BlackBerry Stops Making Devices: The Rise and Fall of a Mobile Empire

//BlackBerry Stops Making Devices: The Rise and Fall of a Mobile Empire

BlackBerry Stops Making Devices: The Rise and Fall of a Mobile Empire

Gerry Purdy J. Gerry Purdy, Ph.D.
Principal Analyst, Mobile and Wireless
Gerry.Purdy@aotmp.com | LinkedIn

BlackBerry Stops Making Devices:
The Rise and Fall of a Mobile Empire

BlackBerry was caught off-guard by the introduction of the graphical user interface used by Apple in the iPhone in 2007. It took BlackBerry over six years to introduce an inferior product (the Storm). The company will focus on enterprise mobility management (EMM) software and (likely) be acquired by a bigger player in the industry.

Last week, John Chen, CEO of BlackBerry, announced that the company has decided to stop making devices. Most of our AOTMP enterprise customers have likely had a large number of BlackBerry phones in the 2002-2008 time frame before the iPhone and Android-based smartphones overtook the market. It’s a good decision by Chen, who came on board in 2013 and assumed the fast-declining market share in BlackBerry devices. At their heyday, BlackBerry was nicknamed ‘CrackBerry’ due how popular and addictive its use became. How did BlackBerry ‘lose it’ in making devices? They were very good at the time. However, the user interface was not nearly as user-friendly as what Apple brought to market with the iPhone. Almost instantly, BlackBerry had a user interface ‘gap’ that put them behind both Apple’s iOS, Google’s Android and Nokia (which was still popular at the time).

In 2008, I asked a BlackBerry executive what he thought of the rise in the popularity of the iPhone, to which he responded that he thought Apple would never amount to much in the mobile device business. Wrong! It seemed clear to me that the smartphone user interface was being defined by Apple’s new iPhone, and BlackBerry did not have anything close to such a user-friendly interface.

As it turns out, the mentality and culture inside BlackBerry was omnipotent. They thought that because so many tens of millions of people used a BlackBerry, no one could possibly unseat it. They felt they had security that couldn’t be matched. They felt invincible. Sure, they thought it might be nice to improve the BlackBerry OS, but BB10 (that finally had a reasonably good user interface) didn’t get introduced until 2013. By that time, Apple was in its seventh generation of iOS, and Google’s Android had also advanced.

By 2013, Apple had introduced the App Store and made its third party apps platform open to developers. Millions of apps were built, and billions of apps were downloaded. Further, it is not widely known that BlackBerry didn’t have a web browser on its most popular smartphones like the Bold.

This graph shows the annual sales growth of the Apple iPhone. By the time the BlackBerry Storm was introduced in 2013, Apple was already selling 150 million iPhones… and the BlackBerry Storm was a disaster that was rushed to market in an attempt to catch up to the iPhone. Operators like Verizon Wireless were left with tens of thousands of unsold devices.

iphone-annual-sales

BlackBerry sales started falling precipitously. Many enterprises kept using them, and for a while many employees had a BlackBerry and an iPhone. The concept was, “We need the security of BlackBerry but understand employees have a lot of information in their personal life.” This “two device mentality” further propelled BlackBerry’s demise.

Take a look at the rise and fall of the BlackBerry Empire in the graph. You can see that revenue continued to rise through 2011, but then began a very steep decline, where it has leveled off at around 10% of its high point from just five years ago.

Blackberry-revenue

In the years between the introduction of the iPhone in 2007 and the introduction of the ‘iPhone-equivalent’ BB10 OS in 2013, both Apple and Google improved their security and worked with device management software vendors to set up personal and work partitions and secure containers to hold mission-critical information. Bam! Just like that, the dual iPhone + BlackBerry concept was narrowed down to just the iPhone alone. With that, a drop in sales of BlackBerry devices ensued, as one company after another stopped using BlackBerry.

BlackBerry still sells software; and with the acquisition of Good Technology, it now has a very solid offering in Enterprise Mobility Management (EMM) next to other industry heavyweights such as IBM Maas360, MobileIron and AirWatch by VMware.

When you look back at what happened in 2007-2008, Apple introduced three things that BlackBerry didn’t have:

1.      A Graphical User Interface (GUI). BlackBerry was an icon-based user experience with a scrolling keyboard. No web browser. No third party apps. No app store. The Apple GUI was a breakthrough in smartphones. It reminded me of when Apple introduced their GUI on the Mac in 1984. Emotionally, Apple was already in a league of its own with BlackBerry unable to catch up.

2.      An Open Browser. With the Safari web browser, iPhone users were able to go to any website. These websites quickly adapted to ensure they were ‘mobile capable’ so web pages would look appealing on the iPhone. BlackBerry didn’t have an open web browser and it couldn’t play any videos. It was already a generation behind.

3.      An Open App Development Platform and App Store for Distribution. Initially, Apple only had their own apps on the iPhone; but in mid-2008, Apple announced that the app development platform was available to any developer who wanted build an app for the iPhone. Apple had to (and still does) review all apps submitted to ensure they meet Apple’s standards and are ethically appropriate. But now, eight years after the creation of the app platform, there are over one million apps. Today, there have been billions of downloads of apps onto iPhone devices all around the world.

Notice that although Android came to market later than Apple, Google was quickly able to advance the Android software to keep up with what Apple was providing in iOS. And, Google set up Android as an open and royalty-free platform, which enabled a number of smartphone manufacturers like LG, Motorola and Samsung (and Google themselves) to bring competitive devices and software to market. And Google, like Apple, set up its own third party app platform and Google Play apps store.

Blackberry-black-hole

In reflection, we’ve seen this story happen a number of times in high technology. A champion at one time becomes the ‘has been’ when someone else enters the market with something that provides a great new user experience.

AOTMP Perspective

Honestly, BlackBerry should have made the decision to abandon making devices around 2007-2008, and certainly no later than 2009. It should have realized that both Apple and Google were better at making devices; and that most everyone loved the iPhone’s innovative user interface – something that BlackBerry didn’t have.

BlackBerry could have developed secure apps for both iOS and Android and, thus, rode the bandwagon toward more consumer-friendly smartphones. The BlackBerry Enterprise Server (BES) is still in operation to support the legacy environment, but the future of BlackBerry now rests in how well it can win in the world of EMM software.

John Chen was the man that built Sybase Afaria into a multi-billion dollar valuation when SAP purchased the company in 2010 for $5.8 billion. Sybase at one time tried to compete with Oracle, but it focused on the financial database sector and was quite successful. The Afaria MDM software grew as the mobile market grew and, as a result, it became more of a mobile software company than a database company. Now, Afaria competes with BlackBerry… an interesting twist on how things have turned out.

As for the future of BlackBerry, it seems most likely to me that the company will be acquired by a bigger player in the market. HP, Microsoft or another large player with systems integration experience might want to have the enterprise mobility management software to help compete against Dell/VMware/AirWatch, IBM Maas360, SAP Afaria or MobileIron. John Chen has a positive track record in knowing how to build value in software and then turn that value into a transaction that pleases his investors.

For our AOTMP customers, you’ll have to wind down any remaining BlackBerry devices that employees are using if you haven’t already done that. And, you’ll need to start thinking about BlackBerry as an EMM software company instead of a hardware company.

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