Platform Leadership & Blackberry

Platform Leadership & Blackberry

Last week RIM rebranded themResearch in Motion CEO Thorsten Heins asselves. Research In Motion is now simply called Blackberry. This simplification of their name is a smart move. Its well aligned with Blackberry’s strategy (I’m assuming) of projecting a one product coherent image. However, is this enough? I watched part of the BB Conference on the Z10 and they certainly have a plethora of new features that brought about applause and the “Ooohs”. But features don’t win the game. So is Blackberry doomed? The bears seemed to think so when Blackberry’s shares plunged 12% after the BB conference. So what brought about this plunge (other than investor confidence)? I have my bets firmly placed on 2 facets – platform leadership and its associated eco-system.

To understand the  facets above 2 simple questions need to be asked -

  1. Does the new product solve an essential problem in the current mobile eco system by creating a new platform?
  2. Does the new product attract complementors / add-ons and there by users?

If the answer is no to any of those 2 questions above, the product is as good as dead i.e. it will be out innovated and despite gaining a few percentage points in market share it will never be ground breaking. So what does Blackberry’s future look like? Bleak. Despite the new features, the new devices and new features that mimic the various Android & Apple devices – Blackberry faces an uphill struggle. The new BB platform “boasts” of over 70K applications, but that’s only 9% of what’s available in the Android & Apple app markets. Additionally by not focusing on their core competency & strong hold in the enterprise market they lost major ground to Android & Apple. For example, when R&D resources were focused on the Playbook a year of innovation was lost which otherwise could’ve been focused on cementing their foothold in the mobile & enterprise email space. Lastly, haphazard and incremental innovation also led to loss in credibility among consumers who were spoiled for choices in the mobile device market.

So what should Blackberry do? It might be too late, but one way to establish platform leadership is to license their OS on different devices. This will allow complementors to provide add-ons and increase direct network effects. If the platform doesn’t become popular among app developers the risk of demise increases. Blackberry also has a very comfortable cash balance (cash increased to 2.9B USD as of 3rd Qtr 2013) which they should use wisely for inventive marketing campaigns by engaging bloggers, early adopters, current & former users. The device itself is still popular outside the United States and they should further bolster their position by focusing on foreign markets where they already have a strong presence ala Nokia in emerging markets. Lastly, on an organizational level they should closely align R&D & Marketing – which I suspect they are already doing. By encouraging a structure that closely monitors market needs and trends, Blackberry can respond effectively to market deficiencies.

One thing is for sure, they certainly have made strides to move away from the defender strategy where all their competitive responses were reactive. They need to keep going down this path in order to exploit any new opportunities or slip ups by incumbents. While 2012, was a year to forget for Blackberry with negative CFs and increased R&D expenses, I suspect 2013 will be any better due to more increase in R&D and marketing expenses, which will lead to increased pressures on operational results. However, at least strategically they seem to have found some solid ground and for now that’s promising. I for one cannot wait to watch Blackberry’s super bowl ad to see if they issue a direct challenge to the incumbents.

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