Someday, someone will do an objective case study on BlackBerry’s rocky slide from smartphone market leadership to virtual irrelevance. But, I’m a biased user and devoted follower of BlackBerry and several of the men who have captained the BlackBerry ship, so I’d like to offer a slightly different explanation, derived from my experiences as someone who has closely followed both BlackBerry and US carriers for many years.
My belief, in a nutshell, is that BlackBerry emphasized end-user experience at the expense of its biggest customers and most important partners, US carriers. More specifically, BlackBerry failed to provide products serving 4G technologies, the differentiating service that Verizon (LTE) and AT&T (HSPA+ and LTE), and to a lesser extent Sprint with WiMax and LTE, had invested literally billions to provide to subscribers. This not only broke longstanding and valuable relationships, it opened the door for the rise of Android and first planted the seeds in both consumers and carrier sales reps that BlackBerry, as a brand, was stale, technologically dated, and unable to compete. Earlier this year, BlackBerry finally released a smartphone supporting LTE technology, but the damage had already been done.
Don’t get me wrong, I think the explanations provided by analysts focusing on competition in the consumer smartphone market, app ecosystem, and divided leadership may all have some truth value to them. They are tempting to embrace not just because they are popular, but they are also all currently relevant, meaning each issue identified makes sense given the marketplace as we see it today. My view.
1. BlackBerry grew rapidly rather than strategically
The first BlackBerry device I saw was launched by a company that wouldn’t have been the largest company in my small, rural hometown. The team that conceived it was small, but focused and the device completely disrupted the pager market by providing professionals with what they had previously only imagined, office-like communications on the golf course.
However, the company’s explosive growth was never managed as well as its products. From an outside perspective, you got the impression BlackBerry might have been growing its head count and resources in order to please Wall Street. By early 2011, when a marketplace reckoning became apparent and Wall Street was looking for cutbacks, BlackBerry was no longer the lean, agile, hungry startup I once followed. They had grown with the explosive smartphone market they had helped to create to over 19,000 employees, but were still relying almost entirely on carriers for their U.S. consumer sales funnel. To put this in perspective consider that Facebook has about 5,300 employees. This trend was a considerable drag on resources and greatly limited BlackBerry’s ability to pivot when confronted with competition in the growing and all-important consumer segment.
2. BlackBerry’s failure to support 4G LTE before 2013 disappointed carriers and opened the door for the rise of Android.
BlackBerry bet against a speedy deployment of LTE by American carriers and lost. That loss gave birth to the success of Google’s Android platform, which provided carriers a vehicle to monetize distinguishing network upgrades that cost millions to implement. One carrier partner in particular was tenacious in ensuring that each and every customer understood LTE as the distinguishing characteristic between their new generation tech and aging legacy tech offered by competitors. Verizon threw the full weight of its organization around “Droid” and various Android lines with hardware capable of supporting its claim that the Verizon network was 8 times faster than competing non-LTE networks. As Verizon flourished in metropolitan strongholds, AT&T quickly followed suit by introducing LTE and strongly favoring phones capable of the new technology.
The problem was compounded by the fact that BlackBerry’s strength was in urban America and that’s where much of the LTE deployment first occurred. These metropolitan areas — the Manhattan skyline is closely associated with the “crackberry” movement in my mind — meant that BlackBerry’s core market was confronted with a regular barrage of carrier-sponsored messages implying that BlackBerry devices were dated and stale (as 3G rather than 4G LTE).
3. BlackBerry sees the iPhone’s obvious weaknesses and fails to respond to its strengths.
The initial Apple iPhone was an AT&T exclusive that was pretty much an iPod with a phone. This was before the App Store. But, what the iPhone did have was a beautiful, large, display for browsing and a decent camera. Display and camera are now key drivers of hardware sales.
BlackBerry’s browser at the time of the AT&T iPhone launch was awful to the point of being worthless, but the iPhone offered the promise of “mobile computing” as BlackBerry’s current CEO feels obligated to tout. Mobile Safari was Apple’s “killer app” in that it transformed the way people thought about what a useful mobile device should be. No one challenged that BlackBerry was better for email, not even Apple, but email was old and the force radically transforming society at the time was the world wide web. Had BlackBerry immediately responded with a device that was much better at interfacing with the web and enjoying media (camera, video, audio), the iPhone would likely have been a niche device offering integration with other Apple products as its strongest selling point instead of the disruptive, revolutionary, device it became. BlackBerry’s failure to compete in these key “consumer” areas cemented in consumer’s minds an idea of the brand as dated or lethargic.
