Faced with a falling smartphone market share, Blackberry is doing something interesting: rather than continue to let competitors eat it alive, it’s choosing to cannibalise itself.
Blackberry used to be a dominant player in the world of smartphones, with its practical, sturdy device among the first sophisticated smartphones on the market.
But as Apple and Samsung brought sleek, well designed products to market Blackberry’s market share fell off a cliff: from around 50% in 2009, to just 0.6% by the start of this year.
Blackberry didn’t respond to what consumers wanted, and paid the price.
But that wasn’t the worst of it for Blackberry. While private consumers were changing their taste and preferences, so too was the corporate market.
Companies used to dictate what device their employees could use. Known for its excellent security features, many companies opted to issue employees with a Blackberry.
But ICT departments the world over changed their policies. Now it’s common practice for employers to allow their employees to use whatever device they want. Blackberry’s share of the business device market fell from 30% in 2010 to about 8% in three years.
How Blackberry is changing it’s approach to the smartphone market
Recognising this trend, Blackberry is moving into smartphone management systems.
While employees love the convenience of using their own device for work, it creates a security risk for business and government employers who need to keep commercial information secure.
Blackberry’s strength in this market was always security, so it has stepped in with a device management system that offers multi-device compatibility.
It helps employers keep their sensitive information secure, and allows employees to safely combine personal and business use on the one device.
Blackberry is now the largest provider of smartphone management systems in Australia, with the Australian National Audit Office and professional services company Questas recently adopting the BlackBerry Enterprise Service 10g (BES10).
What makes Blackberry’s latest move so interesting is that this it is accelerating the very trend that killed market share decline: businesses switching to rival devices.
That’s not all Blackberry is doing, either.
Recognising the strong growth of the middle class in emerging economies, they’ve partnered with Foxconn to produce cheap smartphones for those markets.
Their newest product is launching in Blackberry’s biggest market, Indonesia. Retailing for $200US, the Z10 has adopted the trend for larger, video-optimised screens.
It hasn’t abandoned its traditional market—a new Blackberry device, BB10 is also launching—but is pivoting and adapting.
Blackberry is taking lessons from Apple
It’s not the first time we’ve seen this self-inflicted creative destruction.
Consider Apple.
Apple launched the IPod in 2001 and we all know what happened—sales boomed and the company raked in billions.
Having created the IPod, Apple then went about killing it.
They recognised that eventually the smartphones would be capable of storing music and photos, and supersede the IPod. Hence in 2007, the IPhone was born. Like the IPod before it, the IPhone was prettier and easier to use than competitors, and transformed the market.
Apple still makes iPods, but in a much smaller number that shrinks every year. Rather than let competitors eat the iPod alive, Apple did.
Blackberry late in the game—the collapse in market share has brought the company to the brink– but is now adopting the same strategy.
They’re not abandoning their smartphones entirely, but are making other products that will continue to chip away at the phone’s market share.
And that’s what successful companies, especially tech companies, need to do.
Callum Denness
Contributing Editor, Money Morning
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