BlackBerry and Good Technology announced an unusual type of merger this week. BlackBerry is evolving into a software/services company and it has increasingly been fighting with Good Technology, which is in the same space. Between the companies, there is a lot of product overlap, but the resources both firms were spending on hurting the other were doing more damage than good to both. As a result, unlike most acquisitions, which try to correct a product line or services problem, this one is designed to eliminate painful competition for them both.
Let’s talk about this merger.
The Flavors of Mergers
Mergers come in a number of flavors. The most common and the most difficult to pull off is the merger to gain the full value of the acquired company. These generally fail because the acquiring firm fails to identify and protect the core assets it has just taken over. Dell does this kind of merger best, because it took a process developed at IBM and enhanced it. This process has allowed each acquisition that Dell made after the process was implemented to exceed expectations by effectively combining the two firms’ resources while keeping the acquired firm intact.https://o1.qnsr.com/log/p.gif?;n=203;c=204663295;s=11915;x=7936;f=201904081034270;u=j;z=TIMESTAMP;a=20410779;e=i
The easiest type of merger is the acquisition of customers, employees and technology. This is because the company knows what it is getting because it specifically selects the elements it wants and avoids layoffs and other activities that can result in disloyal employees. In a merger of this type, a business selects the employees it wants and can eliminate at the start of the merger any “baggage” the firm has accumulated. This helps expedite the integration of the new assets, because none of the selling firm’s culture or intrinsic problems—outside of issues with the products or employees that were acquired—are brought into the buying firm. BMC has used this tool lately; most often it pulls good people and technology out of otherwise troubled firms.
The last type of merger I will discuss is when a firm buys another to eliminate competition. We saw this with Oracle and PeopleSoft and now with BlackBerry and Good Technology. This type of merger is relatively easy, because the primary goal isn’t synergy or pooling resources, it is eliminating the competitor, thus making any upcoming products and people that can be used a bonus. It turns out that BlackBerry can actually use a number of products and people from Good, which should strengthen it as the acquiring firm over time, because it has removed the distraction of fighting its competitor.
Acquiring Good Technology enhances BlackBerry’s software status and, as noted, removes a distracting bit of competition. The end result will be stronger productivity, a greater management product portfolio, enhanced offensive and defensive patent protection in the space and a future example that the company is aggressively investing in software while it is pulling back from hardware. In short, this deal gives BlackBerry a steady platform from which to fight and a more robust set of messages to fight with.
Wrapping Up: BlackBerry Plus Good Technology
BlackBerry and Good Technology are attempting one of the easiest mergers to accomplish—competition elimination. But while this last is the easiest to execute on paper, because it is between two hostile entities, it is far harder to get done. The Oracle PeopleSoft acquisition showcased just how painful this can be. In the case of BlackBerry and Good Technology, though, it appears that both CEOs realized that the fight, should it continue, would make recovery far more difficult, and so both moved to do what is actually best for both firms in terms of pooling resources. What I find interesting here is that the CEOs from BlackBerry and Good Technology put aside their differences to do what was best for both firms. That doesn’t happen very often, which makes this move even more worth watching, because the customers, Good employees and investors will all get a lot better outcome than if either company had put up a fight.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+.