BERRYS TURNED SOUR: A CASE STUDY ON BLACKBERRY

Submitted by
Aditi Sharma
A0101914089
B 12
MBA (G)
Under the Supervision of
Professor Ramesh Bagla

ABSTRACT
This case study will provide an insight to a premier organisation, how it nourished itself in the
competitive arena and thus captured a remarkable share, globally. This case depicts the various
strategies adopted by BlackBerry to sustain during the challenging times, and how the decisions
taken by other companies vary from decisions taken by BlackBerry's bosses and what outshines
them from their struggling competitors. BlackBerry is a company whose name was
synonymous with Smartphone early on. It had a commanding share and owned the corporate
market. Corporations led device buying. But that corporate hegemony was also its demise. It
relied on selling to corporate IT buyers and locking them up with long-term contracts and
server-based solutions. It fell behind on innovation, kept its app ecosystem closed and
proprietary, and failed to recognize the rise of consumer-driven IT buying. Now it finds itself
struggling to hang on to some respectable share in a corporate market it largely created.

KEY WORDS
BlackBerry, revolutionized the mobile industry, wireless email handling, security, reliability and
productivity

INTRODUCTION
Based out of Waterloo, Ontario, Canada, Research in Motion (RIM) was the parent company
of BlackBerry. Like many other companies, RIM was also an idea of a college dropout. Mike
Lazaridid and Douglas Fregin founded RIM back in 1984. They were very much impressed by
the wireless technology and wanted to explore it even further. They were so much fascinated by
the wireless technology that they turned RIM into first wireless data technology developer in
North America and the first company outside Scandinavia to develop connectivity products for
Mobitex wirelss packet-switched data communications networks in 1988. By the start of 1990,
the company was able to earn revenue for more than a million dollars

By 1991, the company had started developing software to support a complete wireless e-mail
system. By the end of 1993, BlackBerry was able to introduce several kinds of wireless
modems, paging technology, gateway systems. The company was able to get listed on the
Toronto Stock Exchange in 1997 and was successful in raising funds worth more than USD 115
million from investors for its ambitious future plans.
In 1999, after analyzing the market trends and demands, RIM finally launched its first device
under the brand BlackBerry.
The name BlackBerry was not an idea of the founders of RIM but it was a creative outcome of
Lexioon branding, Californias Presidents David Placek brain who right from the beginning
wanted to keep the name of the product fruity and ended up choosing the name BlackBerry and
RIM decided to take the same forward for indefinite period of time.
The very first RIM device which was BlackBerry 850 was only a paging device with no voice
support (Exhibit 1).

EXHIBIT 1: Two Way Pager In 1996

In the first year, BlackBerry had only 25, 000 users. It was also believed by many other analysts,
that the decision taken by RIM would be a failure but the company had sufficient money along
with abundance of knowledge that enabled them to go search for markets other than Canada,
which finally helped them to get listed on NASDAQ in 1999 which helped them to raise USD
250 million from the same.

RISE OF BLACKBERRY
RIM reinvented the QWERTY keyboard with its BlackBerry 850 and intended to move forward.
RIM desired to take over the position of the ruler of the mobile industry-Nokia, the very
famous-Nokia Worldwide.
Therefore, to combat its shortcomings, RIM launched its very first full-fledged mobile phone
BlackBerry 5810 which supported both voice and data. Though it was not the perfect start for
RIM as the stocks remained low and valued at USD 1.57 per share.
BlackBerry 5810 lacked the very basic requirements, such as, it did not have any built in
microphone or speaker. One had to always plug in proprietary headphones to use the handset for
more than a mobile phone. The company continued to launch a series of BlackBerry devices,
one after the other.
With the launch of BlackBerry 6210, the company was finally successful in delivering a pager
inside the phone and later, with the launch of BlackBerry 7230 the company provided a
complete product which had all the necessary features, like the colored screen and most
importantly with the international roaming capabilities.

HOW BLACKBERRY INFLUENCED THE MARKET?

