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Blackberry buys rival software firm in $425m bid to reinvent itself as simple way for firms to manage smartphones

BlackBerry shifting focus to device management software for enterprises
Also preparing to launch Android 'slider' phone with hidden keyboard

Published: 12:31 EST, 4 September 2015 | Updated: 14:55 EST, 4 September 2015

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BlackBerry will buy rival mobile software provider Good Technology for $425 million, to boost its ability to help corporate clients manage smartphones running on different operating systems.

The cash deal may help BlackBerry, a one-time smartphone pioneer, win new customers for its services business, a priority as it shifts focus to device management software for enterprise customers.

More than half the devices running on Good's systems are Apple products such as the iPhone.

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BlackBerry Chief Executive John Chen

BlackBerry said it expects to realize about $160 million in revenue from the acquisition in the first year after the deal closes, expected by late November.

Its Toronto listed shares were up 1.1 percent at C$7.97 in early trading.

On a call with analysts and investors, BlackBerry Chief Executive John Chen was asked about Good's cash burn.

He promised that BlackBerry would remain cash flow positive overall.

'There obviously will be hard work involved,' he said.

'But I do see a lot of opportunity here to drive value for our shareholders.'

Chen said BlackBerry will maintain both company's products as it develops a unified platform that customers can upgrade to.

He said that a unified product may take a year or two.

Relations between BlackBerry and Silicon Valley-based Good had long been tense.

The companies settled a series of patent lawsuits in 2004, but as recently as January 2015, BlackBerry critiqued one of Good's product announcements in a blog post, annotating the rival company's press release in red ink.

'There is a very long history here.

'We are in an incredibly competitive market and speak to many of the same customers,' said Good Chief Executive Christy Wyatt in an interview posted on BlackBerry's news site.

The phone looks similar to Samsungs's Galaxy S6 Edge, with curved sides. Believed to be codenamed Venice, it will be Blackberry's first Android phone.

Wyatt said her company's technology would boost BlackBerry's ability to manage 'Internet of things' devices, supporting wearable technology such as the Apple Watch and Android-based competitors.

BlackBerry has recently made acquisitions to expand its services business, and in July Chen said the company would likely make more.

On Friday, he compared the acquisition of Good with previously announced deals for Secusmart, Movirtu and WatchDox.

It comes as Blackberry is preparing to launch its first phone running Android, it has been claimed.

A new image shows a phone similar to Samsung's Galaxy S6 Edge, with curved sides.

Many believe the handset could be the company's last attempt to revive itself following disastrous sales of its own BB10 touchscreen handsets.

According to Evan Blass, who posted the images and is well known for leaks of new handsets, it will be launched on AT&T and is codenamed Venice.

Earlier this year it was revealed BlackBerry is considering building a phone with Google's Android software for the first time.

The handset has a similar 'edge screen' to Samsung's flagship handset, the Galaxy S6 Edge

The move is seen as an acknowledgement that its revamped line of devices has failed to win mass appeal, according to four sources familiar with the matter.

The move would be an about-face for the Waterloo, Ontario-based company, which had shunned Android in a bet that its BlackBerry 10 line of phones would be able to claw back market share lost to Apple's iPhone and a slew of devices powered by Android.

The sources, who asked not to be named as they have not been authorized to discuss the matter publicly, said the move to use Android is part of BlackBerry's strategy to pivot to focus on software and device management.

BlackBerry, which once dominated smartphone sales, now has a market share of less than 1 percent.

It is not clear whether a move to use Android would spell the end of the company's BlackBerry 10 line of devices that were initially launched to much fanfare in early 2013.

BlackBerry ?@BlackBerry Mar 3 What a Surprise! Ron just pulled out a dual-curved, all-touch display with a Keyboard - yes a slider device! #MWC15

After positive early reviews, the late-to-launch BlackBerry devices haven't competed well with Android or Apple, mainly due to a lack of big name apps.

'We don't comment on rumors and speculation, but we remain committed to the BlackBerry 10 operating system, which provides security and productivity benefits that are unmatched,' said the company in an email.

A Google spokeswoman declined to comment.

BlackBerry Chief Executive John Chen is banking on the company's new device management system, BES12, that allows corporate and government clients to not only manage BlackBerry devices on their internal networks, but also devices powered by Android, Apple's iOS platform and Microsoft Corp's Windows operating system.

One of the hurdles it faces in that transformation is convincing big customers that its device management software works across many different platforms.

Two sources said that by launching an Android-based device of its own, BlackBerry would be sending a signal to skeptics that it is confident that the BES12 system can not only manage, but also secure smartphones and tablets powered by rival operating systems.

BlackBerry will probably use Android on an upcoming slider device that is likely to be released this autumn, two sources said.

The slider will combine a touch screen with a physical keyboard that users can use if they prefer.

BlackBerry briefly showed off the slider device on stage at Mobile World Congress in Barcelona in March, but it has provided little detail on it since then.

By making an Android device that boasts a large touchscreen and a physical keyboard, BlackBerry hopes to snag a niche in the touchscreen-dominated Android market. The device may attract those still using older BlackBerry keyboard handhelds but who want access to the larger app options Android offers.

Two sources said that if BlackBerry moves forward on a plan to launch an Android device, it could come with some of the patented features in its BlackBerry 10 operating system.

After positive early reviews, the late-to-launch BlackBerry devices haven't competed well with Android or Apple, mainly due to a lack of big name apps.

In March, BlackBerry announced that it planned to deliver its patented security, productivity and communication tools to any mobile device running iOS, Android or Windows.

The company, which a while ago opened its popular BlackBerry Messaging app to those using rival operating systems, has said it plans to offer more in-house features on rival devices, including BlackBerry Hub and the predictive text capabilities of its virtual keyboard.

Chen in March said the company was still committed to its own devices business.

Since that time however, BlackBerry has cut headcount in its hardware unit even further.

The company, which at a 2011 peak employed 17,500 people and in February was down to 6,225, said last month that it was making further cuts on the device side, without providing any numbers.