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BlackBerry phone producer made strategic mistakes. Can you avoid them?

Do you like technological gossip? I do. I came across such a rumor. Blackberry (BB) returns in the year 2021 with a terminal with a physical keyboard QWERTY and 5G network support. The phone is to be based on the Android operating system.

Why do I think this is a rumor? Because pretty soon after this news, I found another announcement. The Chinese company TLC ends cooperation with BB and stops producing its current line of Android-based BlackBerry phones.

These two notices, remind me of the story of the BlackBerry phone.

Working with mobile operators, I had the opportunity to learn a few secrets of RIM’s products. I also witnessed the spectacular collapse of the product line of these phones.

This article is dedicated to my wonderful colleague Kornel Zątek, the biggest fan of BlackBerry phones.

Golden times of BlackBerry

BB mobile phones appeared on the market around 1996-1997. 
The first successes in sales and winning the BB market began around 2004-2006.

Złote czasy Jeżyny, Prosto i bezpośrednio o telekomunikacji, Andrzej Miłkowski
Golden times of BlackBerry, Source; CrackBerry Troy Tiscareno

See the picture above. It did not exist then, I repeat, neither Android nor Apple’s IOS did exist yet. At that time, 2G networks were dominating, and 3G networks were slowly emerging.

There were no touch screens, and not even all terminals had color displays. BB showed the first color models in 2003-2004, and touch screens in 2008.

Between 2006 and 2012, BB became the dream phone of most businessmen and an unattainable dream of ordinary users. Unsurpassed, because the products of this brand were sold mainly as terminals for business customers. At its peak in the US, BB held approximately 50% of the terminal market.

This great career, however, collapsed in 2010, which will be discussed soon.

Let us recall the greatest advantages of these devices.

The biggest advantages of Blackberry phones

What BB won the hearts of users was access to the email box, and not just any, because it was encrypted.

Today it sounds archaic, but in those years, users struggled with data transmission settings in the 2G network. It was hard to keep a stable network connection, and where to think about reading e-mails while traveling?

BB phones changed that state. They allowed the user to feel freedom and check e-mail during lunch or business trip.

This is not the only advantage. The phones had very good physical keyboards. The keyboards looked like miniature computer keyboards. Full ergonomics and compatibility with the QWERTY system. 

I did a short survey on LinkedIn, which is best remembered by BB users. The number one in the memories is of course the keyboard.

Ankieta linkedin, Prosto i bezpośrednio o telekomunikacji, Andrzej Miłkowski
LinkedIn survey

You want to not believe it, but people envied BB users for their miracles, which were fabulous, very expensive, and not for everyone. These were gems for the chosen ones.

Obama Phone, or Blackberry at its best

In the best period of its presence, RIM was so sure of its dominance (USA 50% of sales) that it decided to create its products as luxury solutions.

Obam blackberry phone, Prosto i bezpośrednio o telekomunikacji, Andrzej Miłkowski
Obama’s BlackBerry

Famous people like President Obama or leading Hollywood names took photos with BB phones, boldly showing the outline of the product. BB opted for a characteristic design and acted exemplary in this matter.

But what went wrong with BlackBerry phone?

In 2010, RIM’s huge problems began and their flagship product BB stopped selling well. Worse, customers have started swapping BB phones en masse with smartphones.

Let’s take another look at the chart showing the phone market in that decade.

Udział w rynku sprzedaży telefonów komórkowcy, BlackBerry 2009-20015, Prosto i bezpośrednio, Andrzej Miłkowski
BlackBerry sales market share 2009-20015

The figure shows who started taking over the mobile, Android, and Apple markets.

In 2010-2012, the era of Symbian and RIM operating systems practically ended, and with them, two great brands of the mobile market passed into oblivion: BlackBerry and Nokia.

What’s interesting, both of these companies made the same mistake. They did not believe that mobile phones based on open operating systems would become the new power of the market.

BB firmly believed that access to email, with secure and encrypted communication, would suffice for customers. They did not anticipate that within a few years all customers on the market, not only business ones, will be able to choose from any number of equally secure email applications.

