The Death Rattle For Blackberry: Once Again, Markets Change Very Quickly

from the from-dominant-to-dead-in... dept

There's plenty of attention going to the news of Blackberry's awful financial performance and massive layoffs, with many people declaring the company at death's door (meaning it's likely someone will buy off the pieces sometime soonish). Just a few weeks ago, we wrote about the similar effective death of Nokia, highlighting just how much the mobile ecosystem had changed in just a few years. We showed the following chart from Asymco to make the point about just how much the market had changed, and how far Nokia had fallen in just a few years:

That same chart, obviously, applies to RIM as well. Though since RIM (which became Blackberry) had a rather different business model, it's not as noticeable when you're just looking at profit share, which that chart shows. Instead, the Washington Post shows an even more telling image, just looking at mobile OS marketshare:

The shorthand: markets change. Often in big, surprising ways. A few years back, if you looked at corporate America, it would be almost unfathomable that anyone would unseat RIM/Blackberry. It was everywhere in the corporate market. You could talk to people who referred generically to all mobile phone devices at "Blackberries." That's how ubiquitous the brand had become.

But, then, a variety of things changed. It wasn't because of any anti-trust efforts. It was because of basic competition, which resulted in a somewhat surprising change in how things worked. First, the iPhone came on the scene, and that was a really compelling device. No, it didn't have the nice keyboard, or certain features that Blackberry users loved (liked BBM), but it was really great in so many ways... so people started to want to just use that for both personal and work purposes.

And then the magic shift. As Tim Lee notes, it was the bottom up demand from users in the workplace that completely changed the market.

But the pace of innovation in the consumer smartphone market was so rapid that employees became dissatisfied with their BlackBerrys. And eventually, the advantages of iOS and Android devices became so obvious that corporate IT departments were forced to capitulate. They began supporting iPhones and Android devices even though doing so was less convenient.

BlackBerry eventually realized that it would need to compete effectively in the consumer market if it wanted to survive. But building consumer-friendly mobile devices wasn't its engineers' strong suit. And by the time BlackBerry released a modern touchscreen phone in 2010, three years after the iPhone came on the market, it had a huge deficit to make up.
Folks who study the Innovator's Dilemma will likely recognize this as a classic case of that in action. You have a new upstart, that gets mocked and pooh poohed by the existing players. In the business world, very few people took the iPhone (or Android) seriously. After all, RIM totally dominated the market, and it was entirely top-down, with companies purchasing huge contracts. Plus, the Blackberry had so many features really focused on the business users that the iPhone felt like "a toy."

But that really is the secret to tremendously disruptive innovation. The first versions are almost always mocked as "toys." It leads the dominant player to ignore them or mock them. And then the bottom up tidal wave takes them by complete surprise. The "toys" get better at business tasks, and even if they're not as good as the Blackberry, they're good enough for most business use cases, and the pressure mounts to ignore the top down process and have companies support iPhones and Android phones. And, by the time Blackberry tries to catch up, they're way, way behind. It's the same story of disruptive innovation that has happened time and time again.

This pattern is almost undeniable. In retrospect it always looks obvious, but companies almost always miss this. They tend to think -- incorrectly -- that they can "spot" the disruptive innovations ahead of time. Or, barring that, they believe they have such a dominant position that if something appears to be disruptive, they can just copy it and "catch up" leveraging their position in the market to do so. But that's rarely the case. Almost every time, by the time they realize what's going on, it's way too late. When they finally get to the market, they're seen as also-rans, way behind the times. They're often going after a moving target. The successful early innovators have already adapted and changed and innovated some more, while the big entrants are still trying to compete with last year's model.

It's happened before and it'll happen again. It's the nature of innovation. It has nothing to do with patents (RIM's got tons of those and has used them aggressively at times -- look where that got them). It has nothing to do with antitrust issues. It has everything to do with the nature of innovation and competition.



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  1. This comment has been flagged by the community. Click here to show it
     
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    out_of_the_blue, Sep 20th, 2013 @ 5:54pm

    "Innovation" plus Chinese labor and no corporate tax!

    Apple sells goods made by practically slave labor in a de-industrialized but still wealthy nation, and is not a good corporate citizen, keeps its profits from benefitting the societies it exists in.

    Mike always forgets those doing the labor and never mentions taxing corporations. He's a corporatist. But corporations richer than ever doesn't equate to the common wealth (if were, current stock market levels would mean good times), and fascism / plutocracy is not the kind of society we want.

