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January 27, 2016updated 30 Aug 2016 3:16pm

BlackBerry’s Good buy: Anatomy of a $425 million merger and EMM integration

C-level briefing: Jeff Holleran, VP of Corporate Strategy at BlackBerry, discusses three months of integration and consolidation to one infrastructure.

By Alexander Sword

It is over four months since BlackBerry announced that it would acquire its enterprise mobility competitor, Good Technology, for $425 million in cash.

In that time the deal has gone through all necessary shareholder approvals and was completed on 2 November, with Good CEO Christy Wyatt leaving the combined company at the same time.

Good first launched in 2009 as a start-up combined with a division of Motorola, and reached a peak valuation of $1 billion in early 2014. An IPO was filed for the same year before being delayed and then cancelled. Good’s board turned down an $825 million acquisition offer in March 2015, but took the $425 million offer after running into financial difficulties.

BlackBerry expects the acquisition to boost earnings and cash flow within the first year; it also expects to realise approximately $160 million in revenue from Good in the same period.

The new combined offering, released on 26 January, aims to combine the strength of the two companies; BES12, Good and WatchDox are now all included in the new Good Secure EMM Suites. It builds upon Good’s expertise in secure applications and containerisation, as well as multi-operating system management.

The integration has been remarkably quick, beginning only three months ago. As a senior executive at BlackBerry explains to CBR, there were very few occasions where a decision had to be made over which company’s solution would be used.

"The overlap is a lot less than people think. We are approaching the problem in two different ways," says Jeff Holleran, VP of Corporate Strategy at BlackBerry.

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Holleran says that the respective teams responsible for the integration quickly gelled.

"The teams quickly got together and figured out the path forward. We are three months in and the product release integrates a lot of components.

"When a customer in a prior Good release would start, there was only the option of 15-character passwords. Now the organisation can determine the type of password that they want."

Both brands are being retained, with names such as ‘Good Powered by BlackBerry‘ exemplifying the approach.

"We’ve got a large customer base across both brands," explains Holleran.

He is not exaggerating: prior to the acquisition, Good served over 6,200 organisations, including more than half of the Fortune 100, all of the Fortune 100 commercial banks, aerospace and defence firms, and leaders across healthcare, manufacturing and retail.

Meanwhile, BlackBerry was used by all G7 governments, 16 of the G20 governments, 10 out of 10 of the largest global banks and law firms, and the top five largest managed healthcare, investment services, and oil and gas companies.

"Both organisations had the same goal, to become the provider of choice for secure enterprise mobility solutions across the full spectrum."

For several reasons the choice of which product to adopt has been different for different companies.

"We are finding customers that through their own consolidations and acquisitions have both (systems)."

However, the ultimate ambition is to move any customers that have either solution onto the combined offering.

"When customers have one or the other or manage both side by side, we’re 100 percent committed to moving customers to [the combined solution]. Part of the benefit from this, he says, is simply down to ease of management.

"We want people to see how easy it is to run things," says Holleran. "When combined they can reduce the infrastructure that is required; they can consolidate to one infrastructure."

He also notes that customers have received significant cost savings from moving to the combined solution.

Holleran adds that integration will not be prioritised over innovation.

"We’ve never slowed on the innovation side and we won’t. We are continuing to invest across the board. It will continue across the whole portfolio, as we continue to bring the two together."

As for the business model, Holleran suggests that the same best of both approach will be taken.

"We’ll continue to go to market as well as through carriers," he says; the former was Good’s primary approach, whereas BlackBerry had a strong carrier network.

It is all very well, of course, BlackBerry saying that customers should move onto the integrated product.

This may not necessarily be a view shared by the customer, however. For the organisation whose supplier has been bought out by another supplier, it is important to be cautious about moving to the new integrated product, says Leif-Olof Wallin, a Research Vice President at Gartner.

"The first order of business is: don’t panic," Wallin says. "You know what you have until the product you are on is discontinued.
"You probably have around a year to decide whether to move to the new integrated product."

Wallin urges companies to "stay where they are" until they can make an informed decision.

"Make a timeline and evaluate whether the product will meet requirements. Clients are not in a hurry to do anything just because an acquisition is announced."

This doesn’t just apply to the product, Wallin says.

"You also need to assess the integrated organisation and their viability to serve you."

It’s a valid concern; there has been consistent consolidation in the EMM market for some time. Notable moves include IBM buying Fiberlink Communications in 2013, Citrix buying Zenprise in 2013, Dell buying KACE in 2010, LANDesk buying Wavelink in 2012 and SAP’s acquisition of Sybase in 2010. There was also the acquisition of AirWatch by VMware for $1.54 billion in 2014.

Close Good rival MobileIron, which according to IDC figures for the 2014 enterprise mobility management software market had a share of 9.2 percent of the market that year, has meanwhile managed to go it alone, completing a $100 million IPO in 2014.

The difference of course between these acquisitions and BlackBerry’s is that they are primarily big IT or virtualisation companies buying smaller companies that provide mobile device management solutions.

By comparison, according to the IDC figures cited above, there was little difference between BlackBerry and Good’s shares: 9.5 percent and 9.7 respectively.

In an October interview with CBR, Good’s then-CEO Christy Wyatt claimed that only companies that managed to truly integrate will excel in the mobile world.

"I don’t think we’ve seen the end of [consolidation]. Some of the really large players have maybe made acquisitions but they have been what I call bolt-on strategies.

"In order to do this really well and solve problems such as security and user experience, it can’t be a part-time job. There is a tremendous amount of focus and investment that needs to go into this."

"So we’ve seen a wave of what I’d call the low-hanging fruit and I think we’ll continue to see some of these larger integrations with larger IT providers who really have to think across the entire landscape.

"There are many companies that are going to have a mobile strategy that is an adjunct to the core of their business."

 

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