Sunday, May 29, 2016

The downfall of Blackberry/Research In Motion

The demise of Research In Motion, proprietor of Blackberry, is very apparent throughout the five competitive forces. From 2005-2010, RIM continuously grew their market share in the smartphone realm. The low consumer demand and inability to gain bargaining power sealed the fate of Blackberry smart phones. Nowadays, Blackberry owns less 0.2 percent of the market share.

For many years, Blackberry smartphones was at the peak of its popularity amongst consumers and businesses. The ease of Blackberry’s scroll wheel, keyboard, and secure enterprise network were key factors that attracted the mass crowd. In 2007, new entrants into the smartphone market quickly gained popularity. Google’s Android and Apple’s iPhone were touchscreen smartphones. This technology did not exist on Blackberrys. The Apple iPhone was known as the Blackberry Killer. However, due to the limitations to the AT&T network for iPhone, Blackberry did not truly feel threatened by iPhone initially. 2011 was RIM’s highest revenue year. This was also the year that the Apple iPhone expanded to multiple networks outside AT&T.  iPhones and Androids became the substitute for Blackberrys. Since 2011, RIM’s revenue decreased with the threat of substitute products being more well received than Blackberry devices.

As sales for Blackberry dropped from 2011 onward, the bargaining power of suppliers also increased. The more RIM buys in bulk; the more discount they are able to receive from the suppliers. With declining sales, RIM had to order less parts and the costs rose because the suppliers had more bargaining power. Consequently, Apple and Android OS phone makers were able to leverage more sales into controlling of their supplier pricing.

Similarly, with the bargaining power of the buyers, cell phone carriers were able to find weakness in RIM’s declining sales. RIM needed carriers to support their Blackberry devices. With less demand on the devices, the carriers were able to control the bargaining power over RIM. Carriers such as T-Mobile stopped carrying Blackberrys in 2013.

Competition in the smartphone business is extremely fierce. Manufacturers constantly try to outdo one another with better cameras, better software, or gimmicky features. Throughout the years, Blackberry always relied on their keyboard, scroll wheel, and enterprise servers for secured data. In the current world, social media is a prevalent way of connecting with other peers. As competitors increased megapixels and created better cameras, Blackberry did not innovate. Competitors improved software and user interface while Blackberry used the same OS with minor feature updates for years.

As I read through Porter’s Five Forces, I immediately related the downfall of RIM to the reading. The CEOs of RIM could’ve benefited from going back to the basics and reviewing the five forces. Unfortunately, Blackberry owns less than 0.2 percent of the smartphone market now and they are making Android phones.

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