RIM May Sell NewBay, But Can't Ignore Cloud
Research In Motion considers divesting mobile content service provider and other assets as it pares down ahead of BlackBerry 10 launch.
Research In Motion may further consolidate its business by selling off select assets. CEO Thorsten Heins, plodding along in his strategic review of the company, wants to divest NewBay Media and other assets, reports Reuters.
RIM acquired NewBay in October 2011 for about $100 million. Ireland-based NewBay is a white-label provider of mobile content services, such as social networking, photo, and video tools, to wireless network operators. The company stores media on its own servers, which subscribers can access from their smartphones, tablets, and computers.
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NewBay had 80 million subscribers when RIM purchased it last year. It's unclear how many customers the service has today.
RIM's former co-CEOs, Jim Balsillie and Mike Lazaridis, made the purchase in hopes that it could strengthen the company's service revenue by adding NewBay's cloud-syncing and sharing services to its own mobile services. RIM earns about 20% of its revenue from service operations. The rest comes from hardware sales (70%) and software sales (10%). Boosting service revenue could have helped stabilize RIM's income. It's not clear what, if any, impact NewBay has had on RIM's service revenue.
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In addition to divesting NewBay, RIM might sell off other non-core business units, according to Reuters sources. The additional assets were not named, and RIM declined to comment on Reuters' story.
While it's understandable that RIM is looking to slim down so it can focus on bringing BlackBerry 10 and new smartphones to market as quickly as possible, it shouldn't ignore the current direction in the mobile space when it comes to online media storing and sharing.
RIM's competitors Apple, Google, and Microsoft all have excellent media platforms and deep social network hooks that offer varied means by which consumers can upload, store, and share media content.
Apple's iOS, in particular, had strengthened its ties to Facebook and Twitter, while bringing products such as the iTunes Match cloud music service to its devices. Google has the Google Play Store, which also offers online music streaming, and other such services. Mobile device owners continue to access more media from the cloud.
RIM's BlackBerry 10 platform, due late this year, needs to be a winner in every capacity if RIM hopes to survive in the competitive smartphone market. Google has already shown its new platform for 2012, and Apple and Microsoft have given us a peek. Both iOS 6 and Windows Phone 8 are due to arrive before BlackBerry 10.
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