BlackBerry adds vertical strength, shows swagger in Good Technology acquisition

A company given up for dead by many not that long ago makes the biggest acquisition in its history, driving it further along in its transition to a software company.

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Marty Beard, BlackBerry’s COO

Waterloo ON-based BlackBerry continued its momentum under CEO John Chen Friday, announcing the acquisition of long-time competitor Good Technology in an all-cash $425 million deal. While the deal can appear to be a curious one, it actually makes sense for both parties.

“At first glance, it looks like BlackBerry is buying a completely overlapped target,” said Carmi Levy, an independent technology analyst based in London Ontario. “Their technology does differ slightly though. Good has a bigger and more consistent footprint on the iOS side, and was stronger in key verticals like the military and aviation. Clearly, for some customers, Good’s technology was preferable, as Good was making some key wins because of their offerings. BlackBerry may have concluded, ‘If you can’t beat them, buy them.’”

“This removes a competitor, and gives them a market share pop,” said Rob Enderle, President and Principal Analyst of the Enderle Group.

BlackBerry is emphasizing the acquisition of complementary capabilities and technologies and the expansion of its ability to offer cross-platform Enterprise Mobility Management solutions in its explanation of the deal.

“We are strengthening BlackBerry’s software and cloud portfolio – and with Good, BlackBerry is creating the most comprehensive secure mobility platform in the market,” said Marty Beard, BlackBerry’s COO. “Good has strength in multi-OS management and applications – particularly with iOS as well as Windows and Android, which BlackBerry has been delivering with BES12. Good also has established a strong ecosystem of more than 2,000 independent software vendor and customer-developed applications.”

Beard said that the deal means the end of compromise for customers.

“We will be able to provide even stronger cross-platform capabilities – ensuring customers won’t have to make any sacrifices in operating systems, deployment models, or any level of privacy and security in their mobile environments,” he said.

The new vertical and enhanced software capabilities are both very big assets for BlackBerry.

“In the enterprise space, you have to target unique verticals,” Levi said. “That’s the way the game is played and Good has done that very well. BlackBerry is buying that capability, so it can penetrate verticals where it hadn’t been successful.”

Levi also said the deal will help CEO Chen deliver on his commitment to generate 500 million per year in software, as BlackBerry’s hardware phone business shrinks.

“This will drive their software business even further, as it’s a lot more efficient and easier to buy that capacity than build it,” he said. “Chen has to scale up the software businesses to meet the expectations that he has laid out to investors, and the fastest route to that is through acquisition, not organic growth.”

Good also brings some purely technical enhancements to BlackBerry.

“Good does have a patent portfolio and arguably a better productivity suite than BlackBerry,” Enderle said.

Levi believes that the chance of the acquisition being successful is boosted by BlackBerry’s past history, as well as by some similarities in corporate culture.

“BlackBerry has done well in integrating the companies it has bought in the last several years,” Levi said. “There is also a similar culture between Good and this incarnation of BlackBerry. They have also played in the same circles for a very long time, and BlackBerry is much more focused on partnerships now than it once was.”

Levi added that even though Good has been doing well, the cultural fit was likely one reason they did the deal – along with the all-cash offer on this scale.

“The cultural fit is likely one of the things that enticed Good,” he said. “They wouldn’t just be bought and absorbed but would have an opportunity to add value. They also likely thought that they could do better as part of this larger whole.”

The acquisition, which is BlackBerry’s largest by far, sends a powerful message, Levi indicated.

“It’s the biggest bet in the company’s history. While it isn’t at its old heights, it has at least recovered some of its old swagger.”