    Foxcon having to put nets around the building to prevent workers suiciding is well known, and I ain't got a link handy.

    Apple paid no UK corporation tax in 2012

    http://www.ft.com/cms/s/0/13273fae-e1a3-11e2-95c1-00144feabdc0.html

     

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    Anonymous Coward, Sep 20th, 2013 @ 6:28pm

    RIM/Blackberry is considered a business phone? What do people do on these business phones, type word documents and create spreadsheets?

     

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    Anonymous Coward, Sep 20th, 2013 @ 7:30pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

    Apple sells goods made by practically slave labor in a de-industrialized but still wealthy nation

    Don't worry about that sunshine. As the robots move into more production there will be less human slave labour.

    Apple paid no UK corporation tax in 2012

    So? Did they pay taxes some place else?

     

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  4.  
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    Anonymous Coward, Sep 20th, 2013 @ 7:31pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

    If only there was some website where you could search for links.

     

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  5.  
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    Anonymous Coward, Sep 20th, 2013 @ 7:54pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

    Point to a company in the chart that manufactures their phones in a manner that is not "slave labor in a de-industrialized but still wealthy nation, and is not a good corporate citizen, keeps its profits from benefitting the societies it exists in"

     

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    Anonymous Coward, Sep 20th, 2013 @ 9:10pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

     

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    Anonymous Coward, Sep 20th, 2013 @ 9:36pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

    Apple sells goods made by practically slave labor in a de-industrialized but still wealthy nation, and is not a good corporate citizen

    Quick question: if the alternative for a worker at Foxconn is an even worse job -- one with 1/10 the pay - and workers themselves are clamoring to get jobs at Foxconn, then doesn't that reset the discussion a bit?

    We can all agree that conditions at Foxconn should be improved, while at the same time recognizing that without Foxconn, the lives of those workers would likely be significantly worse.

    But you seem to advocate for making sure the lives of many of those workers is worse. It would seem that Mr. Masnick, if he's ever opined on this issue (and I'm not sure if he has) would have good reason to suggest he's much more concerned with the workers in those plants than you are. Under your plan, you'd have most of them out of a job and in much, much worse jobs. How is that looking out for them?

     

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    bruce partington, Sep 20th, 2013 @ 10:29pm

    Re: "Innovation" plus Chinese labor and no corporate tax!

    Doesn't Foxconn also manufacture phones for Samsung, and Xboxes, and computers for HP, Acer, ASUS, Lenovo, etc.? Looks to me like there's plenty of responsibility for Chinese slave labor all around.

    Please, tell us all whose phones and computers aren't built by Chinese slave labor, so we can avoid our mutual moral culpability. Wouldn't that be helpful?

     

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    techflaws (profile), Sep 21st, 2013 @ 3:49am

    typo

    You could talk to people who referred generically to all mobile phone devices _as_ "Blackberries."

     

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    Zakida Paul (profile), Sep 21st, 2013 @ 4:56am

    Personal attacks aside OOTB does have a point about Apple and their unfair advantage with cheap labour and immoral tax arrangements. However they are not alone with Google, Amazon, Samsung et al guilty of the same things. These things hand a massive advantage to these mammoth corporations at the expense of smaller companies who can barely get a foot in the door. This is one big reason the High Streets in the UK at least are dying.

     

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    Not an Electronic Rodent (profile), Sep 21st, 2013 @ 6:14am

    Re: Re: "Innovation" plus Chinese labor and no corporate tax!

    So? Did they pay taxes some place else?
    Doubt it, but then that's SOP for major corporations. Not just the ones blue likes to rant about, but any that are big/international enough to pull it off. Starbucks, for example, was highlighted not so long ago as having paid basically zero corporation tax anywhere IIRC.
    So what it has to do with this story when Rim almost certainly were doing the same thing I don't know... but then blue's never needed a reason to rant incoherently.

     

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    ChrisB (profile), Sep 21st, 2013 @ 7:17am

    Re: "Innovation" plus Chinese labor and no corporate tax!

    Foxcon workers had a LOWER suicide rate than the rest of China, you moron.

     

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  13.  
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    Anonymous Coward, Sep 21st, 2013 @ 7:34am

    Re:

    How is it an unfair advantage for Apple if all of the phone manufacturers are using the same cheap labor? If anything they have an advantage in that they can lock up the supply chain on particular components, but that is more of a business model decision - make 1 million of the same model vs 300,000 of each of 3 different phones with 3 different specs.

