Blackberry and the pangs of a home run hangover

It was quite some time ago when Microsoft CEO Steve Ballmer called Google a one-trick pony. However, Ballmer would do well to set his own 'glass house' in order. Microsoft started in 1975, while Google was formed in 1998. Microsoft still means Windows for most of us. At least Google has more icons in its arsenal, the latest being the Android.

 

Actually, Microsoft isn't in the doldrums at the moment. Its major grouse would be that Google and Apple took the initial lead in the mobile space, which means that Ballmer's men have a lot of catching up to do. The real one trick ponies are the ones who surprise us with their rise and shock us in equal measure with the way they fall. The company that is in the eye of storm at the moment is Research In Motion (RIM), which gave us the icon called BlackBerry. Its messaging service had many corporates instantly hooked, and the BlackBerry pose became a common lingo for those who maintain that bending posture; staring into their mobile phone and sending and receiving messages for the most of their day at work. There is a steady rise in the number of BlackBerry fans, who view their passion for it as religion. However, their inability to move beyond that one product and keep it in tune with the times is costing BlackBerry's market share and RIM's financials dear. In the global smartphone space, BlackBerry's share had dropped to 15.2% in the last quarter (drop of 2% yoy) and Apple's had risen to 29.5% (gain of 1.4% yoy). It's share price stood at $12.7 on April 5, 2012, compared to $52.8 exactly an year ago. For the fiscal ending March 3, 2012, revenue was at $18.4 billion, down by 7% yoy while net income was at $2.2 billion, a drastic drop of 35.3% yoy. The company is exploring the possibility of partners or even buyers.

 

Just where did BlackBerry hit a wall? Firstly, any product that generates unprecedented success also breeds unprecedented complacency in the organisation. Ironically, the market suddenly begins to expect too much from the company, and if you don't keep innovating, your perception in the market drops quite drastically. One of the company's greatest mistakes was to not launch their PlayBook in time. Worse, they launched it without an e-mail app, which is like KFC removing chicken from its menu! The second lesson that we learn is that any brand that gets straitjacketed on a particular value proposition needs to explore its options very carefully. BlackBerry created its space in the corporate segment, and it needed to strengthen its position there, rather than attack Apple in the consumer segment with the same products. It isn't exactly a pushover in the consumer segment, since there are a growing number of aficionados for the BlackBerry, particularly in the young generation. But that has certainly diluted its 'corporate' positioning. New CEO Thorsten Heins rightly points out that the company can't afford to be everybody's darling at the same time. Thirdly, companies need to strike the iron when it's hot and move the industry's ecosystem to their advantage early. RIM failed to do that, and its app store paled into insignificance in front of Apple and Android, which led the late Steve Jobs to comment that RIM has a huge mountain to climb. At that time, RIM could have developed its own ecosystem, or simply moved some of its devices to the more open Android. Fourth, when you are developing a cult of users, you have to painstakingly grow that base, and engage them in multiple ways. BlackBerry needed to either evolve into a cult brand or quickly move to providing multiple offerings in the corporate segment, keeping its core positioning intact. CrackBerry is a laudable engagement initiative and has millions of followers. But the problem really is that the corporate world increasingly finds little that Blackberry offers as an edge as compared to its peers.

 

Unless some radically new innovations come in to get BlackBerry moving in the market again, there is little hope for the brand and RIM. And if it cannot become a product champion immediately, it must strive to be a market champion and aggressively penetrate markets like India. It slashed its prices drastically of late, which is a welcome move. Players like Micromax aren't into iconic products out here; they simply adapt and have established themselves as followers of technology. BlackBerry itself may have some following to do to come up on the technology front, since the Androids and Apples have leapfrogged ahead. But before anything else, it has to decide on its core value proposition.