Why Facebook should buy BlackBerry
The Wall Street Journal reports that BlackBerry execs met with Facebook about a deal. Mark Zuckerberg needs to listen.
Last week, BlackBerry executives flew to California to meet with Facebook, urging the social networking giant to consider buying the beleaguered smartphone pioneer, report Will Connors and Dana Mattioli at The Wall Street Journal. "It remains unclear whether Facebook is interested in placing a bid," they add, but "the meeting could reignite speculation that Facebook is building its own smartphone."
That it has.
Technically, the company that makes the smartphone once so ubiquitous that it was dubbed the CrackBerry has already agreed to sell itself to its largest shareholder, Fairfax Financial, for the once unimaginably low price of $4.7 billion, or $9 a share. It has until next Monday, Nov. 4, to seal a more favorable deal.
There are reportedly other parties expressing interest — among them: China's Lenovo, Cerberus Capital Management, Cisco, even Google — but a fair offer from Facebook would be bigger news. CEO Mark Zuckerberg has publicly dismissed the idea of Facebook building its own phone, but there are plenty of reasons a real Facebook Phone — not Facebook Home on an Android device — would make sense.
First, though, let's look at all the reasons Facebook won't buy BlackBerry. The obvious one is that Zuckerberg & Co.'s preliminary foray into a branded smartphone hasn't exactly been a hit after HTC unveiled its Facebook Home–preloaded First phone in April. Once bitten, twice shy.
Then there's the fact that BlackBerry hasn't had a hit handset in years. "Even in the unlikely event of a change of heart" by Zuckerberg about building a his own phone, says David Cohen at AllFacebook, "why would Facebook pursue a company that has been spiraling downward for years?"
Besides, says John McDuling at Quartz, "the customer base for Facebook and BlackBerry are misaligned." Facebook is focused on attracting and keeping individuals who love to share (and overshare) everything from videos of their child's first steps to their musings on various products Facebook wants to sell ads for; "BlackBerry deals mainly in the government and large enterprise sector," customers concerned primarily about privacy and security.
The area where BlackBerry would be appealing to Facebook is its expertise with mobile devices, says Jay Yarrow at Business Insider, but Zuckerberg has already put his eggs in the Android basket, so it's not clear how BlackBerry's OS would fit. He adds: "Our cynical read on this Facebook news is that BlackBerry met with Facebook, then someone at BlackBerry leaked the news in an attempt to stir any other bidders out there."
These are all great points. Nevertheless, Facebook should ignore all the naysayers and put some of its huge pile of dollars to use by scooping up the discounted Canadian smartphone has-been.
The biggest reason is that, contrary to Zuckerberg's protestations, Facebook really should make its own smartphone. Mobile devices are the future of advertising, and even with its Home interface for Android, Facebook is relying on the kindness of frenemies to host its software and feed it the user data that forms the basis of Facebook's high stock price. This is a huge deal for Facebook: Almost half its ad sales are geared toward users on mobile devices.
Secondly, as Apple has demonstrated, controlling both the software and the hardware it runs on gives a company much more control over everything from branding to design to ensuring a positive user experience. Facebook's main rivals certainly seemed to have reached a similar conclusion: Google paid $12.5 billion to scoop up another declining cellphone giant, Motorola, and Microsoft just dropped $7.2 billion for Nokia's phone business. Snapping up BlackBerry for $4.7 billion, or even a little more, would seem to be a bargain.
The final piece of the puzzle is that Facebook needs to do something to protect itself from the vagaries of fashion, especially in regards to mobile. Right now, even with its enormous number of users, Facebook is basically a giant piece of software designed for the desktop. There's really nothing keeping it from going the way of MySpace if enough users become enthralled with the Next Big Thing and pull up anchor. Drake Baer at The Week looked at this risk a few months ago, noting how Facebook could fall victim to "unbundling:"
[I]f you're one of the nearly 500 million users of Facebook's main mobile app, you already know the experience feels crowded; the cluttered desktop experience is downright claustrophobic when held in your hand. There are so many services built into this one product — and you probably need only a sliver of them. The danger for Facebook is that each individual service can be better provided by a smaller competitor — meaning you don't have to use Facebook at all. [The Week]
A well-executed Facebook phone, on the other hand, could protect the company from this danger. To date, Facebook has gone half-in on creating that phone. That hasn't worked. BlackBerry, for all its woes, still has about 70 million loyal customers, smartphone and network-security patents worth up to $3 billion, and a messaging platform, BlackBerry Messenger (BBM), that's more popular than Facebook's heavily promoted alternative. At least 20 million people have downloaded the BBM app for iOS and Android since it was released last week, and BlackBerry says BBM has 80 million active monthly users.
BlackBerry is there for the taking. Will Facebook bite? Probably not, says Kevin C. Tofel at GigaOm, but "let's watch for an update on both company's relationship status."