     

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  14.  
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    Anonymous Coward, Sep 21st, 2013 @ 9:21am

    Wired: Homeless, Unemployed, and Surviving on Bitcoins

    You guys debating if Foxconn is bad, well, I like the old style manufacturing thing, it helps teach society the value of work, but it is grueling, there are new ways to make money or even live without it, what society may need is a class of morons that buy, buy, buy stuff and throw out a lot of stuff and another class of people who goes around collecting all that "garbage" to produce new things that the morons who just buy will buy :)

    Symbioses is the name of the game.

    Americans mostly have no work and no jobs in America simply because they now have the upper hand in the conflict, to be an employer in America is almost like having a target painted in your back, no this is not a complaint about the system, is an observation, employers hold a lot of power still, but they do have a lot and I mean a lot of "responsibilities", it has become a minefield so it is easier and cheaper to have others do the job, now those other countries are learning how to work, but they are still relatively hands off the work issues, is that bad?

    In the one hand people are lifted from poverty, and they have the means to educate their sons and daughters on the other they have to put up with a lot of crap.

    Really it doesn't matter, what matters is what we can do and cannot do, at the end of the day only the work done is meaningful to our wealth and health, no matter what the conditions are.

    There are better ways to produce and consume things, some don't even involve money, ants form gigantic colonies and they have no complex system of laws or economies and some how they thrive everywhere.

    For a long time I complained about how much I was getting paid, then a light bulb moment happened, is not how much I earn, but how much I know which is the real thing in life, there are people out there living great lifes on less than a hundred bucks a month in the US, those people know how to make their own clothes, their own furniture, their own homes, they scavenge and repurpose everything , while others given the same set of conditions starve and have real hardships, without the proxy(money) to get others to work for them, they can't survive, while others can.

    With that said, if you don't have the money, you should at least have the knowledge to make it, if you should chose to be a consumer or a maker, be the later not the former, making is what life is all about, no matter how it is done.

    Ants and bees can have social groups because they make it, they don't have anything but simple rules to follow, Indian societies thrived before they were defeated by others, it could happen again I hope, there was no money in those societies so it should make anyone wonder how they did it and if there is a way to implement that in a modern world.

     

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    John Fenderson (profile), Sep 21st, 2013 @ 1:19pm

    Re: Re: "Innovation" plus Chinese labor and no corporate tax!

    if the alternative for a worker at Foxconn is an even worse job -- one with 1/10 the pay - and workers themselves are clamoring to get jobs at Foxconn, then doesn't that reset the discussion a bit?


    Only the tiniest bit. It remains a case of a wealthy, powerful corporation taking advantage of people who are in terrible situations.

     

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  16.  
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    Nemo, Sep 21st, 2013 @ 3:34pm

    Phhht

    I stopped taking Blackberry seriously when those two RIM employees were caught misbehaving on a flight from Hong Kong.

    Bad management leads to bad hires and to bad products.

     

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  17.  
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    Anon-Y-Mouse (profile), Sep 22nd, 2013 @ 9:27am

    Re: Re:

    How is it an unfair advantage for Apple if all of the phone manufacturers are using the same cheap labor?
    With their easy access to cheap labor, just try to make a competing product. Free trade agreements have been the death knell of small manufacturing in western nations. Large corporations can force prices so low they force manufacturers to move to the lowest wage places of the world.

    Free trade agreements are great for large corporations because they can take advantage of moving manufacturing abroad but they don't help the average citizen except to allow those that keep their jobs to buy more in the short term. The problem is they eventually strangle all people's wages by reducing the flow of money though the local economy. Sooner or later everybody is reduced to lower wages too. When people stop buying, profits plummet.

     

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  18.  
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    PRMan, Sep 22nd, 2013 @ 2:19pm

    The incumbents stop listening...

    I told Microsoft that they needed to have a way to install apps from the internet directly onto the phone without using a PC. They told me they didn't need to do that.

    I told RIM that they needed a full browser on the phone. They told me that nobody wanted that because the screen was too small.

    People are telling Apple what they want but Apple is so arrogant that they are losing smartphone and tablet share to Samsung, who is currently the one listening to their customers.

     

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  19.  
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    PaulT (profile), Sep 23rd, 2013 @ 12:33am

    Re: "Innovation" plus Chinese labor and no corporate tax!

    ""Innovation" plus Chinese labor and no corporate tax!"

    Yes, how dare RIM use Chinese labour and parts to make their devices!

    http://www.forbes.com/sites/jeffreycarr/2011/01/13/do-you-know-who-manufactured-your-bla ckberry/

    Oh, you're using your lack of intellect and knowledge to attack Apple for using Chinese labour, i.e. what every other hardware manufacturer does? Typical.

