Looking in the rear-view mirror at what happened to BlackBerry Ltd. is a dizzying experience.
It took only a few years for the company to go from a market leader to also-ran. One cannot help but wonder how things might have turned out if Canada’s biggest technology company had veered in a different strategic direction.
What if Blackberry has introduced its new BlackBerry 10 operating system with a smartphone that sported its signature physical keyboard, instead of a glass touchscreen that makes it hard to tell apart from other phones? What if the company had been a little less condescending, and a lot more attuned to the desires of the consumers it tried to win over? What if it had opened up its popular BlackBerry Messenger (BBM) service to competitors in an attempt to become the dominant chat service?
You can’t undo the past. Now that we know what went wrong, the pressing question is if anything can be done to change BlackBerry’s fate. Is just too late?
Michael Lazaridis, for one, thinks that BlackBerry isn’t finished just yet. The gifted engineer who dropped out of university to launch Research In Motion with his best friend 29 years ago believes the Waterloo company can reinvent itself, just like Intel, IBM and Apple before it.
Reading The Globe’s investigation into what really happened at BlackBerry, what is striking is how the torn company was utterly unable to deal with the competition once Apple and Samsung Electronics set their eyes on the formidable market RIM opened up. The losses in market share came quickly – and so did the losses for investors, who watched helplessly as more than $75-billion in market value vanished over the past five years.
With all this baggage in its past, can BlackBerry be made into a competitive tech company again? The question is now for Prem Watsa to answer. Let’s assume that the Fairfax Financial chairman has all his financial partners aligned and all the cash needed for his $4.7-billion (US) proposed buyout. Then what?
Mr. Watsa hasn’t said who those partners are. He has dropped only a few clues about his plans for BlackBerry. In an interview with The Globe and Mail, the Fairfax leader said that BlackBerry shouldn’t be broken up and that it will focus on business customers. Merely privatizing the company could cure the company, he hinted, even though it would take some time.
There is no denying that dealing with angry shareholders and institutional investors is a distraction for a company that needs to keep its eyes on the ball. But removing its stock-market listing won’t fix BlackBerry, whose problems run much deeper. If there is any hope of saving BlackBerry, it means sacrificing the handset business that Mr. Lazaridis so cherishes.
Smartphones have become a commodity. Consumers and businesses are increasingly unwilling to pay a fortune for a phone that is only incrementally smarter than the one they already have in their pockets. (There are even reports that Apple’s brand-new iPhone 5c is already being discounted in some markets.)
BlackBerry doesn’t have the marketing muscle or savvy to compete in consumer handsets, as the disastrous Z10 campaign showed. It doesn’t have the cool apps and the store to reverse its fortune. There is no point in prolonging this agony.
To survive, BlackBerry needs to capitalize on its remaining strengths. That means becoming a smaller niche player. Those strengths are its secure network and its still popular BBM messaging service, which bring in interesting network service revenues.
But that means BlackBerry needs to open up even more. The company must manage seamlessly the phones of its competitors, since an increasing number of corporations are encouraging their employees to bring their mobile phones from home. It has only recently begun to share BBM with its handset rivals.
In short, a revolution in corporate culture needs to take root. And it needs to happen in the midst of an existential crisis and massive job cuts that will demoralize the work force. The once trailblazing BlackBerry has to play catch-up again.
Finding financial partners may well be the easy part for Mr. Watsa. Finding a new direction for the business – that’s where the real challenge lies.