Showing posts with label cell. Show all posts
Showing posts with label cell. Show all posts

Saturday, March 31, 2012

How the 'Crackberry' makers lost their way

mobile phones
New York (CNN) – When I interviewed Research in Motion founder Mike Lazaridis two years ago at the launch of the Blackberry Torch, he was convinced the product would revive Blackberry’s fortunes because, “People don’t want to carry around two devices, they just want to carry one.”

He was right about that, but wrong about the device people wanted.

Thursday RIM announced a 23% drop in sales in the fourth quarter.  A recent Nielsen survey found only 5% of U.S. consumers buying a new smart phone chose a Blackberry.  It is a spectacular fall from grace for a company that pioneered push email and made their devices so indispensible they were nicknamed ‘Crackberrys.’

What happened?

For one thing, competition.  Workers who were issued Blackberry devices back in 2003-2005 didn’t just use them for work, they used them all the time and it didn’t take long for the likes of Apple and Google to catch on.  By 2007 both companies hit the market with phones that could not only deliver email and web access on the go, but had cool designs and access to app stores – something Blackberry did not.

But it wasn’t the competition that ultimately killed RIM’s edge.  The company suffered from “founder syndrome.” Mike Lazaridis and co-CEO Jim Balsillie created a brilliant product, but there were ultimately engineers that were blind to changes that were taking place.

In 2005, I went to Waterloo, Ontario to interview both men.  In lab coats and sanitized shoe booties, we toured the facilities and talked a lot about security and I.T. departments - not very much the user experience. It is something I have thought about often as I watched RIM’s stock and market share plummet.

It is often said that Steve Jobs was one of the few founders who was able to cannibalize his own products over and over.  Maybe it was Apple’s near death experience that enabled him to do that.  Is this finally RIM’s “a-ha” moment?  Maybe.

New CEO Thorsten Heins, who seemed in denial himself two months ago, has now announced a management shake-up, said he is open to selling or licensing part of the business. He vowed the company will turn its main focus back to the corporate market.  As one analyst told me, “it was the first RIM conference call in a long time where I didn’t roll my eyes.”

It may be too little, too late. Many of my friends and colleagues have gotten their I.T. departments to support their iPhones or Android phones. I can’t see them turning back.  And let’s not even mention tablets, which RIM has to practically give away to attract customers.

But RIM still had $4 billion in revenue. Their brand, though hurt, still carries weight – especially in developing countries.  And Matt Thornton, Avian Research in Boston says that if they do decide to license their operating system, and pare back from the hardware business, they have a shot.

“It will be a smaller company, but the gross margins on software companies can be 70-80% versus hardware companies which are closer to 40%,” he said.  Who might partner with Blackberry in a licensing deal?  Thornton thinks Samsung would make an interesting alliance.

Any Blackberry fans out there with advice for Thorsten Heins?  He’s gonna need it.

News by CNN

Read current news at