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Why Google-Motorola Deal Could Spell Trouble For RIM?

Author : Anupriya tripathi

The tech world is still reeling from Google's mega acquisition of Motorola Mobility sealed for a price of $12.5 billion. The deal will land the world's biggest search engine giant a vast portfolio of patents along with the possession over tens of thousands of patents.

The surprise acquisition is expected to have a huge impact on tech industry. Though deal may cause pressure for other mobile phone makers such as HTC and Samsung backing leading Android based devices, the company that is actually facing the heat is Research In Motion.

Analyzing the whole situation, RIM has the most to lose from Google-Motorola deal.

Motorola Mobility has a strong reputation in the enterprise. With Google's money and proficiency, Motorola may directly compete with RIM in corporate market. This may coerce RIM either to enter into a strategic alliance with another company or get acquired by some other tech major to remain competitive.

RIM is already grappling with stiff competition from players such as Apple and Samsung. Now with Motorola's newly attained power there is definitely a tough road ahead for RIM.

Shares sinking

RIM is constantly losing market share to mobile phones that supports web surfing, run games and manage other computing tasks. The BlackBerry maker's global smartphone market share dropped to 12 per cent in the second quarter, down from 19 per cent last year.

On the other hand, Android became the leading mobile-phone software, escalating to 43 per cent of the market.

War of patents

Shares of RIM jumped after the news of Google's Motorola acquisition, under the conjecture that the company's patent portfolio could be worth up to $10 billion in a buyout scenario.

Few weeks back, a group of companies including Apple and RIM agreed to spend $4.5 billion to purchase Nortel's patent portfolio.

The BlackBerry maker has control over 2,033 patents, covering everything from mobile security to e-mail.

Google's move may push Apple or Microsoft to go after RIM for its intellectual property.

Investors losing interest?

Investors want RIM to modify strategy as it loses ground. Investors criticized RIM's two co-chief executives Mike Lazaridis and Jim Balsillie for taking strategic missteps that have led to the company's misfortune.

Investors even called for splitting the roles of chairman and CEO at RIM to increase board oversight.

In July, the BlackBerry maker announced 2,000 layoffs.

Many investors are feeling the need of a strong partner for RIM. If RIM doesn't pay heed to the investors' demand, they may look for another company.

It will take months until we know whether Google's biggest acquisition ever was a wise decision or a billion dollar debacle but till then RIM has all the reason to worry.

All the best RIM!

ITVoir NewsDesk

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Tags:   RIM, Google, Mike Lazaridis, Motorola Mobility

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Submitted : 2011-08-20    Word Count : 441    Times Viewed: 541