KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT

Balkumari, Lalitpur

An Assignment on “The Rise and Fall of BlackBerry”

Submitted to:

Mr. Ajay Shrestha

Strategic Management (GEM 711)

Submitted by:
Prasansha Shrestha (21330)
MBA Spring 2021

Submission Date: 6th November, 2022

1. Describe the industry that the original BlackBerry competed in.

With the release of the BlackBerry in 1999, Research In Motion (RIM) laid the groundwork
for the creation of smartphones. In its heyday, it dominated the mobile industry; however, when
formidable rivals like Apple emerged, it began to lose ground. When it first entered the market,
BlackBerry launched an always-on mobile email solution with an integrated keyboard for the
telecommunications sector. Back then, email connections on phones and PDAs were
cumbersome, so users had to call the service providers, connect online, or use a specific phone
number to get in touch with customer service. However, BlackBerry provided an easy solution as
it was always connected to a wireless network. It used software to create corporate email servers
that "pushed" incoming messages from an email address that already existed to the BlackBerry.

Because of its simplicity, BlackBerry’s popularity increased among business professionals

leading to RIM partnering with several companies. For example, companies such as Compaq,
AOL and Nortel networks partnered with BlackBerry and agreed to engage in resell, co-brand,
and bundle their goods. As a result, BlackBerry was able to outsell its competitors in the
telecommunications sector because to its mobile email product.

Numerous internal and external environmental factors driving strategic change at various
scales within RIM were contributing to BlackBerry's success during this time. "Mobile wireless
connections", which let BlackBerry become the dominant manufacturer of mobile products with
keyboards, was one of the internal elements contributing to its success. The wireless email
service made it possible to offer consumers a comparable alternative to a PDA-functioning cell
device as well as encrypted email that was synchronized with their users' addresses. The
leadership team was another internal element that was crucial to BlackBerry's earlier success.
Executives from RIM believed that creating technology that would meet consumer needs was
their primary goal. If BlackBerry's executives had a different strategy and set of goals, it would
not have had the early success.

On the other hand, the primary external element driving the BlackBerry's earlier success was
the ready market. "Wireless email evangelists" were part of RIM's grassroots marketing initiative
to approach Fortune 500 companies. RIM was able to successfully enter Wall Street corporations
during this time while undertaking product promotion. Bartenders, lawmakers, and journalists
are just a few of the different types of people who used its devices in Wall Street and Capitol
Hill. Additionally, Blackberry targeted early adopters, established pilot initiatives inside of
businesses, and gave out Blackberries on a trial basis. Additionally, when BlackBerry introduced
BlackBerry Messenger (BBM), an instant messaging system, in 2005, its popularity grew as a
result of its encryption, privacy, and not requiring to access government servers. As a result, the
business was able to access a ready market from influential figures like US President Obama.

Porter’s five forces analysis of BlackBerry to better understand the industry it competed in is
as follows:
Forces Factors Score
High barrier to entry: requires substantial capital and
resource investment (decreases threat)
Low/minimum governmental barriers (increases threat)
There is high economy of scale in this industry and the
Threat of New
industry in itself is highly profitable so it is very lucrative for Moderate
Entrants
new entrants (increases threat)
Complex distribution channel: requires a lot of contract and
negotiations and it is tough to get over already-established
manufacturer (decreases threat)

Threat of Limited substitutes such as tablets, notebooks, PCs etc.

Substitute which do not provide as much mobility and flexibility as Low

Products BlackBerry (low threat)

Bargaining There is high demand for smartphones and suppliers can sell
Power of their products to many companies besides BlackBerry. Moderate
Suppliers (increases bargaining power)
 There are significant number of suppliers as well, thus the
switching cost for BlackBerry to switch to other suppliers is
not that high. Moreover all the suppliers provide similar
products (decreases bargaining power)
Variety of options for customers to choose from such as
iPhone, Motorola, Nokia, Samsung, etc. (increases
Bargaining bargaining power)
Power of Low differentiation among products of competitor and High
Customers BlackBerry (increases bargaining power)
Low switching costs, both economically and psychologically
(increases bargaining power)
Intense competition among rivals
Price wars, technological competition (for example, apple
Competition and Samsung) High
The industry is growing at a fast rate with Apple and
Samsung emerging as clear market leaders

2. Why was the original BlackBerry product so successful? What was the basis for
BlackBerry’s competitive advantage?
The initial BlackBerry devices were popular because they were versatile, safe, and simple to
use. They offered security and encryption, which attracted devoted clients including
governmental bodies and business executives. BlackBerry was the first fully wireless solution
that allowed users to access both personal information management (PIM) and corporate email
on a single handheld. It became successful with its communication system i.e. email that was less
cumbersome compared to its predecessors. It simplified remote email access and addressed
crucial corporate requirements and had “advanced wireless networks to deliver a breakthrough in
mobility”.

BlackBerry was particularly successful with its corporate clients, who were also its largest
clients, including Intel Corp., Credit Suisse First Boston, and Merrill Lynch. These companies
ordered thousands of BlackBerry phones for its employees. Simple remote email access,
mobility, inventive software, appeal to business customers, and information security that did not
need going via government channels gave BlackBerry a competitive edge over its rivals.

