Good BlackBerry Picking: BlackBerry Acquires Good Technology

BlackBerry Limited (NASDAQ: BBRY; TSX: BB) announced this morning that it has entered into a definitive agreement to acquire Good Technology for $425 million in cash. This move immediately strengthens the reinvented BlackBerry’s position as a provider of cross-platform mobile security services for enterprises. For Good, this acquisition was a logical, inevitable exit.


Back in the early days of enterprise mobility, BlackBerry ruled the market with its BlackBerry Enterprise Server (BES) and BlackBerry Messenger (BBM) offerings. However, those products were tied to the company’s hardware offerings. When BlackBerry’s share of the mobile phone market plummeted after the introduction of the iPhone and Android-based handsets, demand for BES and BBM also took a big hit, despite their technical strength.
Recently, BlackBerry has been reinventing itself as a provider of cross-platform mobile security services for enterprises. While the company has demonstrated some success in executing on that position, the market has remained skeptical. As Fortune’s Jeff Reeve’s pointed out this morning, BlackBerry is unprofitable with a lot of negativity priced into its stock. The company is currently valued at less than 1.3 times next year’s sales and only slightly above the cash on its books.
Clearly, BlackBerry needed to do something to bolster the credibility of its strategic market positioning. Today’s acquisition of Good Technology immediately strengthens both BlackBerry’s technical ability and street cred as a provider of cross-platform mobile security services for enterprises. Good’s portfolio of Enterprise Mobility Management (EMM) offerings was one of the best available and highly complementary to BlackBerry’s, as noted in the latter’s press release:

“Good has expertise in multi-OS management with 64 percent of activations from iOS devices, followed by a broad Android and Windows customer base. This experience combined with BlackBerry’s strength in BlackBerry 10 and Android management – including Samsung KNOX-enabled devices – will provide customers with increased choice for securely deploying any leading operating system in their organization.”

For Good Technology, this acquisition was a logical, if not inevitable, exit. As I wrote in A market overview of the mobile content management landscape  (summary only; subscription required for full text) just over a year ago,

“Many platform vendors have already acquired MDM and MAM capabilities, so the viability of the numerous, remaining pure-play vendors of those technologies looks increasingly dim. Instead, future acquisitions by platform vendors are more likely to echo VMware’s recent (January 2014) purchase of AirWatch and its well-rounded suite of EMM technologies. MobileIron launched a successful IPO earlier this month and looks to remain independent for the time being. Good Technologies recently filed its own IPO registration paperwork but could be acquired either before or after the actual IPO.”

And so it is. MobileIron remains the last major independent EMM vendor standing and Good has been acquired. It seems that Good really had little choice. They were $24 million in debt when their filed their S-1 (16 months ago) and never completed the intended IPO. It is very likely that they continued to lose money since then. According to CrunchBase, Good had taken on an undisclosed amount of secondary market funding a month after the S-1 filing and received an $80M private equity investment in September, 2014.  It’s highly likely that a combination of slowing revenue growth and a non-existent road to profitability led Good’s management and investors to take BlackBerry’s acquisition offer.
The looming question is will its newly-expanded portfolio of enterprise mobile security capabilities be enough for BlackBerry to accelerate its turnaround? Investors are reacting positively to the news. BlackBerry’s stock is currently up 1.54% while the broader NASDAQ is down -1.04%. Of course, only time will tell. Success will depend on how quickly BlackBerry can integrate Good’s technology into its own and how well they can sell the combined platform.

Microsoft’s new budget Lumias are all about the services

Microsoft has unveiled a couple new handsets, the Lumia 640 and 640 XL, at Mobile World Congress in Barcelona. The phones themselves are pretty low-priced for their decent specifications, but what’s particularly interesting about them is the degree to which they’re delivery devices for Microsoft’s services.

Both the 5-inch Lumia 640 and the 5.7-inch Lumia 640 XL, which cost from €139 ($155) and €189 respectively, come bundled with the [company]Microsoft[/company] Office apps and a year’s subscription to Office 365 that can be used across the phone itself as well as one PC or Mac and one tablet. That includes a terabyte of OneDrive storage and 60 Skype World minutes per month.

Bearing in mind that the same bundle of services usually costs €69/$69 per year, that’s a pretty sweet deal, and it may tempt quite a few budget phone buyers into using Microsoft’s subscription services.

What’s more, Microsoft also announced a “Universal Foldable Keyboard” – a fairly thin Bluetooth affair – that will work with not only Windows devices but also iOS and Android devices. Microsoft has been putting out some decent Office apps for those rival platforms of late, and the keyboard is just one more way for it to keep users of almost any device thinking of the Microsoft brand and heading for its services.

Sure, the company didn’t unveil any new flagships on Monday – these will probably appear closer to the release of Windows 10 – but it did demonstrate how its mobile hardware and software strategies are coming together nicely as the Nokia handsets acquisition shrinks in the rear view mirror.

Here are the specs for those new Lumias, by the way: The 640 and 640 XL are both based on a 1.2 quad-core Qualcomm Snapdragon processor and a gig of RAM. The XL has a 3,000mAh battery as opposed to the smaller phone’s 2,500mAh affair, and a beefier camera too at 13 megapixels versus eight megapixels. Both devices have a dual-SIM option.

The 640 will cost €139 for the 3G version and €159 4G version, and will ship in April. The 640 XL will cost €189 for the 3G version and €219 for the 4G version, and will appear first in March.

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