CASE:
BlackBerry’s Rise and Fall
A PIONEER IN smartphones, BlackBerry (formerly known as Research in Motion, or RIM) was the undis-puted industry leader in the early 2000s. Corporate IT managers preferred BlackBerry. Its devices allowed us-ers to receive e-mail and other data in real time glob-ally, with enhanced security features. For executives, a BlackBerry was not just a tool to increase productiv-ity—and to free them from their laptops—but also an important status symbol. As a consequence, by 2008 BlackBerry’s market cap had peaked at $75 billion. Yet within a short four years, by 2012, this lofty valuation had fallen to just $7 billion; and, by 2019, it stood at a mere $4 billion. Since its peak, BlackBerry’s market cap had fallen by almost 95 percent. What happened? Jim Balsillie, a Canadian and BlackBerry’s longtime
co-CEO, unsurprisingly calls ice hockey his favorite sport. He likes to quote Wayne Gretzky, whom many consider to be the best ice hockey player ever: “Skate to where the puck is going to be, not to where it is.” Alas, BlackBerry did not follow that advice and failed to con-sider the impact of two important factors in its external environment: technological and sociocultural. Let’s start with a discussion of the technological fac-tor that led to BlackBerry’s decline. The introduction of the Apple iPhone in 2007 changed the game in the mobile device industry. Equipped with a camera, the iPhone’s slick design offered a touchscreen user inter-face and virtual keyboard. The iPhone connected seam-lessly to cellular networks and Wi-Fi. Combined with thousands of apps via the Apple iTunes store, the iPhone provided a powerful user experience, or as the late Steve Jobs said, “the internet in your pocket.” BlackBerry engineers and executives initially dis-missed the iPhone as a mere toy with poor security fea-tures. Everyday users thought differently. They were less concerned about making sure the device’s software was encrypted for security than they were about the user ex-perience, which was fun and diverse. The iPhone al-lowed users to text, surf the web, take pictures, play games, and write and send e-mails. Although Black-Berry devices were great in productivity applications, such as receiving and responding to e-mail via typing on its iconic physical keyboard, they provided a poor mo-bile web browsing experience. The second external development that helped erode.
BlackBerry’s dominance was sociocultural. Initially, mobile devices were issued top-down by corporate IT departments. The only available device for executives was a company-issued BlackBerry. This made it easy for IT departments to ensure network security. Consumers, however, began to bring their personal iPhones (and other mobile devices with an Apple-like user experience) to work and used them for corporate communication and productivity applications. This bottom-up groundswell known as BYOT (“bring your own technology”) forced corporate IT departments to open. The two PESTEL factors—technological and socio-cultural—set BlackBerry back in the smartphone market. Unlike Gretzky, it failed to skate in the direction that the puck was headed and remained instead in its current position, that is, focused on its existing customer base of corporate IT departments and government. Although it attempted to promote some product modifications later, they were too little, too late. By then Apple was the innovation driver in the smart-phone industry, bringing out more advanced iPhone models and enhancing the usefulness of its business and productivity apps. Ten years after the iPhone was introduced, Apple has sold more than 1 billion iPhones globally, directly driving more than two-thirds of its annual revenues, which stood at a whopping $265 billion in 2018. Mean-while, BlackBerry sold its iconic line of smartphones, including its BlackBerry brand name, to TCL Communication, a Chinese electronics company. The original BlackBerry company pivoted away from consumer electronics to enterprise software and the internet of things. Let’s think about the rapid progress in mobile com Consumer preferences changed quickly once the iPhone and later the iPad were introduced. Professionals brought their own Apple or other devices to work in-stead of using company-issued BlackBerries. Although the Canadian technology company made a valiant effort to make up lost ground with its new BlackBerry 10 operating system and several new models, it as too late.
DISCUSSION QUESTIONS
1. What made BlackBerry so successful initially in the smartphone industry?
2. What role did external factors play in BlackBerry’s demise? Which external factors were most potent, and why?
3. What could BlackBerry’s strategic leaders have done differently to address the external factors you identified in Question 2? Be specific.