Blackberry: the standards they have a changed
The saddest part of yesterday’s news regarding Blackberry’s announcement that it is to “explore alternative strategies”, a pompous way of saying something like: this can’t go and we have to find a way out, is that the news didn’t really come as a surprise to anybody.
We are talking about a company that I know very well and with which I have had a very long relationship: for quite a long time I was a user of its products, and which I usually had access to prior to their launch. I literally have a drawer full of Blackberrys. I have attended their annual conventions, I have had the opportunity to interview the company’s founder, I have spoken about their strategy on many occasions with the company’s directors, and I have even helped train, on occasion, the company’s staff.
Blackberry’s long-running crisis reveals what for me is now the most common reason for the decline of hegemonic companies associated to greater or lesser degrees with the technology sector (that’s to say, all companies): what I call the “tragedy of the changing standard”. These are companies that at a given moment in their lives become leaders, that are capable of leading a revolution or a redefinition that for a certain period of time guides their growth, but that are unable to recognize when the standards of their users have changed.
The fall of Blackberry, formerly known as RIM, is linked inexorably to one date: Tuesday, January 9, 2007. On the morning of that fateful day, Steve Jobs walked up on to the stage of the Moscone Center in San Francisco to James Brown’s I Feel Good, and announced the launch of the iPhone. From that moment on, or to be more specific, from June 29 of that year, when the device went on sale, the smartphone landscape changed forever. Standards changed. We went from a market dominated by the keyboard, by actual functionality, from a carrier- and corporate-dominated market, to one ruled by touch screens, applications, maker-dominated, and a consumer market: a brutal, overnight change. On July 9, 2007, after experimenting with the iPhone, at a presentation I was giving at a convention organized by RIM’s European sales network I spoke in front of a huge screen shot of an iPhone behind me and a caption underneath that ran: “Take care with the iPhone: it’s not a phone, it’s something else…”
Few people in the audience got the message. As far as RIM was concerned, Apple was not the competition. It didn’t meet its standards. It was not appropriate for the corporate market, it wasn’t safe, it represented a diametric change in relation to carriers… As far as RIM was concerned, the iPhone wasn’t a threat, because the market’s standards they understood were different. A year later, in a long and juicy interview with founder Mike Lazaridis, it was clear the mindset remained: despite the growing success of the company in the consumer market, the client continued to be the company, the products continued to be designed to meet the criteria of a CIO or a CTO who valued security and control, and the business continued to be selling the Blackberry Enterprise Server, and if somebody wanted to design applications for a Blackberry, then they would have to pay for a somewhat costly license, use pre-established software, and seek the company’s approval.
Meanwhile, in the real world, things had changed: consumers were buying telephones by the shedload, who saw them as fashion accessories, and who upgraded them with surprising speed; iPhone sales expanded exponentially, while at the same time, there were no shortage of gunslingers that were going to run iPhone out of town. Google launched its iPhone alternative based on an open platform that today controls around 80% of the market. But in Blackberryland, it was as if nothing had changed. Nobody could understand why sales were falling. For some strange reason, the market was buying devices that defied logic, prizing factors and qualities that nobody had cared about before, and following absurd and quickly changing criteria.
RIM’s sales continued to fall, and successive launches were little more than timid half-measures: improving the camera that the company had previously refused to install because it was a security threat in the corporate world, redesigning the keyboard a thousand different ways, growing the operating system until it was little more than a series of sticking plasters that could no longer handle the erratic use of a user determined to install and uninstall applications over and over again while staring at an annoying little hourglass…
In its increasingly desperate bid to meet the changing standards of the market, the company tried almost everything: different shapes, touch screens, trying to attract applications creators… but always one step behind a market that just a couple of years earlier it had helped create, but that had now changed to the point that it was no longer recognizable. A phenomenon in many ways similar to that which hit another victim of changing standards: Nokia, but with a difference. Sometime in 2010, as it slumped further downward, RIM suddenly found that its device was being taken up by a younger public, different to its usual buyers. For a while, sales looked like they were picking up.
Suddenly, it seemed as though Blackberrys were being given away in schoolyards. But despite the company’s efforts, it failed to recover its former dominance. As soon as other phones were able to match its prices, while other more open applications stole its thunder, the decline continued.
Quite simply, Blackberry was too late. The new operating system, which is meant to be something different, means that former users no longer recognize it, as well as bemoaning its lack of applications.
At the same time, apps designers see no reason to adapt their products to Blackberry’s new platform, while efforts to use Android apps come up against fine tuning problems such as control functions or the size of the screen. The strategy of cuddling up to carriers, despite a costly launch, Alicia Keys included, simply saw thousands of unsold devices returned to the company’s warehouses.
Yesterday’s events, as said, surprised nobody. Downward spirals are hard to pull out of. Blackberry’s share price has plummeted, its market share is negligible, and the future may well see an alliance or merger with another company, or perhaps its sale to a rival, an attempt at reprivatization, or a garage sale with some of its parts such as QNX or the patent portfolio.
The future looks bleak for a company that was once a potent symbol, as well as an economic driver for a region of Canada, and that could have been saved if it had known how to adapt to changing times. Tragedies are no less tragic just because they unfold before our eyes. Standards change, and the company that had done so much to define them quite simply didn’t see what was going on under its nose.
