Samsung and BlackBerry Need Something, Just Not Each Other

Is Samsung offering $7.5 billion to buy BlackBerry just for the patents, as Reuters reported on Wednesday afternoon?

Although Blackberry quickly denied it had engaged in discussions with Samsung over a buyout, the patent argument, however far fetched, is probably the strongest reason for a tie-up even as both companies are also pursuing strategies that are in need of some help. BlackBerry has the enterprise know-how but these days lacks the scale it once had. Samsung knows how to churn out devices, but has had a tough time standing out from a pack of Android competitors, many smaller and more nimble.

And while a Samsung takeover might be a nice exit for beleaguered BlackBerry shareholders, who bid up shares by 30 percent on the prospect of a deal, it is far from certain that a transaction would solve those larger strategic issues.

What’s clear is both have ambitions to avoid being roadkill as low-margin hardware makers.

Under John Chen, BlackBerry has focused on several key areas including its devices, its enterprise software and services, the QNX software used in cars and devices and in BBM, the company’s messaging platform. Would BBM get a new life under Samsung or be similar to the ChatOn effort that Samsung tried and has now mostly abandoned?

How much of that is of interest to Samsung, beyond the patents, though, is an open question. Samsung also denied a deal was in the works. “Media reports of the acquisition are groundless,” a Samsung spokesperson said.

It’s unclear just how much Samsung wants to be in the business of tailoring its phones for governments and large businesses. Samsung operated its own enterprise effort, known as Knox, but ceded many of those capabilities over to Google in a deal last year.

BlackBerry’s capabilities could theoretically help Samsung with large businesses in mature markets, particularly as the iPhone is already strong and Apple has a deal with IBM to beef up its enterprise chops further. But BlackBerry already has a deal with Samsung to help secure its Android devices. Some of Samsung’s steepest competition comes not in that area but in the fast-growing emerging markets like China and India where it faces companies like Xiaomi and Lenovo.

Nor is there a direct fit between Samsung’s enterprise efforts and those undertaken by BlackBerry. While the company does have some products for Android — and has been focusing on cross-platform software — many of its strengths remain in its proprietary BlackBerry universe.

As for the patents, making a huge deal based on their value alone can be a dubious prospect. Just ask Google, which bought all of Motorola on the strength of its patents. It had little success in court with Motorola’s patents and was forced to operate an ill-fitting hardware unit, only to unload it to Lenovo at a loss.

With BlackBerry and Samsung desperate for a catalyst, it’s only natural the two would be talking. Finding common ground is likely to prove more challenging.

To get a sense of BlackBerry’s sales pitch to Samsung, here’s what CEO John Chen had to say about the company at last year’s Code Conference:

Update: Adds Blackberry and Samsung denial.

This article originally appeared on Recode.net.

Will you support Vox’s explanatory journalism?

Most news outlets make their money through advertising or subscriptions. But when it comes to what we’re trying to do at Vox, there are a couple of big issues with relying on ads and subscriptions to keep the lights on:

First, advertising dollars go up and down with the economy. We often only know a few months out what our advertising revenue will be, which makes it hard to plan ahead.

Second, we’re not in the subscriptions business. Vox is here to help everyone understand the complex issues shaping the world — not just the people who can afford to pay for a subscription. We believe that’s an important part of building a more equal society. And we can’t do that if we have a paywall.

So even though advertising is still our biggest source of revenue, we also seek grants and reader support. (And no matter how our work is funded, we have strict guidelines on editorial independence.)

If you also believe that everyone deserves access to trusted high-quality information, will you make a gift to Vox today? Any amount helps.

One-Time Monthly Annual

$5/month

$10/month

$25/month

$50/month

Other

$

Yes, I'll give $5/month

Yes, I'll give $5/month

We accept credit card, Apple Pay, and Google Pay. You can also contribute via