Blackberry was one of the bricklayers of the smart-phone revolution that we witness today.

However, even after being one of the first players in this segment of the market, and having a better standing than other companies, today, it is on the verge of an inevitable collapse.

What triggered this crash of one of the biggest companies of the 2000s?

Well, as with anything, the answer is not as complicated as it seems to be.

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                              Picture : A shot of the iconic logo of the blackberry brand

BACKGROUND:

In 1984, two Canadian engineers found a company called Research in Motion. 

The Company initially did projects of various kinds. Be it designing LED systems for GM, and even a film editing software that won an oscar.

In 1989, Rogers company contracted them to make interactive messaging services, giving RIM first-hand exposure to messaging services.

In 1996, they introduced their first two-way pager.

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                                  Picture: The first pager introduced by Blackberry

They kept modifying the designs, adding screens, and different features to the pager.

Finally, after six years, they introduced their first phone. 

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                                                        Picture: BlackBerry 5810

Moreover, it was the first of its kind. Complete with features like E-mail, web browsing, text message, and the likes, it took the market by surprise, and was an instant hit!

The Company catered to the needs of the business class people. Designing a device, complete with keypads, from which they can do office work, even when they were not in the office. 

E-mail services, coupled with the option of Web browsing, made the device a ‘small computer,’ with giving an additional level of security to the operations.

The new device was taken quite well by the target market, i.e., the business people. Moreover, the Company wanted to build into that image.

SUCCESS STORY:

Blackberry Messenger:

On August 1st, 2005, Blackberry introduced something which was going to affect a significant chunk of its prospects and success. The blackberry messenger, more commonly known as the BBM. 

It was a proprietary mobile instant messenger and video-telephony application included on BlackBerry devices that allows messaging and voice calls between BlackBerry OS, BlackBerry 10, iOS, Android, and Windows Mobile users.

Nevertheless, BBM was more than a messenger. Blackberry concentrated on the privacy concerns of the users, and the software was made, keeping them in mind.

Gradually, having a BBM account became a status symbol. The instant messaging to and fro from friends and colleagues to each other became something that everyone was doing. 

Thus, Blackberry’s sales arose.

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                                                            Picture: BBM logo

In the very next year, Blackberry introduced its iconic trackball, a rectangular button in the middle of the phone through which one could navigate through the device, acting just like a cursor would do for a computer. Moreover, the customers got hooked on it.

In 2006, when the grip of handheld computers in the Global Market was getting tighter by the day, Research in Motion’s Blackberry also grew at a very brisk pace, having a global market share of over 20%

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                         Picture: A blackberry phone with the QWERTY keyboard

At its peak, the Company sold 50 million units of phones and held 50% of the American market.

In 2007, the share price of the Company peaked at 236 dollars, with its turnover being 3 billion dollars for the same year.

It was the same year in which Apple launched its first I-phone.

The event, at the time, did not make Blackberry too unnerved. However, in the long run, it would lead to fatal ripples in the Company’s operations.

 THE I-PHONE EFFECT:

On January 9th, 2007, Steve Jobs (1955-2011) took to the stage of the Macworld Conference & Expo. He announced that he was going to introduce three revolutionary productsA wide-screened I-pod, A revolutionary mobile phone, and a breakthrough internet communicator. 

As the vast crowd sat there, a little confused, yet excited, Jobs went on to say that these were not three separate products. Instead, all rolled into one device. That device was to be called an I-phone. A full touch screen mobile phone.

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                             Picture: Steve Jobs introducing the first I-Phone

Mike Lazaridis, the founder of Blackberry, was at the gym when he saw the TV report on the launch, and he was a little worried, so he talked to the Co-CEO, Jim Balsillie, who assured him, by saying- “It is OK—we will be fine.” 

Blackberry (then, Research in Motion’s) team of executives did not give much attention to I-phones for months in the beginning. They did not see it as a threat to their core business, which was targeting the Business Class people and concentrating on battery life and performance more than style.

They believed that the new Company could not possibly perform with the same level of perfection that Blackberry could, due to its broader focus on design and less on battery life, lessening cost, etc. 

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                         Picture: The major competitors. Apple and Blackberry

Moreover, they were right even (albeit for a short time), initially, after the entry of I-phones in the market, the sales of the Company did not plummet. 

Blackberry phones continued to sell, due to some reasons:

The first was the price factor. While Blackberry phones sold for around 299 dollars, I-phones started at the high price of 499 or 599 dollars 

Further, the performance was not as excellent either, and customers, who were used to Blackberry could not deal with the sluggish working of the device.

One of the major issues was that of newness. The absence of the keypad was something that the consumers could not get used to right away, and the business officials continued to work on their well-trusted and well-liked devices. 

Launch of I-Phone 4:

Nevertheless, Apple was not one to back down. In June 2010, it planted its second punch to Blackberry by launching the I-phone 4, and this proved to be the knockout.

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                                                         Picture: I-phone 4

Previously, in 2008, Blackberry tried to enter the touch screen market, and launched its first touch screen phone: The blackberry storm. And it was not taken well by the Critics. Almost all devices sold in the first year had some issues with them, and this put up a dent in the Company’s name.

Furthermore, there was rising competition in the smart-phone industry with new players like HTC, Google, Samsung, coming to the forefront.

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               Picture: Graph of annual shipments of both companies’ products

Thus, when Apple launched the I-Phone 4, its sales immediately soared.  

It surpassed the Blackberry sales for the second time in history, but this time, it stayed there. 

Blackberry could not cope up with the competition. It tried to diversify its products by offering various designs, but none of them were taken well by the market. 

The Global market share of 20% in 2007-08, fell to near about 5% in 2011, which kept on declining. 

Market share.jpeg

So… What was the reason, exactly? 

Even after having to go through this fate, the Company believed that its customers would wait for it, and thus it continued with the basic structure of its phones believing that, eventually, its sales will be back on track.

They did not. They had moved on!

Out of the various flaws that the Company committed, one of the major ones was its lack of innovation. 

Even when at its peak, the Company did not look to expand its customer base, and was happy with what it had.

While its competitors were introducing new products regularly, Blackberry kept on with the idea of launching one product and gradually making improvements over time.

 The market had moved on from this ideology. They did not realized that!

In 2016, TCL bought the rights to the branding of the Blackberry phones, and so, the Blackberry phones are still produced, with the last one being Key 2 Le

But the Company does not seem to learn. The whole of 2019 has passed without another Blackberry phone being introduced.

Blackberry under-estimated its competition and focused more on itself than the market around it. 

In hindsight, it looks like a huge mistake, something which the Company should have foreseen. However, was it so obvious?

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