BlackBerry devices were initially chosen because of their convenience, and were then taken to
another level as a business travelers device, as these phones were able to access e-mail.
BlackBerry was not just a business device, as the prices lowered; it made them more reasonable
and cheaper for people to buy a handset.
Size
A BlackBerry phone is portable and can clip onto your belt, or fit in your purse easily. It's
much smaller than having to bring a laptop computer with you to respond to email while
travelling for business

Function
Not only can you use the BlackBerry Phone as a cell phone,
but you can send text messages from it check your email
and, on some models, even surf the Internet.
Features
Newer BlackBerry cell phones have added a feature
similar to iPods and iPhone, in that they have touch

EXHIBIT2: The Handy

screens to make it easier to select applications and surf

BlackBerry Device

the Internet
The BlackBerry makes it easy to communicate with a large group of people at once. By
checking your email you can access mailing lists from your office to send a message to
everyone; this is much more reliable than texting, as each individual might not have texting on
their cell phones.

BLACKBERRY SUCCESS
By the end of the year 2004, BlackBerry customers were more than two millions, which clearly
shows how well the company knew to reach its target audience and was also well aware about
the strategies to be adopted in order to perfectly position its brand. By the next year, the
company was able to double its customers.
There was a time, in the initial stages when RIM had to tackle with the telecom operators, but by
the end of 2005, worldwide operators were running after RIM to carry its BlackBerry service in
their respective regions. By 2006, BlackBerry became a known brand in the global market, and
was very much desired by everyone. The very famous competitor, Nokia, kept on upgrading its
devices to compete with the BlackBerry devices. By the end of 2006, BlackBerry was in a
situation to kick out competitors like Palm, HP, Dell, Mio etc, and was able to become the
favourite gadget, not only for the business class, e-mail addict segment, but also the celebrities
and many other politicians (Exhibit 3) were also seen using the device, which was another high
for the company. The company was able to get its investors confidence, which made the
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companys share reach upto USD 124.51, making the companys worth over USD 67.35 Billion
and it thus became Canadas most valuable company.

.
BlackBerry
wasThe
ableUS
to capture
5million
worldwide
its pocket, with
which
was yet
EXHIBIT3:
President,
Baracksubscribers
Obama, shows
off his in
BlackBerry,
a charm

EXHIBIT4: BlackBerrys market share in 2006

BLACKBERRY AT ITS PEAK

After receiving so much success, RIM had become a known and mature brand across the globe.
The company was able to receive stable inflow and outflow of cash. The growth was hitting an
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all time high. RIM was able to get 10.million subscribers under its shed by the year 2007. The
company also adopted a very convincing strategy, whereby it pulled all its competitors, into its
partners, right from Nokia to Yahoo, all had some or the other relationship with RIM which
tremendously boosted the companys volumes. 2007 was the year when Apple Inc. entered into
the mobile industry with the launch of its iPhone.
Almost every journalist in the world predicted Apples fall which unknowingly targeted
BlackBerry users. The only feature that an iPhone and a BlackBerry had in common was the
ability to make calls and send messages iPhone was a completely different device when
compared with the traditional BlackBerry(s) but what made an iPhone an immediate competitor
of BlackBerry was with the price bracket which both of them shared. iPhone was launched as a
premium phone. RIMs products also had premium price tags. Hence, the market, the targeted
audience was same but the product offerings were different.
Within a year of iPhones launch, iPhone was able to capture 10.7% smartphone market share
and BlackBerry hit 19.5% market share. Both the players were aggressively stealing business
from Nokia but were also on the verge of becoming head on competitors. With the competition
becoming tougher, RIM planned to completely change its strategy. The company which has been
producing mobile phones with the QWERTY keypad launched its very first complete touchscreen phone, the BlackBerry Storm. This not only indicated how scared the company was with
the iPhone but it also indicated how rigorously Apple was gaining popularity in the market.
On a closed front, there were rumours of a technological development been taking place by
Google, which was developing an operating system it acquired in 2005. Google released the first
version of Android n 2008 but it was not commercially available till 2009. 2009 was also the
finest year for RIM. RIM had done a lot of hardships in smartphone market and it had
maintained 20.7% market share in the smartphone market worldwide. iPhone was also not much
behind, with its 17.1% and the newly launched android had mere 3.5% share but considering
that it was first year of its commercial existence, the share was something to worry about for the
two major mobile manufagturers.

