BlackBerry smart phone was launched by Research in Motion
(RIM) in 2001 and RIM created a category of devices that allowed people to send
& receive email reliably when away from office, easy to use, long battery life, multiple mailboxes at once,
web browsing capability, traditional PDA functions like calendar, address book,
etc and was an example of the third principle of Blue Ocean Strategy:
Reaching beyond existing demand. BlackBerry was a new type of wireless handheld
solution for companies and it created an uncontested market space with in the
enterprise segment and companies saved time and money because employees can
access email almost from any place at any time without having to go back to the
office. RIM was able to reach beyond existing demand to unlock a new mass of
customers (B2B) that did not exist before and aggressively
partnered with wireless carriers to expand availability, with 100,000
installations of BlackBerry Enterprise Servers worldwide and currently has
agreements with about 475 carriers and distribution channels in over 160
countries. In April 2009, RIM launched BlackBerry App World, a virtual
storefront that collects BlackBerry applications in one central location and
developers keep 80% of what they charge for their programs.
Source: Gartner
With its disruptive Product
offering and unique blend of service and hardware solution the number of units
of Blackberry sold raised from 500,000 in 2002 to 47million in 2010 and 38
million units in 2011 till third quarter. As of October 2011, there were seventy million subscribers worldwide to
BlackBerry.Blackberry had become a cult device like Apple products and
Blackberry was a must have device for all the C level executives and Top
Managers in the organization and in fact Blackberry has become an addiction
(symptoms included constant checking of emails, need to hold the device always,
etc) that affected many professional and non-professional users of the device. Blackberry
had become a status symbol for business leaders, managers and other
professionals as the device had features like push email, instant messenger and
easy use contacts and calendar that sync, etc and Blackberry owners liked to
flaunt their device and realized a need to constantly stay in touch with their
work. Business organizations and governments bought Blackberrys for employees
and profited by employees using the devices. Many fortune 500 companies and US
With such a huge corporate success RIM started to focus on
consumers segments along with its global expansion into other countries. The
initial models of Blackberry 5 & 6 series were black & white integrated
phones. The 7 series were the first color phones and 71 series are the sure
type phones without QWERTY keyboards. The 8 & 9 series phones were the most
consumer friendly models that had more features like other phones with better
screens, camera, media player, touch screens, etc. RIM also started focusing on the consumers
with the launch of Blackberry Pearl model in 2006 as the consumers were not
attracted earlier because of lack of features. Pearl
RIM had seen its Blackberry new subscribers came from the
non business crowd like Teens, who loved BlackBerry Messenger and company
believed for continuing to grow in the crowded U.S. market is to develop
targeted products for specific groups of customers and hence released many
models of its seven series of devices which also caused confusion to the
consumers and developers could not develop apps. RIM announced the Blackberry
Curve 8520, aimed at social media maniacs with buttons that allow users to
upload media directly to YouTube and Facebook. RIM offers a wide range of devices that are highly subsidized by wireless
operators as mass market consumers are more influenced by price than early
adopters and this had led to the low average selling price even below RIM
expectations. RIM expected to recover the revenue through data services and app
sales. RIM also works closely with the wireless operators and it designs the
products and service offerings as per their demand. One example is when
operators wanted a device to counter iPhone Blackberry launched Blackberry
Storm with sensory touch screen keypad. The overseas market other than US
Reasons for
Blackberry down fall
Source: Gartner
Despite the fact that RIM is selling more units of
Blackberry every year but its market share of the overall smart phone market is
coming down. Android is growing at close to 900% YoY followed by Apple 90- 120%
YoY in last two years. Android is seeing phenomenal growth as smart phone
makers like Samsung, Motorola and HTC are flooding the market with more and
more devices running android at all the price points. Apple is launching newer
versions of iPhones with added features, functionality and millions of apps in
its app stores. Apple generally focuses on the high end smart phone market that
can afford to pay premium for the device but it also changed its strategy
recently and is keeping iPhone prices near to the competitors high end models
and started to offer smart phones at lower levels as it started selling its
iPhone 3gs device free with a contract. This strategy of Apple had started
affecting Blackberry and is also expected to affect the android phones too. RIM
is not able to sell more units as Blackberry is perceived to be more of an
email and messaging phone with weak web browser, few apps, poor media player
for music & videos and ultimately poor web experience when compared to
android phones and iPhone. The recent phones launched based on the Blackberry 7
OS did not match the consumer expectations. Blackberry is no longer in Blue
Ocean Market as it was with email phone for Business consumers but it is now
following Apple iPhone and Google Android phones in a Red ocean.
Post economic recession, Businesses had started encouraging
employees to buy smart phones and employees are more interested in buying
iPhone and other android phones that are laced with superior features, powered
with advanced chips and software and have large number of apps in the appstore
to use. RIM is not able to sell Blackberry to the end consumers as the need of
the consumer has changed towards a complete internet phone that allows them to
access the social media along with messaging and email. Blackberry has only
3000 apps compared to million apps in both Apple and Android stores. Developers’
complain coding for the BlackBerry OS can be a bind, with the API changes, the
diverse specs on devices like screen resolution, form factor and GPS, WIFI and
the touch screen and optimized coding between individual major versions of the
operating. Another reason is frequent outages that are occurring and disrupting
the services for days. Outages are cause of concern not only for users but also
to the corporate customers as they are seeing business losses and communication
problems. There have been apprehensions that Blackberry is no longer reliable
and with severe pressure from governments regarding the server locations and
data there is more concern for corporate consumers.
The co-CEO model is also being questioned. Recently an email
surfaced supposedly from disgruntled executive in RIM that highlighted some of
the key reasons for problems like lack of innovation support, lack of focus for
the top management, failing to listen to the end consumer and understand their
needs and the way the organization is become redundant with inefficient leaders
and lack of quality employees. Even many analysts and other stakeholders are
asking the CEOs to quit and bring in fresh leadership. Recent failure of the
Playbook tablet is another reason. RIM is also losing out its core Enterprise
2011 has been a year of turmoil for RIM as Blackberry is
losing out at a greater pace to its rivals Android phones and Apple iPhones and
the loss is more in the US
RIM co-CEOs believe that the company will regain its market
share next year with the launch of the new device and is committing significant
advertising budgets for pushing the Blackberry devices into the market. RIM
management is requesting patience from the investors and other stakeholders and
it believes it can deliver results as it have strong technology, unique service capabilities
and a large installed base of customers. With wireless operators saying there
is requirement for one more operating system other than the Apple iOS and
Google Android, Blackberry is banking on its QNX OS to deliver the goods as
required by the operators. RIM also needs to work with application developers
and encourage them to develop more apps for their device. Currently app developers
are complaining about the different OS versions and different specs of various
Blackberry devices. Blackberry still has huge install base and it is expected
to hold onto its install base for some more time despite the onslaught from
iPhone and other android phones. RIM is taking a major risk with its delay in
launch of new phones with new operating system and its risks the drastic
erosion of its brand and mindshare with its consumers. It seems as of now every
body lost confidence on the current RIM Leadership and co-CEOs are saying the
transition will revive the company next year.
Discussion Points:
- How did RIM lose its sight of
the market evolution?
- What options do the company
have to revive? ( Product, Innovation, Consumer needs and Software wise)
- How to protect its enterprise market and attract the consumer segment?
- How to tackle the onslaught from Apple iPhone and Android phones?
No comments:
Post a Comment