The same happened with Nokia. However, the company simply does not believe in the power of an open operating system and the growth of a giant third-party application market. External means not created by Nokia.

Was that the only and main sin of BB in terms of strategic development of the company?

Problems with secure access to Blackberry email

The second, or I would say, the first problem turned out to be the issue of breaking the promise of maintaining email correspondence between users.

In August 2010, the news came like a bolt from heaven: RIM had agreed that Saudi Arabia would receive server access through correspondence from its residents.

The myth of the product ensuring full discretion of communication has fallen.

At that time, it was a shock for the market.

Had such a message come out today? We already know the secrets of the special services thanks to Snowden’s reports. It revealed the much larger and brazen actions of the US and de facto secret services in many countries.

Would it impress someone?

Not, but it wouldn’t prevent BlackBerry from inevitable collapse.

Powerful, open-source Android and IOS systems dominated the market. Today, almost all brands of mobile phones use them.

Did the operators cry for Blackberry?

There are users like the aforementioned Kornel who cannot imagine their lives without BB products and I understand that.

Today, a huge crowd of iPhone users would jump into the icy water behind their iPhones.

Some can watch BlackBerry fall with slightly hidden satisfaction. Why?

I will tell you a secret from that time.

Companies on the wave, companies dealing with cards in the market, as it was in those years with BlackBerry, can afford to dictate conditions to business partners.

It was no different from our hero in the article.

First, a mobile operator applying for a contract with this Canadian company did not have a chance to invite a company representative for interviews and agreed on the terms of the arrangement. He had to stand in line.

Secondly, if the talks were started, it turned out that the operator was burdened with most of the technical, financial and marketing costs. Conditions cannot be changed. With the word “Take it or not.”

Do you think BB changed his attitude towards partners after he started feeling trouble?

Yes, they did, but it was too late. The milk has spilled.

I am convinced that no one on the operator’s side is crying for this supplier. As with Nokia from that time, which treated operators in a similar way.

However, is this an isolated case? Of course not. This is what many “strong” players do in many markets.

Strong? In my opinion, just the weak.

This issue brings to mind one of the most important reflections in this article, which is the issue of strategic mistakes made by companies.

Strategic mistakes in conducting responsible business

BlackBerry was firmly convinced that only they could create and develop secure email systems.

They were so sure that they didn’t even agree to create a BBM (BlackBerry Messenger) app for Android. This would perhaps be their last chance to survive on the market for at least services as an application.

Such conduct is, in my opinion, proof of the lack of a broader view of the market by wider competition and market stakeholders.

I have come across this approach many times in our industry. For a mobile operator, another operator is a natural competitor, while the real competitor is OTT (Over The Top) service providers like Facebook, Google, etc.

BB did not notice further competition and missed the threat.

There are many examples.

The same can be assessed from the user’s perspective. So what if it is more convenient to type on a hard QWERTY keyboard if such a keyboard takes a quarter of the screen to watch movies or play games? Besides, if you can run many applications on such a smartphone that make life easier, why not use it?

Finally, let’s look at what happened to BlackBerry and Nokia.

Blackberry today

To my surprise, the company did not collapse and from the revenue perspective, it is doing well.

Sytuacja BlackBerry w 2020 roku, Prosto i bezpośrednio Andrzej Miłkowski
BlackBerry 2020

Today it is a company specializing in IP device protection solutions, such as IoT.

In 2020, their revenue was $ 1.04 BILLION. Not bad, especially for a cybersecurity company that once lost its reputation as a secure email provider.

As you can see, reputation can be rebuilt, in this case in a new market.

And what is Nokia doing today when it comes to smartphones, those that it did not believe in the past?

Nokia’s smartphones in 2021

Nokia became a mobile phone manufacturer again, based on the operating system that was its “executioner”, ie Android.

As you can see, the new management gives confidence to open operating systems and flexes its muscles by designing beautiful 5G phones in cooperation with prominent lens suppliers, the Zeiss company.

We love competition, right? Competition is fun for customers.

At the end

How would I summarize this story?

“ Bigger can do more but not if looks himself in the mirror. “