Today, BlackBerry offers an excellent browsing experience with a terrific UI/UX and best-in-class HTML5 support. But, the delay in becoming competitive in this area caused serious damage to many people’s understanding of the BlackBerry brand. Even today, I’ll occasionally talk to people who are surprised to hear that the devices allow effective browsing, at all. Likewise, during the 2012 U.S. Presidential cycle a tech advisor for one of the campaigns explained the campaign’s decision not to create a mobile app for the platform by stating incorrectly that most BlackBerry devices don’t include cameras or multimedia features to support the functionality of the app they planned for the campaign.
4. BlackBerry fails to adequately invest in ecosystem development.
Let me make this clear. For every bit as much as BlackBerry offered a great messaging device, BlackBerry was a nightmare for third-party developers. This contrasted heavily with competitors Apple and Google, who both wanted to be to mobile what Microsoft was to PCs, the platform with all the software advantages.
BlackBerry’s legacy OS wasn’t built for 3rd party extension. In fact, I remember friends using BBs without third party apps and enjoying a remarkable stability. I couldn’t resist adding third-party apps and the result was white screens, random reboots, and battery pulls. Foursquare bricked a device for me, once. Apps weren’t sandboxed, so memory leaks and such from 3rd party developers could bring down a device or leave it running poorly. It took too long to introduce BlackBerry App World and decent design guidelines and tools were never introduced for the legacy BlackBerry OS.
This all would have been merely unfortunate, but it turns out people love “apps” more than they love software, phones, email, eating, sleeping, or sex. The limitations of the mobile form factor and mobile processing power required developers to make things beautifully simple — documentation or manuals were almost never needed and apps usually did just one thing as well as it needed to be done. By 2012, “smartphones” were really app players for many consumers… with a phone attached. This design advantage was unanticipated, but has damaged traditionally computing severely with even Microsoft reeling from the popularity of these more limited mobile software solutions. BlackBerry had an opportunity to position itself to ride this trend to the top — it’s not like Apple invented third-party apps — but they failed to invest in that potential and their competitors did. This was particularly unfortunate because they really needed to invest more than their competitors.
BlackBerry needed to push harder than their competitors in this are because the competitors had advantages. Apple had a loyal following of computer users including more than a few programmers who were characteristically enthusiastic about developing for Apple phones. They also had a built-in base of developers from their Macintosh development outreach. Google launched Android within the talented linux community where many had a kind of “free software” ideological motivation for developing for Android. BlackBerry had a strong user base of… lawyers, accountants, investment bankers, and other folks whose time was simply too valuable and their expertise to detached to spend time developing apps.
Instead of pushing harder, BlackBerry’s effort in this area was eclipsed by its rivals. Given that this area is the heart of many people’s mobile experience, today, this failure still stings.
5. BlackBerry acquires QNX
QNX is an older Canadian company that never really found its footing outside of embedded computing (think your washing machine, toaster oven, or car infotainment system). When BlackBerry bought it, after QNX failed to deliver the impact it’s previous owner had hoped for, QNX Nuetrino was a platform that had some superior technical advantages, but many of the same problems that legacy BBOS had. Specifically, QNX didn’t provide really useful 3rd party development tools for the mobile development community. They offered an ancient C/C++ oriented IDE and an Adobe Flash interface. From a user perspective, QNX offered much marketing hype about distributed processing and such, but has failed to provide any additional benefit beyond what launching a new platform on a version of Linux or Android would have offered.
