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Is BlackBerry A Dead Product Walking?
There are 2 types of companies in the world today. You are either:
- The best, or
- You’re a “Me-too” company
Only “best” companies will earn margin premiums and enjoy the growth worthy of the hard work of business executives and salespeople.
I’m becoming increasingly convinced that BlackBerry is rapidly falling into the “Me-too” category, and will become increasingly irrelevant (and less profitable) going forward.
Full Disclosure: I’m an Apple fanatic (of course, if you’re reading this blog, you probably already know that). I’ve owned every version of the iPhone within a week of its release. So maybe that colors my thoughts, but I don’t think so.
One of the fundamental precepts of great businesses is to narrow your market focus and expand your yield. Great companies are maniacally focused on who their customers are – and who they aren’t. Jim Collins made that clear in his seminal book Good to Great.
BlackBerry, at one time, was an absolute killer device. I had one and loved it. Ever since the iPhone came out, and the smart phone category exploded, BlackBerry has been struggling with finding its place. The Storm was a disaster (on all counts), and they continue to lose market share.
To fight that, they keep “innovating” and coming out with new products. A recent view of their website highlights seven different models to chose from. So I ask, what is a BlackBerry?
In contrast, Apple offers one model (two if you consider the fact that they are still selling the 3GS), and no one need ask the question, “What is an iPhone?”
Watching BlackBerry’s approach reminds me of the 1991 movie, Other People’s Money. In it, Danny DeVito played the memorable character Larry the Liquidator. In trying to takeover a dying company, he said:
We’re dead alright. We’re just not broke. And you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure.
Here’s my corollary:
You know the surest way to go broke? Keep introducing more new products while you continue to lose share of a growing market. Down the tubes. Slow but sure.
Think about this for a moment. Who loves – I mean really loves – their BlackBerry?
Heavy duty email users – that’s who.
Email was the entire basis of BlackBerry’s success to begin with. They invented technology and a device that solved a critical problem for people.
Now, what’s their newest device? The BlackBerry Style. Huh?! What?! If someone is buying a phone for “style;” guess what – they’re buying an iPhone.
People who buy BlackBerrys buy them for function. BlackBerry is superior to the iPhone if email is critical. The iPhone is superior in just about every other way.
What Should BlackBerry Do?
To ensure its future, BlackBerry needs to stop playing other people’s games. They need to focus on their core market – heavy duty email users.
Is that a smaller market than the size of their current business today? Yup. But guess what, BlackBerry isn’t as big as it thinks it is.
BlackBerry needs to answer the same question that small and mid-market companies are faced with every day:
Do I keep fighting for volume and size which will result in less profit and greater vulnerability, or do I accept the market for what it is and focus on what we do best and become relevant?
What would you decide?
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25 Responses to “Is BlackBerry A Dead Product Walking?”
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You’re right on the button here, Doug. RIM have teetered on the edge of irrelevance for a long time, and only for so long because of a large installed base in the corporate sector.
Interesting that the very thing which people said would hold Apple back (retail focus, not enough consideration of enterprise needs) is the very thing that has kept them at the top of an industry they weren’t even in, what, 5 years ago?
I’d bet your comment that they need to focus on heavy duty e-mail users would be a revelation for them. The scroller needs to go too, but that’s another (hardware) story altogether
Its a pretty deep stretch that because they named a product “Style” that it implies that is the sole purpose of the product. That was simply amateur marketing techniques, which regrettably for Blackberry, was poorly done. However, its about on-par with the iPhone implying it is a useful phone, and only to be used as a phone, despite its myriad other uses. This article was HEAVILY tainted by Apple love.
D., thanks for the comment. I’ll concede that this post is not a deep analysis on RIM and that I have some Apple love. Though I’d add that Apple love is not BlackBerry hate.
Naming the phone Style may be amatuer marketing that I’ve read too much into; though the actual ads play even more to the “it’s a cool phone” motif. There’s nothing Apple would love more than for BlackBerry to try and compete on a “coolness” factor.
