BlackBerry
From Invertopedia, the encyclopedia of how things fail
BlackBerry was the phone business people carried for email, made by a Canadian company called Research In Motion. Its handset sales peaked in 2011 at almost 52 million devices[2], four years after Apple introduced the iPhone[4]. On September 28, 2016, the company said it would end all internal hardware development and hand it to partners[6][7], and by the end of that year its share of smartphone sales had fallen to 0.0 percent[2].
Contents
The bet
RIM's leaders believed the people who bought BlackBerrys, corporate IT departments and the carriers, wanted what it already did best: secure email, a physical keyboard and a battery that lasted. The iPhone looked like a consumer gadget. In the book Losing the Signal, Larry Conlee, top lieutenant to founder Mike Lazaridis, recalls that it "wasn't a threat to RIM's core business" because "It wasn't secure. It had rapid battery drain and a lousy [digital] keyboard."[9]
When the threat could no longer be denied, the second bet was that a new operating system, BlackBerry 10, with one touchscreen phone and one keyboard phone, could win users back. It launched in January 2013, on the same day RIM renamed itself after its product[1].
What happened
| Jan 9, 2007 | Apple introduces the iPhone, with a touch keyboard and a full Safari web browser, due in the US in June at $499.[4] |
|---|---|
| 2010 | In one quarter of 2010, RIM makes $900 million in profit on $5.5 billion in sales.[2] |
| 2011 | BlackBerry handset sales peak at almost 52 million devices for the year.[2] |
| Dec 2011 | A $485 million pretax inventory charge, driven in part by the PlayBook tablet. Two more follow in March and June 2012.[10] |
| Sep 2012 | RIM says its user base has grown to 80 million, up from 78 million the quarter before.[3] |
| Jan 30, 2013 | RIM renames itself BlackBerry and unveils BlackBerry 10, with a touchscreen model and a keyboard model.[1] |
| Sep 20, 2013 | BlackBerry says it will cut 4,500 jobs and write down as much as $960 million of inventory, mostly unsold Z10 touchscreen phones.[10] |
| Sep 28, 2016 | BlackBerry says it will end all internal hardware development and outsource it to partners.[5][6][7] |
| Q4 2016 | Gartner puts the BlackBerry platform at 0.0 percent of smartphone sales, about 200,000 devices. The brand now lives on through a name license to TCL.[2] |
| Jan 4, 2022 | BlackBerry decommissions the services behind its legacy phone software.[8] |
The kill shot
Its leaders judged the iPhone by their own customers' checklist, security and keyboards, and missed that the people holding the phones had started choosing them.
The iPhone was sold on a touchscreen and what Apple called "the most advanced and fun-to-use web browser on a portable device"[4]. In the Losing the Signal excerpt, Lazaridis notices the browser at once ("They put a full Web browser on that thing"), and Jim Balsillie answers "It's OK — we'll be fine."[9] For a while the numbers said they were. BlackBerry's user base was still growing in September 2012, to 80 million[3], and handset sales peaked in 2011[2], so the turn did not show up in the totals until it was very late.
By the time BlackBerry 10 arrived, six years after the iPhone, buyers had moved on. The 2013 writedown of up to $960 million was mostly Z10 touchscreen phones that failed to catch on with consumers, and corporate customers such as Morgan Stanley were reported to be holding off on upgrading because they were not sure BlackBerry would be around to support the devices[10].
Red flags ignored
- Grading the rival on your own test. The iPhone was waved off as insecure, short on battery and stuck with a bad keyboard, the things BlackBerry's own buyers cared about.[9]
- Totals that hid the turn. Users were still rising to 80 million in 2012[3], five years after the iPhone launched[4].
- Inventory piling up. Charges of $485 million in December 2011, $267 million in March 2012 and $335 million in June 2012, before the 2013 Z10 writedown.[10]
- Customers waiting to see if you survive. Corporate buyers such as Morgan Stanley were reported to be holding off on BlackBerry 10, unsure the company would be around to support it.[10]
The cost
In one quarter of 2010, RIM made $900 million in profit on $5.5 billion in sales. In the quarter that ended in November 2016, sales were $289 million, down almost 50 percent from a year earlier, with a net loss of $117 million[2]. The quarter in which it gave up making phones showed a net loss of $372 million on $334 million in revenue, including $147 million in reorganization charges[7].
Jobs went with it. The 2013 cuts removed 4,500 people from a company that had reported 12,700 employees that March[10].
The inversion
When your customers' own people start buying the toy with their own money, it isn't a toy. Judge a rival by what the people using it want, not by the checklist your buyers hand you, and answer while your numbers still look good.
What survived
The company, as a software business. Chief executive John Chen said in 2016 that "BlackBerry is no longer just about the smartphone, but the smart in the phone"[7], and the brand went to partners: a joint venture in Indonesia[7] and a name license to TCL for Android phones with keyboards[2]. When it shut the legacy phone services in January 2022, BlackBerry said it securely connected more than 500 million endpoints and ran in over 195 million vehicles[8].
References
- ^ “RIM Changes Company Name to BlackBerry”. Bloomberg (Hugo Miller), January 30, 2013, archived. RIM renamed BlackBerry; BlackBerry 10 launch with a touchscreen and a keyboard model.
- ^ “Chart of the day: The BlackBerry's fall to 0.0 percent market share”. Recode (Dan Frommer) via CNBC, February 27, 2017. Gartner: 0.0% share and about 200,000 devices in Q4 2016; sales peak of almost 52 million in 2011; $900 million profit on $5.5 billion sales in a 2010 quarter; $289 million sales and $117 million loss in the quarter to November 2016; TCL name license.
- ^ “RIM shares rise on new phone hopes”. The Globe and Mail (Omar El Akkad), September 25, 2012, archived. User base up to 80 million from 78 million.
- ^ “Apple Reinvents the Phone with iPhone”. Apple press release, January 9, 2007. iPhone introduced with a touch keyboard and Safari browser; US availability June 2007 at $499.
- ^ “Why BlackBerry will stop making its own phones”. The Christian Science Monitor (Gretel Kauffman), September 28, 2016. BlackBerry to outsource all future hardware development and stop designing or building its own phones.
- ^ “BlackBerry Abandons Hardware Business and Pivots Focus to Software”. MacRumors (Mitchel Broussard), September 28, 2016. John Chen's statement ending all internal hardware development.
- ^ “BlackBerry to outsource smartphone manufacturing from now on”. CBC News (Pete Evans), September 28, 2016. End of internal hardware; $372 million loss on $334 million revenue with $147 million reorganization charges; Chen quote; the Indonesian joint venture.
- ^ “BlackBerry's Transformation Journey and Our Smartphone Heritage”. BlackBerry blog, January 4, 2022, archived. Legacy phone services decommissioned; 500 million endpoints and 195 million vehicles.
- ^ “How the iPhone surprised and then crushed the BlackBerry”. Kottke.org, June 2015, quoting the Wall Street Journal excerpt of Losing the Signal. Conlee's "wasn't a threat" and "wasn't secure" quotes; Lazaridis on the browser; Balsillie's "we'll be fine."
- ^ “BlackBerry to fire 4,500, write down $960 million in inventory”. Bloomberg via Bangor Daily News, September 20, 2013. 4,500 job cuts; writedown of up to $960 million, mostly Z10; 12,700 employees; Morgan Stanley holding off; earlier $485 million, $267 million and $335 million charges.