Summarizing the tale of the rise and fall of mobile device and services maker BlackBerry as “changing too little and changing far too late” is probably as good as any way of succinctly capturing the sense of the huge fall from grace of Canada’s biggest technology company, originally known as Research in Motion or RIM.
And a huge fall it is, from almost owning the mobile devices market a few years ago to becoming a bit player in the past year or so as the company’s leadership tried in vain to figure out how to evolve in a marketplace that literally changed in front of its eyes.
Last week, BlackBerry reported a quarterly net loss of nearly a billion dollars, the elimination of 4,500 job positions – almost 40 percent of its global workforce – and its sale to a consortium led by Fairfax Financial, its biggest shareholder, for the fire-sale price of $4.7 billion (about £3 billion, €3.5 billion).
By all accounts, the tipping point for BlackBerry’s crash to the ground was the disastrous sales performance of its Z10 smartphone launched in January 2013. Sales were so poor that the company had to write off $934 million in Q2 – the majority of the overall loss it reported last week.
Very nice, I thought, but hardly a stand-out in a marketplace where the excitement in consumers’ eyes (and, increasingly, business eyes) lay in the iPhone, Samsung Galaxy and a host of other cool brands.
From the Z10 display, I moved across Selfridges lower mall area to a Samsung stand showcasing Galaxy S3s and other devices. I noted this stand was packed with people, including sales assistants, all touching the devices and talking about them. Contrast that to the Z10 stand – not a single person there, not even a sales person.
A microcosmic experience no doubt, yet such experience must have been repeated everywhere.
Canada’s Globe and Mail newspaper has a story this weekend that makes for fascinating but sober reading on the rise and fall of BlackBerry with a comprehensive account of a siloed organization rift with leadership rivalries, dysfunction and eyes off the ball.
Here’s an excerpt:
[…] Finally, close to six years after Apple unveiled the iPhone, the long-awaited BlackBerry 10 made its debut at a glitzy launch event in January, featuring singer Alicia Keys as the company’s “global creative director.” It was a minor detail in a much larger story, but the made-up title and meaningless job irked some who wondered why the company was distracting itself with celebrity endorsements while in the fight of its life.
The Z10 device itself won a number of positive reviews. The New York Times’ David Pogue, who previously had predicted that the BlackBerry was doomed, began his review: “I’m sorry. I was wrong.” But eight months later, it’s hard to see the launch as anything other than a total business failure, given the sheer volume of unsold smartphones now written off.
The marketing campaign was confusing and vague: An ad that ran during the Super Bowl failed to explain what made the product distinct. A source close to the board said directors weren’t shown the ad before it ran, and some didn’t understand the content or the slogan, “Keep Moving.” There were no lineups, and no buzz for the product – nothing like the frenzy of publicity that seems to surround the launch of each new version of the iPhone.
Once again, the market had shifted, and there was little demand for the Z10 in an era where sophisticated operating systems were commonplace and phones were getting cheaper. The one advantage the BlackBerry may have had over its rivals – a physical keyboard – wasn’t present in the first model to hit the market.
“The only people still clamouring for a new smartphone from BlackBerry were in it for the keyboard,” said S&P’s Mr. Moorman. “Then they come out with a touchscreen. Anyone who wanted a touchscreen was already gone.”
As it turns out, both Mr. Balsillie and Mr. Lazaridis [the co-founders and co-CEOs] were proven right. It was hard enough to compete in a commoditizing smartphone market. Leading with the wrong product on top of that only made BlackBerry’s task more hopeless. Mr. Heins’s [current CEO] strategic errors only compounded the challenging situation he had inherited.
I’ve seen some people blaming the marketing, PR and other communication for BlackBerry’s woes and ultimate fall.
Contributory factors, to be sure. But if your corporate and leadership foundation is at best shaky, no amount of marketing, PR or other communication will save you.
The Globe and Mail’s story is a compelling one and terrific story-telling. I can see a TV mini-series coming.
“Inside the fall of BlackBerry: How the smartphone inventor failed to adapt”: Globe and Mail, September 26, 2013.