How Did BlackBerry Do Everything Wrong?

A woman using a Blackberry phone to send and receive emails and text messages over the Internet.
Alamy
With BlackBerry announcing its exit from the consumer business last week and now entertaining a bid to go private, it's worth looking at how the once-dominant smartphone maker got crushed by Apple, Samsung and other competitors in the mobile marketplace.

At first glance, it's obvious that the company was too wedded to its keyboard-based devices even as new designs and technologies cut into its business -- precisely what Clayton Christensen called the Innovator's Dilemma. Looking deeper, one could pin some blame on the Canadian firm's dual-CEO leadership structure, as well as its inordinate focus on corporate customers. Its Hail Mary pass to recapture market share this year with the touch-screen Z10 and hard-keyboard Q10 fell far short. BlackBerry investors over the past five years have seen more than 90 percent of shareholder value evaporate. And the take-private bid, for its part, is far from a done deal.

"In apparel you have fashion leaders. In technology, you have innovation leaders," said C. Britt Beemer, a longtime consumer analyst and researcher. Not only did BlackBerry fail to innovate, but also its executives "kept reading their own press clippings" and "did nothing to be able to go out there and defend their turf."

BlackBerry's decline made Beemer recall a time when the Zenith brand controlled 60 percent of the market for color-console TV sets, "but it was shrinking 50 percent every year." The mobile company was chasing "huge contracts with companies, then one day those companies that had these large contracts made changes."

Formerly known as Research In Motion, BlackBerry once was the unquestioned leader in smartphones, at a time when email was the Internet's killer app and its devices provided an excellent way to stay on top of it. "Catching the public fancy in a huge way is not all about your innovation," said Christopher Bonanos, a senior editor at New York magazine and author of "Instant: The Story of Polaroid." The right idea and the right product had hit at the right time. But even though the iPhone shunned the physical keyboard, it wasn't clear that consumers would discard their existing gadgets. (Here's WSJ's Walt Mossberg interviewing Apple's Steve Jobs about the issue in 2007: " So how much argument was there about not having a keyboard on the iPhone?" Jobs replies: "None. None." Mossberg tries again: "So you had no one [at Apple] that thought that was a good idea?" Jobs: "Yeah.") So BlackBerry was fully committed to hard keyboards, while Apple sought to be rid of them. "Each had a decent rationale that might have won out," Bonanos added. "The only one who survived is the one who guessed right."

It's easy to give Jobs and company credit given what's happened, but "everything that made Apple so unique was Apple did not sit on their laurels," said Beemer. It built an ecosystem that "created more and more demand for more new products."

In addition, there's something about the speed of the consumer-electronics business today, according to Bonanos. "Polaroid had the great advantage of a 40-year cycle of obsolescence instead of four," he said. "When the cycle comes around, you only get to place your bet on the next thing once or twice. After that, you're out of the game. If you get one of those bets wrong, it's almost enough to sink you."

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum