What Can We Learn From The Demise of BlackBerry Ltd

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BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s fall from grace seems to complete this week after 2013 Q4 figures showed losses of $423 million. This was followed by another PR disaster after the Blackberry CEO, John Chen, threatened employees that leaked information with the sack.

BlackBerry: a fascinating case study

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is a fascinating case study for investors in the tech industry. This sector is a volatile rise and fall of fly-by-night names and brands, so leadership and a company’s history of innovation are paramount.

The technology industry can yield a temporary explosion in sales before a steep descent; to stay in the game you need to develop and be bold.  Whether you like or loathe Apple Inc. (NASDAQ:AAPL), they’ve retained their consumer core and innovated constantly; likewise Samsung are looking to innovate their way out of a slump.

In the summer of 2008 BlackBerry had a share price of around $144; editions like the BlackBerry 9900, the Pearl 8100, and the 9700 became practically iconic; Barack Obama was an avid user of the device, and the “crackberry” had become a staple of modern business.

BlackBerry’s unstable fortunes

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s fortunes waned but seemed to enjoy a second wind with millions of teenagers adopting the device for its BBM capabilities.

Now BlackBerry’s slump is nearly complete.  Its share price lies at just over $8, and investors have been predicting catastrophe after last year’s Z10 failed to take the market by storm.

Technology firms, more than any other industry, have to keep innovating, moving, dropping grand ideas and making bold steps into the future.  It seems like when BlackBerry’s stock reached its peak they consolidated and rested on their laurels.

The debate regarding ‘what went wrong?’ ranges from the ultra-technical, to the glaringly obvious.  One such glaring point is that BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s phones – until the Z10 – had small screens and a tangible keyboard; the competition had large screens and touchscreen keyboards.

Blackberry used to enjoy the privilege of BBM, but when cross-platform messaging applications like WhatsApp became prevalent there seemed little point in the Blackberry for non-business usage.  It would lose both the business market and the young people’s market practically overnight.

Now it seems that when most of us buy a phone, there’s a simple choice: Apple (iOS), Android or Windows, then there’s factors like elegance of design, user experience, and camera capabilities.  BB10 (QNX’s microkernel OS), is a formidable platform but it doesn’t have the pull or the range of Apps which entice users to the big operating systems.

Communications screening a positive for BlackBerry

Blackberry’s remaining markets seem to be amongst dedicated business users who enjoy the phones ability to screen communications; the device easily records phone calls and shares copies of messages.  It also probably still has a market for those that can’t get their head around using a touchscreen instead of a keyboard – possibly some elements of the older generation.  But in general, it seems that anything a Blackberry can do an iPhone can do better.

Around the time of 2005 different phones had different specialisations, but it became apparent that if a phone could act as a bridge to the net then it would corner the market – the iPhone was released in 2007 and in the following years it would gazump all of Blackberry’s instant messaging features.

The BlackBerry Z10, Z30 and Playbook were all decent devices hinting at a new dawn, but ultimately floundered.  BlackBerry needs to plough another niche and it does seem to be making headway in terms of connected cars and software.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB)’s new CEO John Chen has a history of company turnarounds and is keen not to leak any impending plans although software and business usage have returned to the top of his agenda.

More importantly, he’s an outsider coming in, rather than an insider looking to rebuild the company; BlackBerry could certainly be accused of going stagnant in recent years due to too much insider influence.

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