THE COLLAPSE OF BLACKBERRY

BlackBerry Storm was officially declared as a failure, which even worsens the situation. Google
with its launch of Android Cupcake, later on became a commercial hit. Mobile phone
manufactures such as Samsung, HTC and LG hit high as soon as they switched to Android
Nokia was brutally hurt with the rise of these 3 major brands, but still somehow was struggling
to stay in the market. Smartphone were expensive to buy, and were thus not everyones cup of
tea, therefore common people still preferred to stay with Nokia. BlackBerry had no such
alternative. It did bring down price of its mobile phones, changed its marketing strategies and
tried to attract the younger segment of customers and believed that with the launch of some
cheaper version it will be able to take over Nokias share in the market, but in vain. 2010 was a
major setback for BlackBerry. Apple iPhone stood high at 16.7% in the worldwide smartphone
market share, Android surged to 25.5% and BlackBerry fell to 14.8%. The year also marked the
launch of Apples iPad. Apple had gained enough popularity with its iPhone and thus planned to
establish an all new product segment.
RIM responded to it very quickly to the same. It announced the development of a table named
Playbook. RIM was trying to copy Apple at every level. Google was also not behind. It launched
Android Honeycomb in 2011 and then entered in the tablet race. RIMs BlackBerry Playbook
was commercially available in 2011 and the initial reviews declared the Playbook as a
failed attempt. RIM was constantly losing its share in the market which made its
board to constantly keep revising its strategies. RIMs stock price hit the all-time low
level. BlackBerrys share also dropped to 8.8% and Android stood as the king of smartphone
market.
2012 was a silent year for RIM across the globe. The two founders made Thorsten Heins as the
new Chief Executive. The company also reported its first net loss in eight years. As the revenue
was declining, employees, all across the globe were trimmed, and the company made no signal
which could signify that it will be launching new variants with the desired features in to the
market. While other operating systems were offering thousands of applications, BlackBerry
could only offer few hundreds of them and relied majorly on its BlackBerry Messaging service
which was the only saving grace of RIM and probably the only incentive for which people had
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been buying the not so good looking BlackBerry(s). BlackBerry which was the most adored
phone of the business class, soon started to be replaced by the iPhone.
People had no option but to change their smart phones accordingly obviously, as no one wanted
to stick around with a BlackBerry when they had more good looking, trendy and feature rich
handsets to carry with them.
By the end of 2012, BlackBerry had nothing in its basket to offer other than the teaser
advertisements for its upcoming handsets and operating systems which kept on delaying for
long. The year ended with clear sign signifying the end for RIM, also the share of BlackBerry
dropped to 1.1% in major markets, it was the end of RIMs almost after two decades
Other major growing companies around the globe such as Lenovo and Google started spending
more on Research and Development in order to device strategies to capture the share which was
once held by BlackBerry. On the other hand, RIM was struggling with cash and criticism from
everywhere hovered over the RIM.

THE BEGINNING OF THE END

The new CEO, Thorsten Heins started with a positive start, committing that the companys
investment in QNX would certainly be fruitfulBut in March, Heins declared on an investor call,
and publically declared about the terrible the situation the company was fafcing.
Hardly any new product was launched by BlackBerry. The new BlackBerry 10 software, based
on QNX, was initially suppose to arrive in the beginning of the year 2012, but was later delayed
till the next subsequent year, which further lead to 5, 000 job cuts. Though the BlackBerry
Playbook delivered with certain changes in it, but apart from that, no innovation was created by
the company.
An innovation did arrive in late January, 2013 with the launch of a new model of mobile phone,
BlackBerry Z10. Though it was better than the previously launched BlackBerry touch-screen
devices, yet it failed to meet the customers expectations. The body of the phone was different,
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the software was enhanced, but the overall experience was still lacking. The company followed
up with the launch of Q10, Q5 and Z30 throughout the year, but the overall market share kept on
shrinking. It was visible that the charm BlackBerry devices once carried was long gone.

