I don’t think anyone saw this coming as today has become one extremely special day for Research in Motion. In addition to the official launch of the BlackBerry App World earlier this morning, the folks at Waterloo have given us yet another huge surprise.
A lot of the talk in the smartphone world these days has to do with the Apple iPhone, but we could be looking at one of the biggest corporate mergers in the history of cell phones. It has just been announced that Research in Motion, maker of the BlackBerry line of devices, is in the process of acquiring Palm, Inc. This news comes mere months before the pending release of the Palm Pre, a smartphone that is supposed infuse new energy and excitement into the Palm brand. Research in Motion wants to capitalize on this excitement and extend it to the BlackBerry line as a whole.
Combining Forces to Dominate the Smartphone Market
The way that we approach smartphones has drastically changed in recent years. It wasn’t all that long ago that smartphones were reserved for the corporate and enterprise environments, because these are the people that demanded a more robust handheld. This goes back to the days when businesspeople were still enamored with the Palm Pilot line of PDAs and it grew with the emergence of the revolutionary push email technology found in early BlackBerry devices. The average consumer, by contrast, was much more interested in fashionable phones like the Motorola RAZR.
That has now changed. You don’t have to wear a three-piece suit to want a smartphone anymore, because the general public is quickly starting to demand more from their phones. People want feature phones that can take decent pictures, play music and videos, send and receive emails, surf the web, update Twitter accounts, check Facebook, and so on. Smartphones, like the HTC Touch Diamond and Apple iPhone 3G, are designed to satisfy this kind of demand. This has created a great air of competition in the smartphone world and RIM seemingly wants a bigger ace in the hole.
In a prepared statement (which will see official release later this morning), Research in Motion co-CEO Jim Balsillie said that this was the “perfect time” to capitalize on a synergistic merger with Palm, Inc. “The corporate world has long since known about the power, security and reliability of the BlackBerry. With the acquisition of Palm, Inc., a company with a long history in the enterprise market and a renewed vision for the future in the Palm Pre, we can be better positioned to appeal to the widest audience.”
Balsillie expressed a fair deal of excitement over webOS and how it fits with RIM’s vision of seamless connectivity and productivity. “Together, we can change the world.”
The Rebranding of Palm, Inc.
While the financial specifics of this new relationship were not disclosed to us, they did indicate that Research in Motion would be restructured to accommodate the inclusion of Palm, Inc. More specifically, RIM would become the parent company of two somewhat independent brands.
The BlackBerry arm will remain largely faithful to the corporate end of the market, catering to business users who have come to know and trust the security of the BlackBerry brand. The Palm arm will be rebranded as “PalmBerry”. PalmBerry-branded phones, like the upcoming Pre, would be largely marketed at the consumer market: A place where the iPhone currently has the most momentum.
Looking to the future, Research in Motion hinted at the possibility of more “Berry” sub-brands. It is unclear how they would approach a new moniker like BlueBerry or RaspBerry.
The Common Exchange of Technology and Intelligence
Both Research in Motion and Palm bring a lot of experience and expertise to the table. RIM revolutionized the industry by introducing push email so many years ago and it was also around this time that the Palm Pilot was the PDA of choice for the discerning business user.
For some people, the BlackBerry brand has had a very difficult time trying to be recognized as a “cool” handset. iPhone enthusiasts oftentimes scoff at the “clunky” Blackberry OS. It’s not svelte and sleek like what comes out of Cupertino. The BlackBerry Storm was supposed to be a response to the iPhone, but it’s still got a lot of room to grow.
Even though Palm hasn’t experienced very much success with its Treo line as of late, the Sunnyvale, California-based firm really caught everyone by surprise at CES 2009 in Las Vegas with the unveiling of the Palm Pre. Here was a functional device that actually looked good. It was sexy. And that’s the kind of thing that RIM needs to take BlackBerry to the next level. At the same time, Palm can benefit by the established reputation and user base of the BlackBerry.
The Extension of the Palm Pre Line
Palm has already indicated that the Palm Pre will not be the only phone from the company to feature its new webOS. Just as HTC took the TouchFLO interface to a variety of Windows Mobile smartphones, Palm has every intention to produce additional handsets in the near future that (hopefully) capture the same kind of interest as the Pre.
With the new financial and creative backing of Research in Motion, Palm is much better positioned to overcome its current shortcomings and move forward with new and exciting products in the future. More specifically, future Palm Pre phones may feature access to the BlackBerry Enterprise Server.
Bono Takes Over as Chief Executive Officer
This is perhaps the biggest part of today’s story. Ed Colligan of Palm and Jim Balsillie of BlackBerry will head their respective departments of Research in Motion, but they will both report to a new CEO. The new Chief Executive Officer of Research in Motion will be none other than Bono of U2 fame.
How is this possible? As you may recall, U2 and Apple had a bit of a falling out recently. The band shifted their allegiance to Research in Motion as the primary sponsor of this summer’s tour. Further still, Bono is a partner in Elevation Partners, a venture firm that owns 39% of Palm, Inc.
Given the pre-existing relationship with Palm and the new relationship with RIM, Bono acted as a liaison between the two companies. He was instrumental to the development of the new relationship and both companies agreed that he’d be the right man to run the newly formed company, giving it the star power it needed to take the shine off Apple’s front man, Steve Jobs. It is also very possible that Bono would push toward a Product (RED) version of a BlackBerry-like phone. Product (RED)Berry, anyone?
The appointment of Bono as the new CEO is still pending approval from the board of directors, but the initial response has been overwhelmingly positive. By combining their several years of enterprise-level experience, Palm and Research in Motion (BlackBerry) will certainly be a force in the smartphone market. Look out, Apple. The elephant in the room just got bigger.
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