Today has been tumultuous for BlackBerry. Investment company Fairfax Financial, BlackBerry’s biggest shareholder, was intending to buy the company for US $4.7bn, but that deal fell through, apparently because of failure to attract other investors to what seemed a risky endeavour. Instead, Fairfax and other investors will invest US $1bn of new money into BlackBerry. CEO Thorsten Heins is to step down, and John S Chen, formerly CEO of Sybase, will take on the CEO role. Here is what Chen says:
BlackBerry is an iconic brand with enormous potential – but it’s going to take time, discipline and tough decisions to reclaim our success. I look forward to leading BlackBerry in its turnaround and business model transformation for the benefit of all of its constituencies, including its customers, shareholders and employees.
Note the key phrase here: business model transformation. What does that mean? Presumably, that the company cannot no longer be primarily a supplier of mobile devices, but will attempt to build a new business based on mobile device management, mobile security, messaging, or who knows what.
It is relatively easy to explain why BlackBerry, whose dire financials released at the end of September triggered the crisis changes, got into trouble. Like Nokia, it found that a strong position in mobile phones had suddenly become a weak position, thanks to competition from Apple and then Android. The iPhone was not just a better mobile phone, but one that changed the computing landscape. I am not going to reiterate why, but think design, think apps, think usability, think mobile computing in place of smart phones. BlackBerry was not prepared for this, nor was Nokia, nor was Microsoft.
In October 2010 I wrote about which mobile platforms will fail. This was my list of current mobile platforms:
- Apple iOS
- Google Android
- Samsung Bada
- BlackBerry Tablet OS (QNX)
- HP/Palm WebOS
- Windows Phone 7 and successors
Today, Samsung Bada, MeeGo, WebOS, Symbian and now BlackBerry 10 are gone or all-but gone. There are now three mobile platforms that matter:
- Apple iOS
- Google Android
- Windows Phone
I realise that many have written off Windows Phone as a contender, but I include it because it is actually growing its market share, and because it is the future of Windows. Desktop and mobile versions of Windows will merge, and while Microsoft has challenges in this market, for sure it is not dead yet.
We should also at least nod to Amazon which is building its Kindle platform, based on Android but an Amazon platform, and will likely introduce a mobile phone at some point; and to Mozilla for Firefox OS; and to Samsung which is making efforts to meld Android into more of its own OS thus fracturing the platform, and to Chinese vendors like Xiaomi who are doing some of the same.
Why has BlackBerry 10 failed? Reviews have been mixed, but it is as far as I can tell a decent mobile OS, and the underling QNX embedded operating system was a good choice given that the company decided against Android.
However today you need not just a nice mobile platform but an ecosystem of huge scale. BlackBerry 10 may objectively have be better initial effort at a new mobile platform than Windows Phone 7 was, in a parallel situation, but it is even later, and lacks the backing of a deep-pocketed company content to lose money for years in the hope of eventually establishing its viability. BlackBerry also lacks the wider ecosystem that surrounds the other three platforms.
While no doubt the strategy adopted by Heins could have been improved, it was more that the task was too great, than that the execution was poor.