Now, please understand that I’m biased here. I was a huge personal computer fan as a boy in the 1980s and early 1990s. This is when there was a myriad of competing platforms: Atari, Apple, Commodore, IBM PC and Compatibles, etc., etc. By the late 1990s, the scene had changed, there were two large competitors who were eating up all the marketshare – PC and compatibles and Macintosh. I was a devotee of a third platform that had a tremendous, loyal following, the Amiga. Commodore, the company behind the Amiga, folded and Gateway, a large PC company looking to escape their MS/Intel dependency, bought the Amiga assets… and then contracted with QNX to develop a next generation OS. This was the OS that would save us from PC-Mac dominance. And, then QNX dropped the ball. It seems they had overpromised and then blamed the fact that their work wasn’t performant on the PowerPC chip, which Gateway had built their motherboard systems around. In the end, QNX never delivered anything but hype and Gateway spun off the project to stop the bleeding. I was young, but here’s a good history that gels with my recollection: http://www.trollaxor.com/2005/06/how-qnx-failed-amiga.html
Enter QNX and BlackBerry. BlackBerry’s hardware division delivers the Playbook, with a best-in-class effort, but the software and OS are weak and there were still no development tools worth a damn except for Adobe Air, which was losing steam before the Playbook’s release. Thankfully, BlackBerry added their own WebWorks API and browser or the much-discussed tablet would have been a complete fumble on the OS side. As far as I can tell, QNX offered no advantage to end users that a layer over some Linux system like Android would not have offered. BlackBerry took an over 1 billion dollar write-off on Playbooks. Then came Blackberry 10 (attempt #2) and some young upstarts and entrepreuners had been brought on board and they added some cool stuff: A unified messaging center, design guidelines, development tools… but the device was delayed. When it finally came out, the question many asked is what benefit to end users did the decision to go with QNX contribute? There was little answer as the hardware had to be beefed up to 2 gigabytes and the OS never met requirements for release on the Playbook. The most compelling answer in support of the QNX route, I suppose, was “stability.” But, that was soundly refuted by BlackBerry 10 devices suffering random reboots — a totally unacceptable instability in today’s market — for a couple of months following the release of the Z10. This greatly damaged BB10′s reputation with boots on the ground at carriers including Verizon. End result: A billion dollar write-off of Z10 devices. We’ll probably see a billion dollars in unsold inventory of the Q10 and Q5, as well.
6. BlackBerry never should have called a new platform “BlackBerry 10.”
After BlackBerry took so long delaying the release of a new flagship device, they really needed to distinguish it from the aging devices that preceded it. BlackBerry 10 sounds like an evolutionary upgrade, not a new platform or, perhaps, some odd tribute to Apple’s decision to introduce a new OS as the 10th version of MacOS. ”BBX”, aside from the trademark issues, would have been better. But, then again, “Experiate OS”, a random name based on a random word I just made up would have been better. There are still plenty of consumers, IT guys, and carrier salespeople who don’t understand that BlackBerry 10 is really an entirely new approach. The iterative sounding name was a big reason for that.
7. BlackBerry fails to build adequate direct or indirect sales funnels for BlackBerry 10
I’m not saying that BlackBerry needed to make the kind of historic investment that Apple did in retail, but I cringed each time CEO Thorstein Heins explained that there was “great carrier support” for BlackBerry 10 sales in the U.S. Why? I walked into dozens of AT&T stores and found that the phones weren’t even available on launch day, AT&T sales clerks didn’t even know the advantages or selling points, and placement made the first BlackBerry 10 phone look like a budget phone with no business anywhere near the best phones available. That would have been very regrettable if BlackBerry had a direct sales system setup to pick up the slack, but it was disasterous because they had nothing of the sort.
Many people say that BlackBerry 10 should have been supported by more television advertising or other media buys. I’m not sure I disagree, but I don’t think that a lack of advertising was fatal. It was really a lack of sales support. In the United States, where BlackBerry 10 needed to thrive, television really just buys brand awareness and BlackBerry already has brand awareness. It’s hard to pitch a device in 30 seconds. What would I have preferred? At a minimum, the ability to preorder and buy devices for each U.S. carrier directly from BlackBerry’s website. Requiring customers to fend off an Apple fanboy salesperson and the discouraging environment of carrier stores is just a recipe for disaster. I would have liked to see the community at CrackBerry formally incentivized to sell devices to family, friends, and customers. I would have incentivized bloggers and retailers to sell. The high margins on devices were important to Wall Street, but we were talking about rebooting the business and there was still a lot of cash in the bank, so I would have maximized getting devices in people’s hands, not by lowering prices, but by selling them through different channels. I would have thought that the Z10 hardware specs would have been over-the-top impressive just because hardware specs can sell or unsell a phone and the launch of a new platform is a time to get devices in people’s hands early and fast.
And, well, the sales funnel needed to be very good for existing BlackBerry OS 7 users in the US, in particular. I’d start with a text message announcing the release and a series of emails to existing BlackBerry users explaining the huge advantages over their existing BlackBerry and over other platforms. That could have come as an email ad buy from the carriers. I’d request that users contact BlackBerry directly about helping their companies upgrade to BlackBerry 10. In regards to a good call to action, it’s often true that if you don’t ask, it’s never going to happen, so *ask*. In theory, if what BlackBerry had been telling itself about existing BlackBerry users in the U.S. was true, this would be the easiest group to sell to — after all, it’s often easier to get an existing customer to buy more than a new customer to buy for the first time — but, what BlackBerry was telling itself about its U.S. customer base was highly unrealistic.
