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Today BlackBerry announced it is buying Good Technology for a reported $425 million in cash. While this is not a huge sum given the size of the acquisition, and BlackBerry does have cash in the bank to make this happen, it nevertheless begs the question, why would a struggling BlackBerry buy an also struggling competitor?

I have been predicting a consolidation in the mobile market for some time. And the various acquisitions over the past few years (e.g., VMware/Air Watch, IBM/Fiberlink, Citrix/Zenprise) have made it more difficult for the smaller players who kick-started the market for mobile device management (MDM). But now that mobile is a mainstream component of virtually all companies, the niche has matured. So BlackBerry acquiring Good is a continuation of the consolidation in the mobile market and particularly in the enterprise mobile management (EMM) market (the successor to the earlier MDM market). It’s becoming clear that only the strong will survive long term, so bulking up is becoming even more critical for companies wanting to remain as strategic players.

But what about Good and BlackBerry? What do they get out of combining? In my opinion, both companies win in this scenario.

Good was planning a public offering, but with its mixed financial results (continued losses), it would have had a difficult time going public. The acquisition will make it part of an already public company, so it can avoid the scrutiny and difficulty of an IPO. And its investors get an easier path to recover their investments. Good also still generates a considerable amount of its revenues from secured email on different device types (especially iPhone, but also Android), although its push to become a full mobile platform for app development and deployment has been progressing. By partnering with BlackBerry, the secured email/productivity suite will get some renewed focus and a refresh/updating, which it really needs. Good’s broader platform play (Good Dynamics) had not yet gathered enough steam to propel the company to compete with the larger combined players I mentioned earlier and was feeling a lot of pressure in the marketplace..

What BlackBerry gets out of the deal is a larger installed base than it had and an ability to upsell many Good customers with additional components for a more complete EMM solution. It also gets a way to retrieve many of its previous customers who went to Good when they moved away for being BlackBerry shops as BYOD took hold and they moved to iPhones (and later Android), and as a result curtailed or eliminated their BlackBerry Enterprise Server infrastructure before BlackBerry offered multi-platform support with BES. Bringing the lost BES customers into the fold by acquiring Good consolidates the BlackBerry customer base, including many that have both Good and BES, and provides BlackBerry with a potentially large gain in software revenues going forward (something it will be driving harder in the future as devices become a much smaller component of sales).

BlackBerry has been on an acquisition binge lately, with its WatchDox acquisition propelling it into the secure document container business, and its virtual SIM solutions attractive to an increasingly regulated market for split billing in business, as well as its recent addition of secure voice and text messaging to the platform. BlackBerry has also been moving closer to some of the device makers, in particular Samsung, whose own software solutions, meant to compete with BlackBerry and others, have not gained significant traction. Getting Good’s technology to push further into the app dev market makes BES a more complete solution, better able to compete in the market, particularly as it represents a more compelling cross platform offering for iPhone and Android, something that BlackBerry has struggled to achieve with its open BES platform.

However, integrating the two platforms will not be easy. BlackBerry does have experience here with its many recent acquisitions, but Good has much more technology to integrate than the previous acquisitions did, and far more overlap in capabilities. And the cultures of the two companies are different, especially since it’s clear that there was no love lost between the top staff (Good CEO Christy Wyatt spent much time and effort bashing BlackBerry whenever possible, and BlackBerry CEO John Chen responded accordingly). Integration of the people and products will likely take a year or more, but Chen has been down this path many times before, and he knows how to make this happen. I expect it will be successful given his track record, but it may not be without some “potholes” along the way.

Bottom line: This acquisition was a marriage of convenience for Good, which needed some financial bolstering, and a way to give its investors an exit. Meanwhile, BlackBerry acquires a customer base that it can upsell, and it consolidates itself in the EMM market to compete with the few standing large players (IBM, Citrix, and VMware). Assuming that the two products can be integrated successfully and only the complementary “best of the two” remain, this is a good acquisition for BlackBerry and a good exit strategy for Good. It also bodes ill for many of the remaining smaller players, who will need to partner, be acquired, or fade away.

Jack Gold is the founder and principal analyst at J.Gold Associates, based in Northborough, Mass. He covers the many aspects of business and consumer computing and emerging technologies.


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