BB’s Bold Days Over, Private Days Begin

Was interviewed by CTV News the evening of Sept 21st on Blackberry’s fate.

Time to take a look back. The ‘crackberry’ was a groundbreaker launched by Waterloo-based Research In Motion in 1999. The amazing ingenuity lasted nearly forever, in ‘tech years’. 14 years of success in the fast-shifting tech world is worth saluting. Especially for a small Canuck underdog.

But the firm made some big mis-steps starting roughly 5 years ago. Their greatest legacy may be the lessons they leave, straight from Sun Tzu.

Fight winnable battles on terrain that favours you. Despite being a small firm with very limited resources, they went for the Whole Pie, fighting for the ‘average Joe/ Jill’ consumer market. It stretched them too thin in R&D, marketing resources and management focus. Meeting Apple & Samsung/ Google on the ‘average consumer’ battlefield was misguided.

Know which battles to fight; do not fall for feints & false fronts. BB made a half-baked move making tablets that lacked relevance to ‘core’ business/ enterprise/ military/ diplomat/ legal users. A Playbook without email? Squandered R&D, at a time when they badly needed phone hardware & software updates.

Feed the troops & keep them in Good Spirits: This is one thing Thorsten did well. During his short stint as CEO, he did a fine job motivating app builders, employees, investors and carriers. Kudos on that front.

Beware an enemy flanking you: Blackberry was unmoved by Apple, then Android, plying smartphone users with apps. “Leisure’ apps as local mapping, restaurant reviews, surfing companies’ background, weren’t just ‘fun’, they were productivity tools. Poor surf capability and then poor app selection, bled BB’s ‘core’ users’ productivity, who then had to carry 2 phones, or  shift to Android or Apple to stay competitively updated when mobile. When companies opted for BYOD, employees chose- and most did NOT choose BB.

Be quick when a battle calls for it. A slow march is death march: The wait for the Z10, Q10, Q5, etc was painfully long and followed by a new Op Systems which is entirely new, baffling the few remaining Loyalists (Where’s the Back button? the Call-End button?) and returned it in high numbers (some sources claim 20% return on the Z10 in UK, though I doubt it’s that high). Now an announced 5″ screen phablet-style phone? Makes one wonder how much of the Z10/ Q10 delays may have been avoided if the talent on the Z30 had instead helped the Z10 team!

 

Sun Tzu aside, what’s left of this once-great firm? Two parts. I certainly know which side I’d have more faith in.

Hardware: BB remains a fine phone maker with a raft of great patents- but who needs a phone maker now? Who wants to be in hardware, vs outsourcing manufacturing, given risky tech swings? Perhaps facebook or an electronics maker with cash to spare? Celestica? In theory, HP or Dell, but they have both face huge management issues. Does Canon have the stomach for these churning waters?  Most likely scenario? BB hardware will be bought in bits- the patents may attract the most attention/ value, but jobs linked to that business are now precarious at best. Shop those resumes!

Blackberry Messaging & Services? More promising as a sustainable business, or 2 businesses. A manageable market / investing scale for a smaller player like BB, though I still think they’d be better off with outside help. as they must now play catchup.

BBM now has just a fraction of the dwindling 60M BB phone users. The current move** to open it up (free) to Android and iOs users is smart, if late. BBM must quickly gain scale (build the platform & user base; worry about how to monetize it later- that approach worked for facebook, pinterest, LinkedIn…). BBM’s user base lags way behind WhatsApp’s 250M users – and it can expect a fight from google hangout and skype.  But BBM brand recognition & shared-screen capability (on BB devices) is promising and it’s a market I predict won’t be subject to the kind of ‘short list of OpSystems’ consolidation that the phone market is undergoing. There should be room for many players; size isn’t the sole survival tool- smart positioning & features could help BB thrive.

Blackberry Enterprise Server  is arguably an even more intriguing asset. Consider the future potential for providing secure oversight of an Enterprise’s mobile IT- and yes it handles iOs, android, etc. A terrific fit for the trusted-for-security Blackberry name.

i.m.o. these are BB’s 2 viable ongoing crown jewels. Either may be of interest to eg Microsoft-skype, Oracle, SAP, Computer Associates, CGI (bonus ‘fit’ points; they’re also Canadian). Normally I would say Dell and HP (working so hard to be Enterprise service businesses) but, as said above, they’re both too distracted.

Outside Possibilities? IBM or Xerox. Or a massive conglomerate that’s already into phones (Samsung) or consulting (Fujitsu). Or a Business Electronics giant (consider how Canon, Ricoh & Konica-Minolta wish to use their B2B savvy, but are stuck in declining photocopying & printing categories).

A wild ride, full of lessons for all of us- and it’s not done quite yet. Stay tuned.

**btw speaking of wild ride, thanks to Marius for pointing out why my attempt today to activate BBM on my Android phone failed; Blackberry is having problems activating the BBM platform- ouch!

Steven Litt

NewsFlash!  Midday Sept 23d, minority shareholder, board member & Thorsten supporter, Fairfax Financial took Blackberry private for <$5B. Hand it to Prem Watsa; he’s a diehard. Doesn’t change my POV that BB should soon be disassembled and the phone-hardware battle isn’t a smart battle for a small solo player. Sell it, piece it out, or partner up. As I said above, I think BB can make it in either or both service businesses (BES &/or BBM) but even in those categories, a partner and or a greater sense of urgency would do them good.