8. BlackBerry failed to recognize that it’s U.S. customers had already moved on.
BlackBerry had a vision of customers who were fanatically loyal, physical keyboard lovers, who wouldn’t use another phone. And, there are such people, the are just few and far between in the United States. Almost everyone I know who carries a BlackBerry also carries an iPhone or Android device. I’ve heard people explain dozens of times that “I just carry the BlackBerry for email” or “the company makes me carry this BlackBerry” or “the BlackBerry is for work stuff like email.” If they show you pictures of their family, they use their “real” phone, which is often made by Apple or Samsung. From the form factor of the Q10 to the icon grid on the Z10 many things about BlackBerry 10 feel like they were implemented in order to aid in the transition of legacy OS users to the new platform rather than attract new users or steal away users from other platforms. This is unfortunate because BlackBerry continues to make BBOS 7 and maybe BBOS 8 devices. If a user really loves the Bold 9900 and isn’t immediately tempted to jump to a radically different OS/device, they should probably buy a BBOS 7/8 device. BlackBerry can continue to serve them. On the other hand, BlackBerry shouldn’t hamstring its nextgen OS with an ugly application icon grid or a small screen form factor in order to hang on to legacy users, who will be shocked by the changes a next-gen OS brings no matter what.
9. BlackBerry 10 needed to be a disruptive, radically different alternative for BB’s niche market and it wasn’t.
I believe BlackBerry 10 is, in many areas, better than its competitors…. at doing what it’s competitors do. But, given that the U.S. market, in particular, is mature with two dominant players who are well-situated with huge barriers to opponents, BlackBerry needed to do something altogether different from what it’s competitors do. Here the process I’m envisioning:
- Identify a target niche with specific needs.
- Design a platform that is radically different in a way that is significantly better at meeting those needs, with a benefit-provided that competitors cannot claim to provide.
- Concentrate on selling to that niche based on the benefit provided.
- Collect bonus points if the distinction is protect-able by IP
BlackBerry 10 has a cool, superior UI and a ton of great enhancements on the smartphone game. I love the Hub even more than Windows Phone 8′s effort in this area, but well, BlackBerry built a slightly better smartphone and, when you are facing these market conditions, being the best isn’t really good enough if you aren’t radically different. People will buy an iPhone over significant competition because they have accessories and hundreds of dollars in app purchases and hours in learning the platform all invested in Apple. The same is true of Android. Factor in the fact that the other two platforms have thriving, excellent application ecosystems and anything too similar from BlackBerry becomes a tough sell.
10. BlackBerry failed to balance former co-CEO Lazardis’ vision of a new platform with former co-CEO Balsille’s vision of cross-platform services.
Right now, most of the excitement in BlackBerryLand is centering around the potential of cross-platform BBM. There’s also a lot of excitement among Android and iPhone users. Rather than ignore the large almost insurmountable barriers to competing with the market leaders in the short run, BlackBerry should have monetized their success. BlackBerry could provide secure NOC access and communications through a cross-platform version of BlackBerry Hub that would be available via the cloud to users on BlackBerry for free and desktop, Android, or iOS for a price. I don’t care whether the carriers pay and sell for the service or the consumers buy it. This helps keep the BlackBerry brand relevant in the minds of consumers… and in the not-so-distant future there will be no reason to buy “enterprise” mobile devices because consumer ones will have superior functionality in almost every arena and employees will know how to use them and enjoy using them without the cost of training.
The only company I can think of that has successfully managed a full platform transition has been Apple with their Macintosh computer platform. But, they did so only within the context of a mega-hit consumer electronics side project that redefined their company (the introduction of the iPod.) It gave their loyal tribe something to engage with during a time of struggle in their platform’s history. It would be easier for BlackBerry to accomplish the platform transition if BBM and a cloud services product took off in a profitable way. Some would say that is dividing your house and courting distraction, but it is the model Apple laid out and there’s no reason it couldn’t work for transitioning BlackBerry. There’s got to be something visionary that Mike L. dreamed up outside of the ultra-competitive phone space, right?
So, the preceding 10 observations were my subjective, BlackBerry enthusiast’s experience of the failure of BlackBerry to transition to “the 10.” But, there are no doubt many other factors that were the focus of your experience of BlackBerry’s downfall. Please comment to share your recollection of additional blunders, mistakes, or missteps. Tomorrow, I’ll post again to explain why I think BlackBerry’s story isn’t over and why I think the decision to go private is a very positive development.