Monday, July 27, 2015

BlackBerry and the smartphone industry

Once seen as one of the main “inventors” of the smartphone industry boom, BlackBerry Ltd. (RIM) now sits as a small, lesser-known player in a world surrounded with mobile technology. Multiple changes in leadership and on the board were tricky for the company who openly opposed many of the “new” technologies that were springing up in the mobile business, not thinking that they would be successful or last long.

In 2007, after the release of the first iPhone and Apple’s newly configured relationship with AT&T, Verizon had approached RIM/BlackBerry to make an “iPhone killer.” The end result was the BlackBerry Storm, which had been thrown together almost haphazardly, was months late, and was not successful. Customers complained about the awkward touchscreen and how slow and buggy it was. Despite the failure of the device and Verizon’s eventual move to team with Google’s Android operating system (including a massive marketing campaign aimed to still support BlackBerry products), BlackBerry was still seen as expanding and successful. But the success of the Android devices, instead of killing the iPhone, ended up taking market share away from other companies like Palm, Microsoft, and eventually RIM.

Now that the smartphone industry had really taken off, RIM struggled to keep up. They invested in hardware upgrades, despite knowing that there was growing interest in software applications. And they immediately failed to follow Principle #1 as written by Clayton M. Christensen in The Innovator’s Dilemma (1) regarding a company’s dependency on customers by saying:
“The problem wasn’t that we stopped listening to customers,” said one former RIM insider. “We believed we knew better what customers needed long term than they did. Consumers would say, ‘I want a faster browser.’ We might say, ‘You might think you want a faster browser, but you don’t want to pay overage on your bill.’ ‘Well, I want a super big very responsive touchscreen.’ ‘Well, you might think you want that, but you don’t want your phone to die at 2 p.m.’ “We would say, ‘We know better, and they’ll eventually figure it out.’ “ (2)
RIM also had the added bonus of attempting to satisfy two largely different customer bases at the same time—which resulted in neither being satisfied. When they introduced the idea of adding such features as a camera and game and music applications, they had received huge backlash from corporate customers who did not want them. Despite adding these features anyway, customers complained about the clumsiness and appearance of the apps—and Apple and Android continued to dominate the market.

After hiring an outside company to build a new OS from the ground-up, RIM began its push for the BlackBerry 10, and they were already behind. The original design called for a full touchscreen, but that was met with some distaste from leaders in the company who continued to see the [somewhat] success of the BlackBerry 7, which included a keyboard. The two CEOs (an uncommon business practice) clashed: one believed the market was pushing towards all-touchscreens; the other believed that hoping customers would embrace yet another touchscreen was too risky. This resulted in not just one, but two phones to be released—the Q10, with a keyboard, and the Z10, an all-touchscreen version to be release first. In January 2012 the phones were released, but market observers agreed that the products were two years too late (and six years after the launch of the iPhone).

RIM realized their missteps a bit too late, much like the other companies (especially HP and the Kittyhawk venture) mentioned by Christensen in The Innovator’s Dilemma. The Z10’s release was met with generally positive reviews. But they had mass-produced the all touchscreen version of the 10 and, in a world of touchscreens, they found themselves with a large volume of unsold phones just a few months after the initial release. Having put the device out so late in the game, the market had already shifted yet again to faster, cheaper devices. RIM had failed to cater to its customer base that did want keyboards by putting out a device that was substandard in every other way.

Smartphone and mobile technology could be seen as a short-term disruptive technology that turned into a sustainable technology. But companies like RIM whom were previously successful with devices that were now outdated, struggled to keep up with the demand of mobile technology despite once being a frontrunner in the industry. Instead of adapting to the changes with their business plan that already worked, RIM pushed the boundaries in a clumsy manner that ultimately left both their customers and them dissatisfied.

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(1) Christensen, Clayton, M. Introduction to, and Chapter 7 of The Innovator's Dilemma. 1997. 
(2) Silcoff, Sean, Jacquie McNish, and Steve Ladurantaye. Inside the fall of BlackBerry: How the smartphone inventor failed to adapt. The Globe and Mail. 27 Sept 2013. http://www.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602/?page=all

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