Basis for BlackBerry’s competitive advantage:

i. Network encryption feature that increased the security of BlackBerry devices was its
foremost competitive advantage.
ii. Its QWERTY keyboard is very easy to use and people can type very fast with few errors
using this device.
iii. Remote email access that was less cumbersome compared to its predecessors:
BlackBerry was always connected to a wireless network and used software for corporate
email servers that “pushed” incoming messages from an existing email address to the
BlackBerry.

3. When competitors introduced new products, how did BlackBerry react? Why did
BlackBerry react this way?
RIM intended to introduce Storm, its first touchscreen phone, to address the shift in
consumer demands. Storm was a rival to the iPhone; however, it garnered unfavorable reviews
from customers, one of whom called it "the Edsel of smartphones, an utter smeller from top to
bottom." It was discovered that the Storm had a number of technical issues, resulting in a $500
million replacement cost for roughly one million phones. Another strategy RIM employed was
the 2009 debut of the BlackBerry App World, which featured only 2,000 apps compared to
Apple's 65,000 by the end of the summer. Although the strategy shifted to addressing customer
needs by catering to their preferences in mobile phones, BlackBerry was still unable to compete
with the iPhone. Therefore, instead of releasing the Bold, which still had the physical keyboard,
RIM should have thought about putting all their effort into creating additional apps for their
BlackBerry App World and updating the Storm. Customers no longer preferred smartphones
with a physical keyboard, and RIM should have known this.

RIM had intended to keep expanding BlackBerry product availability in both the prosumer
and consumer markets. Balancing the BlackBerry architecture with the popularity of applications
like BBM to increase e-commerce prospects was one of the steps that would help the company's
ambition come to fruition. As a result, BlackBerry focused a lot of attention on the phone's
durability, QWERTY keyboard, high level of security, and physical toughness. These qualities
drew a large number of consumers, including business and governmental entities, who could
purchase BlackBerry at the predetermined high pricing. RIM, however, was unaware that a
sizable portion of the market was made up of customers with minimal purchasing power.
Blackberry should have taken into account the price of its phones if the average customer, who
constituted a sizable portion of the market, could afford them. This situation could be attributed
to poor marketing because it overlooked the market's average consumer's ability to afford mobile
phones.

Another plan RIM had developed as a means of coping with market changes was a
partnership with Verizon Wireless. Due to this collaboration, BlackBerry's first touchscreen
smartphone, the Storm, was released. Similarly, in order to improve the market share of the
iPhone, Apple partnered with AT&T. However, the RIM-Verizon alliance never lived up to the
expectations of all parties. After it was discovered that Storm had a number of technical issues,
the buyers had an unfavorable reaction to it. It was clear from this that the alliance was unable to
create phones that could outperform the iPhone in the market. There was no need to develop the
collaboration because the issue with BlackBerry was that its architecture was incompatible with
users who preferred touch-screen smartphones to those with physical keyboards. Therefore,
instead of working with Verizon, RIM ought to have gone by itself and should have
rather negotiated on network access.

4. Why was BlackBerry unable to sustain its industry position?

When Blackberry reacted to market signals and changes, it made a costly error that
contributed to its downfall. BlackBerry reacted slowly to changing market conditions as well as
consumer demands. A smartphone category typified by an advanced operating system combined
with various services such as email, cameras, video games, and media players emerged as a
result of fierce competition in the telecommunications sector. Competitors of Blackberry,
including Nokia, Samsung, Siemens, Motorola, and HP, started creating wireless email devices.
The Palm Treo, on the other hand, was a product that PalmOne delivered to the market in one
million units. In a similar manner, Microsoft upgraded its email servers to support mobile
devices and gave its consumers access to it without charge. Additionally, Microsoft developed a
version of the Windows OS specifically for mobile devices. Since it became known that Apple
was developing a smartphone that some analysts have called the iPhone, it was impossible to
ignore the company. As a result, BlackBerry lagged behind competitors and failed to capitalize
on changing market indicators.

Blackberry was unable to maintain its place in the market due to its inability to recognize
how different each customer's preferences in product design are. For instance, RIM co-CEO
Lazardis thought that Blackberry's keyboard will continue to compete with its rivals' cutting-
edge touchscreens. Lazardis remarked that he couldn't type on the iPhone as quickly as on his
keyboard and claimed his friends couldn’t either, and he added that writing on glass is
challenging. No one wants to use a phone whose battery would run out in a matter of hours, he
continued, adding that Apple's battery has a short lifespan. As a result, Lazardis overestimated
the popularity of Blackberry's keyboard devices while undervaluing the Apple offering, which
was responding to consumer demand by manufacturing iPhones with a screen touch keyboard.

It was unexpected to see BlackBerry, which had been ruling the market, falling while Apple
devices, which were mocked, eventually flourish. The change in management and leadership
approaches is another factor in Blackberry's industrial position's decline. The corporation was
operated fairly informally and lacked a strong strategic plan. The effects of these management
techniques were not apparent in the company's early years, but as it grew, the company's
management style backfired, costing it several of its important personnel, including the co-CEO,
chief operating officer, and chief marketing officer.

RIM paid a high price for refusing to reform; it lost a sizable portion of the market. The
corporation was established with a goal to fulfilling consumer's needs, but Lazaridis' leadership
decision was misleading because it did not emphasize on the importance of doing so. As a result,
leadership roles also had a major role in Blackberry's downfall.