Interested in buying RIM? Think again

Here's a friendly warning to all technology companies eyeing Research In Motion: Back away slowly.

Apparently, RIM drew its fair share of suitors over the last few months, with companies including Amazon, Microsoft, and Nokia weighing potential offers for the BlackBerry maker. The talks, however, never got serious enough to warrant a formal proposal.

It's clear why any company would consider buying RIM. For one, it's extremely cheap, having lost more than three-quarters of its market value over the past year. Despite its declining brand, the company still boasts an impressive array of business customers. For all the talk of doom and gloom, its subscriber base still grew 35 percent to 75 million--with much of that expansion coming from overseas. Outside of a few outages here and there, RIM's security and e-mail system is top notch.

Yet, RIM would make for a complicated and frustrating acquisition for any technology company bold enough to make an offer. RIM's core business is built on top of an operating system that is years too old to be on the market, and is dragging its feet on its move to the next-generation platform. Whatever design acumen it used to have has largely faded away. Lastly, it is suffering from an identity crisis: is it focused on business, the consumer, or some halfhearted mash-up of both?

OK, so pondering an acquisition is a bit moot since RIM has so far insisted on remaining independent. But the company's management recently expressed a willingness to at least consider other options, and shareholders have certainly cried out for a potential takeover to bail out their sunken investments, so it's worthwhile to run through the various scenarios based on the rumored acquirers--as well as add some ourselves.

Would you buy a KindleBerry?
Amazon considered making an offer for RIM over the summer, Reuters reported yesterday. At first glance, such a deal would be a head-scratcher. Amazon is a retail company focused on the consumer, while RIM's last bastion of users remains the corporate white collar army (and even that is starting to erode).

But if you dive deeper, you start to see how the two fit. Amazon runs a lucrative cloud services operation that caters to businesses, which falls alongside RIM's own business-centric model. RIM's security, messaging, and network services could be layered on top of that, allowing Amazon to offer new services and expand its customer base to larger corporations and government agencies.

RIM offers a ton of wireless know-how and relationships with carriers--crucial to Amazon if it wants to expand the distribution for its Kindle Fire and future mobile devices. An acquisition would also give Amazon instant access to millions of users--all potential online shoppers.

Amazon, however, would be better off on its own. The company is on a solid run with hot products like its regular Kindle e-reader and the Kindle Fire tablet--it doesn't need the distraction of a large acquisition and the potential integration of a completely different corporate culture.

The Kindle Fire uses essentially the same body as RIM's PlayBook tablet (with cheaper components), yet has been phenomenally successful because of its low price tag and access to Amazon Prime services. Fittingly, RIM has had to offer massive discounts to get its PlayBook to $200--the same price as the Kindle Fire--finally convincing consumers that it was worth their money.

Amazon has already put considerable resources behind its own flavor of Android, which is heavily customized to the point where it is unrecognizable. Amazon doesn't need to inherent the old BlackBerry 7 platform, and likely wouldn't know what to do with QNX/BBX/BlackBerry 10. It's unclear how, or if, Amazon would mash up the Kindle with the BlackBerry.

The three amigos: Microsoft, Nokia, and RIM
In contrast, a deal with Microsoft and Nokia makes more sense on a higher level, with the two reportedly considering a deal before dismissing it a few months ago. Microsoft has long been a rumored acquirer of RIM, and with their mutual focus on business customers that makes sense. Microsoft could bundle its software and services alongside RIM's BlackBerry phones and network.

Nokia, prior to hopping on the Windows Phone bandwagon, was in need of a next-generation platform, which RIM could potentially offer in the form of BlackBerry 10.

RIM, already a player overseas, would get parents with even more considerable global reach.

But the combination between the three would have been a disaster. Individually, each company was reeling from the competitive threat posed by Google and Apple. Together, the three would have created an even slower, more lumbering player hampered by its own size and clashing corporate cultures. Joint ventures rarely work (ask Sony about Sony Ericsson), and this wouldn't have been an exception.

For instance, which operating system would the three have used? Windows Phone? BlackBerry 7? BlackBerry 10? Would Nokia take on the BlackBerry brand? These are questions better left unanswered.

If CNET bought RIM
OK, so if we theoretically took up a collection to buy RIM, what would CNET do? I shot around a number of ideas with ZDNet's Larry Dignan, who posted his own suggestions to save RIM here, and we came up with the same conclusion: hop on the Android bandwagon.

RIM needs to move quickly, which means BlackBerry 10 coming late next year just won't cut it. So instead, I would use a ready-made mobile operating system in Android, and focus on what makes RIM great: awesome e-mail; secure networks and business-class servers; and the network of BlackBerry Messenger users. Rather than focus on hardware, I would turn all of those services into apps that can easily be loaded onto Android phones, and continue to generate revenue through service fees.

To retain the BlackBerry brand, RIM could create a BlackBerry variant of the Android software (if Amazon can do it, why can't RIM?), and outsource the hardware business. RIM has too many products with too many confusing names in the market, so the lineup would have to be trimmed down to just a few products addressing a specific segment, from high-end corporate workers to mass-market consumers. RIM could take advantage of the vast library of Android apps already in the market, as opposed to convincing developers to take a gamble on an unproven platform.

As for BlackBerry 10, or QNX, RIM should abandon using it as a smartphone platform and continue licensing it out for other uses.

If that doesn't work, there wouldn't be any other choice but to break up and sell the company in pieces. Its intellectual property alone makes it a worthy acquisition.

Which is likely why RIM has so many bidders knocking at its door.