What Master Yoda Would Tell Blackberry [Pt 1 of 3]
In one of his wiser moments, Master Yoda of Star Wars fame opines: “Do or do not. There is no try.” These are probably the same words of wisdom that the Jedi master would have imparted to Research In Motion if that company, like Luke Skywalker, had pledged “to try.”
The tribulations of the smartphone maker have been well documented in the press, news reports, etc. And while there are pockets in the world where RIM’s signature device, the Blackberry still holds sway – witness the popularity in Nigeria epitomized by the movie Blackberry Babes – the company has been bleeding share in most of world despite its vaunted security and the popularity of Blackberry Messenger. The ability to secure sensitive corporate information on other smartphones, and the reduced costs to companies with bring-your-own-device policies, has made other smartphones attractive to corporations. Meanwhile the plethora of apps available for Android devices and iPhones has made these more attractive to employees (and consumers) to carry. Together, these factors along with the absence of the “coolness” factor, have contributed to the precipitous declines in RIM’s fortunes. Not surprisingly then, a lot was riding on RIM’s various announcements last week.
One announcement concerned RIM’s decision to change its name to Blackberry, the product it is most closely associated with. In many ways, the decision makes sense. Corporate customers may not care much about the name, but consumers relate more to the Blackberry name than they do to RIM. Having one name to rally behind makes sense from that perspective. Of course, this could mean that subsequent product launches with names other than Blackberry may have difficulty gaining quick traction; this seems to be an issue for the future, however. Importantly, other companies have done this. While the name changes from Minnesota Mining and Manufacturing to 3M, or from Kentucky Fried Chicken to KFC, or from Lucky Goldstar to LG seem more obvious, Dayton-Hudson did change its name to its best-known brand, Target. A common concern with name changes is that the brand could end up losing the equity associated with its previous name. However given RIM’s situation, the negative fallout is unlikely to be fatal.
The bigger announcement, however, was the launch of two new devices, the Z10 and the Q10, both of which run the new Blackberry 10. That’s the operating system driven by the QNX software acquisition, with the new user interface courtesy of The Astonishing Tribe purchase. Most of the attention focused on the fact that the Z10 looks similar to the smartphones Blackberry has been trying to catch up to. Positive differentiating features are likely to be the new virtual keyboard, and the Hub and Flow services on the device. At the same time, Blackberry continues to be at a disadvantage as far as the number of apps is concerned. This is a negative differentiating feature it will have to contend with.
From the customer perspective, Blackberry needs to accomplish two things – retain its existing base of 80 million or so subscribers and acquire new customers, either first time smartphone buyers, or switchers from other platforms. The new devices are likely to hold some appeal for current subscribers. Current customers are dealing with a company they are used to (which could minimize switching costs), and furthermore, they now have a parity product that has many of the features of its rivals and a few more. So they need not feel left behind holding a Blackberry.
Acquiring new customers is a far trickier proposition. First time buyers of smartphones, especially those in developing economies, are likely to be price sensitive due to the absence of handset subsidies in many of these countries (I wrote about that in this earlier post about a lower-cost iPhone). Such buyers are likely to gravitate to lower-cost Android devices since the Blackberry, iPhone, etc. are likely beyond their financial reach. On top of that, it does not appear that there is a “killer benefit” that will sway current users of other platforms to switch to Blackberry. This is likely to be its biggest hurdle in expanding the subscriber base.
Ultimately the success of Blackberry depends on how much the combination of the device, the operating system, the user interface and the apps differentiates the product from its rivals and turns out to be a game changer for the company. Again, to echo the sentiments of the wise Yoda: “If no mistake have you made, yet losing you are … a different game you should play.”