I’d also add the the math and the facts back me up. Apple gets paid 30-70% more for each phone it sells than RIM gets paid. Additionally, the price RIM gets is dropping far more rapidly than Apple. RIM is losing share at an accelerating rate (violating the rule that disproportionate share goes to the #1 player); Apple is growing. RIM continually tries to intro a game changer product, Apple has successfully intro’d at least 4. Don’t even get me started on the performance of their stock.
By what measurement should we identify that RIM’s strategy is working?
Doug, I (and the stats) take exception to your statement that Apple is growing – they are actually loosing market share to android-based smartphones.
David, I think you’re right on – just look at the recent report from Flixster on app downloads.
“Flixster, has given us some key details of how their mobile installs broke down from Christmas to New Year’s.
Flixster was able to hit a big milestone just in that one week span: just over a million installs on mobile devices. Of the 1,027,000 total installs during the week, 51 percent were on the iPhone, 30.1 percent were on Android devices, 10.5 percent were on the iPad. 7.9 percent were on RIM, and 0.5 percent were on Windows Phone.
In other words, if you add the two iOS devices together, Apple gorged with 61.5 percent of Flixster’s downloads. Android, meanwhile got pleasantly plump with their 30.1 percent. RIM got the leftovers. And Windows Phone went hungry.”
Wow! That’s even worse news for RIM that I would have imagined.
While RIM has admittedly lost their leadership position in the smart phone market I am encouraged with their recent moves. Acquisitions of TAT and The Astonishing Tribe and the QNX OS for the PlayBook show me they at least realize they need to step up their efforts in providing better devices and overall experience with their products.
Hey Jon – thanks for the comment.
I’m not sure I agree with you – as a matter of fact I think I disagree. These moves are precisely what I worry about.
I don’t mean to make this all about Apple, as Rod showed – Android is eating their lunch too. But, I remember what Steve Jobs said 90 days after he re-took over. He had just killed 18 of 22 products in the go-to-market pipeline (a huge cost) and said:
Apple will get bigger by first getting smaller. We will focus on our core and from their we will only grow from our core.
BlackBerry is trying to defend its share, rather than accept the reality of the market. That means looking at its strengths and determining the best, most focused, way to apply those strengths to the market.
My gut is that the #1 aid to BlackBerry’s current strategy is inertia. Simply there so imbedded in corporations that change is tough. While that kept IBM going in the 70s and 80s – I’d caution RIM to look at IBM in 1995. It’s probably the future that awaits them if they don’t focus.
My larger point is for small and mid-market companies. That can keep doing more and more to try to appeal to more and more people. That destination is likely not a good place. Or they can chose to focus their strengths and their markets and enjoy a very profitable future.
Reminds me of the old saying “Reports of my demise have been highly exaggerated”. I’ve heard the same claims for the past six years since before Apple, Android and WinMobile.
The problem is that ignores the facts… Rim continues to grow and their financial metrics are stronger than ever. From Wikiinvest:
“In FY2010, RIM reported revenues of $15 billion, a 35% increase over the previous year, as well as a 65% YoY growth in its subscriber account base and a 40% YoY growth in its mobile phone shipments[2]. In 1Q11, RIM witnessed revenues of $4.24 billion, a 24% increase from 1Q10’ $3.42 billion in revenue. 79% of this revenue can be traced to its devices, 16% to service, 2% to software, and 3% to other revenue.”
That does not sound like a company on the brink of irrelevance. Furthermore, their marketshare is continuing to grow while Apples growth has slowed in the past 12 months.
I too am an Apple fan and like much of what they produce, but recognize that this will continue to be a three horse race. (Apple, BB and Android)
An one last point.. Blackberry has made big inroads with the younger generation of late. Walk the halls of an suburban high school; you will see lots of Blackberries because as it was explained to me “That’s what all the cool kids have”.
