BlackBerry Ltd (BBRY) Downfall May Have Been Inevitable After 3Q2009

BlackBerry Ltd (BBRY) Downfall May Have Been Inevitable After 3Q2009

Now that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is being sold for what would have been an insulting price a few years ago—but what feels somewhat generous today—it feels like the unwinding of the company was a fait accompli. But the company’s downfall has been much faster than most people realize, and it demonstrates how being the first company in a new market isn’t always an advantage, explains Michael Zawalsky for Ivey Business Review.

“Total market share is a lagging indicator. In the United States, the average smartphone is about 21 months old,” says Zawalsky. He thinks that it makes more sense to look at sales to give an idea of how a company is performing right now. At the beginning of 2009, Research in Motion (before it changed its name) had the best-selling smartphone in the U.S. and three of the top five.

He looks specifically at data from Verizon Wireless, which would be a good indicator of overall trends, except that the iPhone was only available from AT&T Inc. (NYSE:T) for the first few years. This graph makes it look like people were switching from BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) to MMI, but it’s more likely that they were switching carriers entirely.

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Even so, the incredible drop from the first to third quarter of 2009 is striking. After that, it’s a steady two year decline to where we are now. (It’s worth pointing out that the rise of MMI is an artifact of the graph. It doesn’t actually show an increase in sales for MMI, it shows roughly steady sales of MMI while Verizon Communications Inc. (NYSE:VZ)’s total sales declined).

BlackBerry made lots of mistakes along the way

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) made lots of mistakes along the way, but with such a rapid loss (could they have possibly gotten a new model out within six months?), their obstacles may have been more formidable than people realized.

As Zawalsky put it, “As an aside (and though it pains me as a Canadian and former CrackBerry user) RIM embodies the reason I love the technology space. In no other industry can a series of mistakes or general complacency be so dangerous – and the payoff of the right products and strategy so profound.”

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