    Why don't you list what magical equipment you're using that doesn't use Chinese labour? Go on, I dare you to supply such a list.

    "Apple paid no UK corporation tax in 2012"

    Yet, they paid tax in the US where they're incorporated.

    Yet again, ootb leaves out all important facts when they don't allow him to rant like an idiot against his favourite targets. You might even be interesting if you weren't so wilfully dishonest.

    "He's a corporatist"

    I love the fact that you've attached yourself to this idiotic argument. I can't wait for the next batch of stories where you attack Mike for supporting piracy and losing profits for your favoured corporations, so we can laugh at what a poor and pathological liar you are.

     

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  20.  
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    PaulT (profile), Sep 23rd, 2013 @ 12:55am

    Re:

    "Apple and their unfair advantage... they are not alone with Google, Amazon, Samsung et al guilty of the same things"

    You've fallen into ootb's typically anti-logic trap singling out Apple, although you do manage to get the real point across afterwards.

    Apple are merely doing things that everyone else in the sector are doing. If all their competitors are using the same labour and tax tactics, then it's not an unfair advantage.

    You can argue that it's wrong to utilise these things, but that's a problem with the sector and the market, not Apple specifically. Unless you can come up with something they're using that their competitors are not, they don't deserve to be singled out for criticism.

    "This is one big reason the High Streets in the UK at least are dying."

    Maybe, but there's a great many other reasons. Plus, the "high street" in the UK has long been dominated by chain stores, many of them owned by major retail groups and corporations. It might be a shame that some independent stores have gone away, but most of the time the "high street" in any given town is just the same collection of names you see in the next town over. That people are now giving their money to, say, Tesco and Amazon instead of Dixons, HMV and Woolworths is not due to a sudden corporate influence - that's been there for decades.

     

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  21.  
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    Ninja (profile), Sep 23rd, 2013 @ 3:44am

    Apple more or less dominated the personal use mobile market till early 2010 while having mixed success in the business world. Then Android kicked in. After that both systems ate market share systematically in all spheres. Nokia failure to introduce Android phones early has cost them dearly and as far as I can see it was out of pure stubbornness.

    Apple is losing some of it's pace right now. I'm betting Android will keep eating more and more market share simply because it is a dynamic OS and Apple is suffering from that same dilemma right now. They just don't have an "Apple" that's dropping a bomb in the market yet. There's room for major breakthroughs in the Android environment too - I still think they can make it more useful in a number of ways - but I'm not bold enough to launch any prediction on the next innovation in the field.

    One interesting thing is how LG declined to the point of being a very thin line in the profit graphics. I've had phones from LG and they were very good (my last was a LG Arena). I'm guessing they took too long to jump into the Android bandwagon.

     

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  22.  
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    Pragmatic, Sep 23rd, 2013 @ 3:45am

    Re: Re: "Innovation" plus Chinese labor and no corporate tax!

    Can we please stop pretending that a badly paid job is better than no job, as if there aren't any other options? Oh, wait, there are forces among us doing their level best to remove the other options. Lovely!

     

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  23.  
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    Pragmatic, Sep 23rd, 2013 @ 3:48am

    Re:

    So... learn to accept our corporate overlords and grovel before them, grateful for the crumbs that fall from their tables?

    Uh, no.

    Atlas shrugged, then went back to sleep.

     

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  24.  
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    Leonardo Balliache (profile), Sep 24th, 2013 @ 3:03pm

    Another company destroyed

    No matter how good you are there will be always someone better. The problem is the loss of money and jobs of many people.

     

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    out_of_the_blue, Sep 24th, 2013 @ 7:09pm

    Markets change, but The Rich are always arrogant:

    BlackBerry executives bought a $20million private jet just months before troubled phone company sacked 4,500 employees and announced an incredible $1billion loss

    http://www.dailymail.co.uk/news/article-2429965/BlackBerry-executives-bought-20million-jet-j ust-phone-company-sacked-4-500-employees.html

    This is really the key point to learn about "capitalism": workers produce; stockholders and management steals and wastes their labors. -- Steeply progressive tax rates are needed; that's not "punishing achievement", it's limiting how damage the arrogant dogs can do.

     

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    mermaldad (profile), Sep 24th, 2013 @ 8:03pm

    The elephant NOT in the room

    The thing that bothers me about that first graph is the missing elephant. Where's Motorola?

     

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