Regards,
C
Chris,
Thanks for the comment. I agree that it’s premature to pronounce BB dead. I just think it’s a legitimate question to ask.
I’m curious, while RIM’s revenues are up what’s happening with their margins and direct sales costs?
BB’s share of the cell phone market is growing, but there share of the smartphone market is shrinking. As a matter of fact there are several analysts that are predicting that Apple will bypass BB this year or next. I don’t know enough to say that’s accurate, but I certainly find it interesting.
BB is far from dead and it still has a lot going for it. My recommendation (not that they listen to me) is that they should focus on where they are best and grow from there. As I mentioned to Jon, if you looked at IBM’s revenue growth in the 70s, 80s and even early 90s – they were growing. That growth masked an underlying cancer that nearly wiped them out. I hope it doesn’t happen to BB, but I think the possibility is increasing.
Doug
Nice job of illustrating the general concept of product maturity and the “staleness” of the BlackBerry. Your blog prompted me to muse about what I find frustrating about the BlackBerry.
If I were speaking to RIM’s Chief Technology Officer or their Chief Marketing Officer, I would discuss the need to make the devices fit our needs better:
1. Problem with text messaging while driving. Why can’t the Blackberry expand the voice recognition application to make
a) operation of the device itself hands free “Use email” / “Use phone” / “send text message” / “use speakerphone”
b) operation of the applications hands free “read next unopened email”
and so on, eliminating the need to look at / key the device.
2. Problem with phones ringing at unwanted times. Why can’t you use the calendar function to drive ring tones? So if my calendar shows a meeting, then my phone switches to vibrate automatically.
3. Problem with cell phone usage (calls / messages) in locations where one should not (school classroom during finals, church, etc.) Why not create a block signal through Bluetooth or wifi to all phones? The school/church/library/etc. buys the small blocker device and turns it on when needed. (yes I understand that this approach would take 1-2 phone generations to accomplish, but that’s not long.)
4. Make a better headset/Bluetooth/earphones for hands free phoning. The earphones that come with a BlackBerry are crap (and you can’t buy replacements easily), and most Bluetooth devices are crappy, and sound worse than the headphones. Holding a Blackberry to your ear for a while, and it will be all sweaty.
If RIM did this, and made their screens a tiny bit larger, I think they could regain their leadership role (for a while).
Thanks again for your good insights.
Ian, thanks – and welcome.
I think you’ve nailed it. And your ideas are precisely my point. If RIM put their time, energy and maniacal focus into solving the problems of their core fans they’d have the leadership position. And who knows, that leadership may be so magnetic that it attracts others as well.
Great stuff!
We were having this same conversation yesterday internally here, but not about RIM…about Starbucks. In Chicago they’ve added wine and beer to their menus. They just changed their logo and took “coffee” out of it.
Methinks it’s another company teetering on the edge of Good to Great to Dead.
Gini,
I completely agree. I actually wrote about Starbucks (I called them McStarbucks) and what they should do.
More room for us though, eh?
Really disappointed in the Blackberry! It’s not just me that thinks the blackberry is dead! Check out this UK rapper GT Solo’s song about them “BB is Dead” http://youtu.be/hZYiE-cRSxQ so funny!
I do agree that RIM should stop playing other people’s game and go back to basics as to why they became successful in the 1st place. I’m a BB user and quite frankly I don’t really care too much for games and apps that I can access on my laptop. BackBerry is a great business phone but when it comes to apps Android and iPhones are just miles ahead.
Hello
I’m not sure if you would read this, but I need some suggestion about new Blackberry Bold 9900, and iPhone 5. Currently I live in Japan but I go to school in States. And I only come back few times. And I am thinking of getting either BB 9900 or iPhone 5. I am heavy text-user, and not so much of calling.
I really like new Blackberry Bold 9900, but I’m also worried that RIM is a dead company, and would lose the shares in few years.
What would you say? And do you have any information about iPhone 5 getting unlocked?
Thanks