EXHIBIT 5: BlackBerrys Net Income and the entire smartphone market share

MISTAKES DONE BY BB
UNDERESTIMATED iPHONE
After the successful launch of Apple iPhone in 2007, which was a breakthrough in the field of
full touch-screen mobile phones, RIM launched a similar category phone known as BlackBerry
Storm. As BlackBerry did not have prior experience in the touch screen category, not too much
of surprise, it was defeated badly by iPhone. It failed to create a unique identity of its own thus
declaring Apples USP predominant.
Right at the onset of the launch of iPhone, it boosted the stagnant smartphone market and it
caught the rest of the industry off guard & gave customers a new set of features which were not
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restricted to only e-mail integration but gave them a whole new world of Apps & Web browser.
On the other hand, all other companies including RIM were focusing on a physical keyboard
phone but iPhone swept the gamble in its favor for the obvious reasons.

SUREPRESS TOUCHSCREEN
As discussed above, Apple had created a huge market for itself due to the immense good quality
touch-screen & of course for its ease of use. Whereas, RIM had a touch-screen that felt like a keypad
& user experience was worst. The SurePress touch-screen was out an out failure as one would have
to give extra pressure to make a tap. Meanwhile, in September 2008, Google introduced its own
mobile touch-screen operating system, Android. Now that a new player had arrived, RIM knew it
would be getting even tougher.

BLACKBERRY OS 6
The iPhone had been on the market for three years when RIM introduced OS 6 in late 2010. Android
and iOS had robust app stores, multiple devices, and excited developers. RIM introduced a much
better OS of lately with better social interaction, new Apps and much more. But to the dismay of
RIM, it was only a marginal upgrade over BlackBerry OS 5 in comparison to iOS which failed to
keep the users loyalty for a longer time.

LACK OF INNOVATION
RIM launched many smartphone which failed to give a fight, too much popular iPhone &
Android phones. As a result of continued rejection, it almost stopped manufacturing the classic
phones it used to be known for. Corporates were loyal to BlackBerry even after the launch of
Android and iPhone for a longer time but younger generation made a shift to iPhone and other
devices due to lack of innovation in hardware and other important characteristics, which became
imperative for the current generation which unfortunately, RIM could not provide. Its not just
comparing RIM with other leaders in the market, but RIM itself lost its power & control over its
customers due to lack of innovation and customer research.
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TOOK CUSTOMER LOYALTY FOR GRANTED

RIM enjoyed a monopoly for its Blackberry Messenger Service, which was concentric to
corporate email server & internal message exchange. The company believed it had an
unbreakable stronghold on the corporate market as it would remain the default choice. It also
supported this with a research stating its own 45% share of the US smartphone market. But with
new innovations being shown up by Apple & Android every passing year, Blackberry failed to
maintain its share of corporate clients. On the contrary, Apple introduced iMessage, which was a
free SMS/MMS service between Apple users.

EXHIBIT6: BlackBerrys Overall Journey of Through Thick and Thin

SO WHAT SHOULD BLACKBERRY DO NEXT?

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BlackBerry is not just any other brand. It started from scratch and was able to achieve the fruits of
success in a very short span. The company has grown itself in all these years and has been praised by
all set of customers in the global markets. It still has a substantial user base, lots of assets, and

crucially a tonne of useful mobile patents. So what should be the next move for the company?
The company should focus on enhancing the brand image, and should also start spending its
proceeds more on Research and Development, marketing and sales strategies, and should highly
emphasise on increasing the attractiveness of its products and services which will help it to push its
products in the market. It should consider the following points together, and then form a comeback
plan:

Believe that they still have a user base out in the market, which are willingly
waiting for their return.
A faster or better up gradation of the BB10 is very much required,
They should also switch their old BlackBerry operating system, and should
switch to better and faster software like Android.
The company had a competitive advantage with the access of BlackBerry
Messenger Services in their device, but that was not the only feature
enabled the users buy their products
Advertising should be aggressively in order to promote their products in the
market
Further changes can also be done in the hardware of the devices, considering
the changing demand patterns of the customers.

