Sunday, 22 September 2013

BlackBerry Down

English: Steve Jobs shows off the white iPhone...
(Photo credit: Wikipedia)
As anyone who has heard me chatting on the radio (*ahem* Every Thursday from 12.45 on 103.8FM's 'Lunchtime Live') will attest, I have long been fascinated by the precipitous dynamics of the smartphone market. In the past five years, we have seen shifts in technology and corporate fortunes on an unprecedented scale - no other industry in history has impelled such meteoric change at such speed and with such scope.

Five years ago, Nokia was the world's biggest mobile maker and a dominant force. They invented the smartphone. They had over 49% of the global smartphone market, represented 4% of Finland's GDP and boasted a market capitalisation of over 110 billion Euro. Something like 25,000 lost jobs later, Nokia's stock was rated junk, its market share stood  at something like 3% and Microsoft snapped it up for a tad over 5 billion Euro. Remarkably, the man who presided over what must stand as one of the biggest, fastest falls in corporate history, Stephen Elop, looks set to make $25 million from that sale. He came from Microsoft, spent three years destroying Nokia and now he's going back to a $25 million bonus and a stab at Ballmer's job. No wonder people call him the 'Trojan Horse'.

Over the same period, 'troubled' BlackBerry has also managed to transition from global dominance to failure - although its decline and fall has been more recent, its position protected by its strength in the conservative corporate market. It hasn't finished falling by any means, either. BlackBerry's market capitalisation has plummeted from a high of over $70 billion to under $5 billion, while its user base has actually increased, from 8 million-odd in 2007 to almost 80 million in 2013. That hasn't been enough to stem a whopping billion dollar Q2 loss - or the haemorrhage of 4,500 jobs - 40% of the company's global workforce. This is clearly a company in terrible trouble.

It's the speed of these falls that is so stunning. And the speed of the rises, too. Of course, when Steve Jobs took to the stage back in 2007 in his polo-neck and announced the future of the mobile, many in the industry had a good old laugh. Steve Ballmer, brilliantly, led the giggling. You can still enjoy the Great Visionary's laughter today thanks to YouTube. Nokia and BlackBerry weren't far behind in the hooning. But it wasn't actually Jobs banging the nails into coffins - that took Google and Android.

Google mimicked the rise of the PC by providing an 'open top' standard for multiple manufacturers with Android. Once again, it's Mac vs PC, only Microsoft and IBM are no longer players. IBM had the sense to get out, because it could. Microsoft didn't even see it coming - not as remarkable as it may seem: those with long memories will recall the company's 'visionary' leadership missed the Internet, albeit performing a remarkable pirouette on a sixpence to recover the existentially threatening situation its arrogance and lack of awareness created. This time around, the dynamics are different and Microsoft can't depend on market dominance to bludgeon its way out of trouble. And it is in an awful lot of trouble.

But Microsoft's headlines are yet to come. Today belongs to BlackBerry, the company that's had to write off almost a billion dollars against its unsold inventory of unwanted smartphones, having missed its sales targets by over 50%. Now the company itself is for sale and it's a cheaper buy than Nokia. The question is, who wants 80 million users who are, undoubtedly almost without exception, wondering whether they'll go for the iPhone or a Samsung.

Fascinatingly, BlackBerry was to have rolled out BB Messenger apps for Android and iPhone this weekend just past, but they appear to have totally blown the rollout and have withdrawn the apps after getting hit by over a million downloads, despite only short availability on small regional platforms. Screwing this one up was a real Barbarians at the Gate 'light the smokeless cigarette with a match' moment for BlackBerry.

By the way, following that Mac vs PC history repeats itself analogy, I'd guess that makes Samsung Compaq which famously led the charge against IBM by having the sheer balls to release an 80386 machine before Big Blue and rip the PC market rug from under IBM's feet...

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Luke said...

I find it odd that Blackberry made a profit every year from 2004 to 2012, and yet in 2013 when they have 14x as many users as in 2005, they will makes a huge loss. They should have focused on their core clients rather than trying to take over the world.

Luke said...


Luke said...

Nobody seems to care but me. Oh well...

Caught myself wondering just now whether the failed rolled out of BBM to IOS and Android at the weekend had anything to do with the bid from Fairfax. Maybe they have a better plan to monetise BBM and told them to cancel it.

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