Lenovo considering RIM buyout to boost mobile biz Lenovo CFO Wong Wai Ming says the company is actively pursuing ways to improve its position in the mobile device market, spurring speculation that the Chinese firm may be planning to cozy up with Research in Motion – or even swallow it whole. In an interview with Bloomberg at the World Economic Forum meeting in Davos, …
The US's paranoia regarding Huawei's business practices & partners lends a lot of credence to your theory, I think - In some ways a buyout by the Chinese (and all Chinese are the same when it comes to US security it seems, Huawei, or Lenovo, or ZTE or whoever) could be the last nail in the coffin for RIM as their last solid area of the market (gov) moves to something... more "homegrown" (or at least home-friendly).
It's entirely possible that the Chinese government is poking Lenovo in the back to buy RIM. Owning the Western World's trusted secure mobile comms system as used by governments everywhere would be one hell of an opportunity. Making all the PCs and servers is one thing, but they're not necessarily on-air or on-internet. But mobiles definitely, indubitably, enticingly and unavoidably are on-air and on-internet!
It will be interesting to see what happens. For users who have to take data security really seriously (eg governments) there is no place to go other than BB. That's because
Thus far governments haven't had to pay much for the service because of the wider market for BB phones. If RIM are bought out by Lenovo all three of those points are called into question. The rest of the BB market isn't like to care. At that point governments will discover the true costs of mobile data security.
So what will they do? They could:
All of those seem to mean spending money or taking a risk.
Of course, you're guaranteed to be right about certain policy makers screaming about this. They'll be the very few government security types who actually understand this sort of problem. However the power within governments is usually in the hands of the money men, and they really don't understand these things, nor do they tend to look far ahead.
Getting them to take the issue seriously early on when it is feasible to do something about it is difficult. Usually you have to wait until a disaster has happened, present that fact to them and watch their faces pale as they realise that it's now going to cost a huge amount of money to put right. At that point "Made In China, and hosted there too" will suddenly be accepted as being perfectly acceptable...
"...Stop the sale. That would mean interfering in the market place, and RIM stockholders would have to be compensated for not being allowed their free-market rights to sell their shares"
Actually it is very easy to stop such a transaction early on without letting it be known. A US government whisper to Lenovo along the lines of "please don't", and they'll not waste money on mounting an expensive bid (usually complete with big fat break fees for the target). The US government wouldn't even have to say anything to RIM, and the shareholders would never know. Alternatively, the US government can simply tell RIM that it will stop using BB devices if they are sold to a non-favoured party, and that's RIM's entire business down the toilet, because if the Feds won't use Lenovo/RIM, neither will any US government contractor or "critical infrastructure". Many other large or promising BB markets eg Middle East, India, probably wouldn't touch it if the US government stopped using them.
I'd be very surprised if the US government would be liable for a cent to shareholders - they don't owe them a living (unlike Wall Street, of course), and they can always invoke "national security" as a defence.
"A US government whisper to Lenovo along the lines of "please don't", and they'll not waste money on mounting an expensive bid"
Depends. Who really runs Lenovo? The Chinese government? Don't count on them listening. They might do it just to make Uncle Sam's life hard...
"Alternatively, the US government can simply tell RIM that it will stop using BB devices if they are sold to a non-favoured party..."
Sure they can, but it doesn't exactly leave the US Government with an alternative. After all, if they don't like the idea of Chinese made Blackberries, why would they be content with Chinese made Androids, iPhones or WinPhones?
"I'd be very surprised if the US government would be liable for a cent to shareholders - they don't owe them a living"
I'm not well versed in US law, but I imagine that there is a public expectation (or even right?) of non-interference in a free market. Invoking "national security" is all very well and good, but that in itself wouldn't do RIM any favours and could bring about their demise. And again, where would that leave Uncle Sam?
Also it is complicated by the fact that RIM, a Canadian HQ'd company, could simply de-list themselves from the US stock exchanges, poke two fingers up at Uncle Sam and sell themselves to whoever they wish in Canada (assuming that their government doesn't intervene).
Can RIM manage without government business? BB10 is looking quite promising, so maybe yes. Can the more nervous bits of various governments manage without RIM? No, not at the moment. The bottom line is that if the US or any other nation's government wants their mobile security resting in the friendly hands of the Canadians as opposed to the less certain control of the Chinese they might actually have to put their hands in their pockets and cough up or do without.
Our Canadian government just got grilled about selling an oil company to China. The Minister in charge flat out told China not to expect to be able to buy out any more major Canadian companies anytime soon. And the reciprosity terms mean even if they could, they'd have to sell us a comparable company in China; which will happen when pigs fly.
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