In a recent interview with Jacquie McNish and Sean Silcoff, when asked about the future of
BlackBerry, Sean Silcoff replied optimistically and said; BlackBerry has two things going for
it: valuable assets - including thousands of patents and $2 billion in net cash; and CEO John
Chen, a veteran fix-it artist, whose turnaround plan is backed by committed long-term
shareholders. When you dig in, however, the business offers little to cheer about. BlackBerry
generates 40% of its revenue selling smartphones and almost as much from service revenue
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flowing from its older smartphones still in use. Despite the launch of several new models,
BlackBerry device sales continue to drop: the company sold 1.3 million devices to end users in
its latest quarter, down from 1.6 million the previous quarter and 1.9 million the quarter before
that. John Chen has indicated he needs to sell 8 million to 10 million for devices to remain a
viable business. The trend does not look promising for him to do that.
Those service revenues are another problem. BlackBerry generated $1.6 billion last year from
those service fees, close to half of total revenue. The company expects those service revenues to
fall by 15% quarter to quarter; that means Chen will derive just over $800 million from services
this year and, if the trend continues, about $420 million next year.
The bright spot is BlackBerry's software and technology licensing business. Chen has promised
to double those revenues to $500 million this year and he's off to a good start, generating $137
million in the first quarter, up over 150%. But most of the gain was from a licensing deal and it's
not clear he can steadily deliver those; without licensing, software is growing by 20% year-overyear. Plus, the company admits it won't be able to turn its BBM instant messaging app into a
$100 million per year business, as was the plan. BlackBerry still has time, options and assets,
but it's destined to become a much smaller company before we know how bright a future it
has.
BlackBerrys share presently stabilizes at 0.5%, globally, under the new Chief Executive Officer

John Chen. In the companys new plan, Chen states that they are planning for a comeback with a
new range of BlackBerry devices with advanced features. He also claims that BlackBerrys new
strategy and good software will bring some users back to its own phones. The BlackBerry e-mail
system is constantly rated the best of its competitors and, as security and cloud breaches remain
a problem nowadays, the company has a chance at convincing professionals that the e-mail is
the common language of business and being safe is better than being in line with the millions of
people who own an iPhone or a Samsung device.

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QUESTIONS
Q1. Describe the major winnings for BlackBerry which helped it to withhold a
strong image in the Smartphone market
Q2 How can BlackBerry cope up with the developments done by its competitors?
Q3 BlackBerry believed that its kitty will always hold the majority of the
customers. Comment.
Q4 Discuss various marketing strategies that BlackBerry should adopt to attain its
lost market share?

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Growth Rate With 3.7 Per Cent Increase in Fourth Quarter of 2008, Retrieved
from http://www.gartner.com/newsroom/id/910112

Demers, M. (2010), Droid-Life, Numbers Dont Lie, Android is Still Far from
the Top, Retrieved from
http://www.droid-life.com/2010/06/07/numbers-dont-lie-android-is-far-fromthe-top/

Gustin, S. (2013), Business Time, The Fatal Mistake That Doomed BlackBerry,
Retrieved from http://business.time.com/2013/09/24/the-fatal-mistake-thatdoomed-blackberry/
Taulli, T. (2013), Forbes, Lessons From The Fall Of BlackBerry, Retrieved from,
http://www.forbes.com/sites/tomtaulli/2013/09/23/lessons-from-the-fall-ofblackberry/
Cagna, J.D (2014), Associations Now, BlackBerry's Strategic Mistakes, and How to Avoid Them,
Retrieved from https://www.asaecenter.org/Resources/ANowDetail.cfm?ItemNumber=652880

Wheatley, M. (2015), Silicon Angle: BlackBerry is poised to make a stunning

comeback

in

2015,

Retrieved

from

http://siliconangle.com/blog/2015/01/15/BlackBerry-is-poised-to-make-astunning-comeback-in-2015/
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Motroc, G. (2015), Australian National Review, Does Blackberry have the potential to make a
comeback? Retrieved from http://www9.australiannationalreview.com/BlackBerry-potentialcomeback/
Sharma, R. (2015), the Globe and Mail, Why BlackBerry has a fighting chance at
a comeback, Retrieved from
http://www.theglobeandmail.com/technology/business-technology/whyBlackBerry-has-a-fighting-chance-at-a-comeback/article23312419/

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