RIM Could Be Considering An Alliance With Microsoft

The Canadian smartphone manufacturer Research In Motion is said to be looking at some unlikely options to end its apparent crisis, such as selling the network part of the business or partnering with Microsoft.

This follows the news that RIM will have to delay the BlackBerry 10 OS release, as well as deal with £333 million in financial losses from the past fiscal quarter and restructuring that will result in cutting 5,000 jobs – almost a third of its workforce.

The updated schedule will mean that BlackBerry 10 will not be released until early next year.

Tough choices

RIM shares have lost 70 percent of value in the past year. The company is now valued at just $4.1 billion (£2.6 billion). That’s less than half of the $8.5 billion that Microsoft recently paid for Skype.

Sources familiar with the situation told Reuters that the Blackberry 10 delay has increased pressure on the board, prompting it to look for painful solutions to its financial problems. One of these solutions would be to ditch BlackBerry OS altogether and adopt Windows Phone 8.

The sources claim Microsoft CEO Steve Ballmer had approached RIM in recent months, looking to forge an alliance similar to the one the software giant has with Nokia. In this case, RIM could also look for Microsoft to buy a stake in the company and fund some of the expenses.

The Windows developer could also be interested in RIM’s wireless patent portfolio.

The idea of Microsoft buying RIM is not new. In 2010, there were rumours about a takeover, after Ballmer personally visited the BlackBerry World conference to announce RIM support for Microsoft’s Bing search and maps services.

However, Nokia, which had switched to Windows Phone in order to help its ailing business, is not doing all that well. In April, it issued a profit warning, predicting negative operating margins for the second quarter of 2012. The company is also cutting 10,000 jobs and selling its Vertu luxury divison.

And last week, Nokia sales estimates went down due to Microsoft announcing that the current Lumia smartphones will be unable to upgrade to Windows Phone 8.

According to the same sources familiar with RIM’s situation, another option for the BlackBerry maker would be to sell its proprietary network. The buyer could then open up the network operating centres to other smartphone providers, allowing them to provide the highly-secured services that made BlackBerry so popular.

RIM has considered this option in the past, under its former co-CEO Jim Balsillie. However, it would rob BlackBerry of its one unique selling points, said the sources.

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