BlackBerry’s Bust A pioneer in smartphones, BlackBerry was the undisputed industry leader in the early 2000s. IT managers preferred BlackBerry. Its devices allowed users to receive e-mail and other data in real-time globally, with enhanced security features. For executives, a BlackBerry was not just a tool to increase productivity—and to free them from their laptops— but also an important status symbol. As a consequence, by 2008 BlackBerry’s market cap had peaked at $75 billion. Yet by 2015, this valuation had fallen more than 90 percent, to less than $7 billion. What happened? Being Canadian, BlackBerry’s longtime co-CEO, Jim Balsillie, not surprisingly sees ice hockey as his favorite sport. He likes to quote Wayne Gretzky, “The Great One,” whom many consider the best ice hockey player ever: “Skate to where the puck is going to be, not to where it is.” Alas, BlackBerry did not follow that advice. BlackBerry fell victim to two important PESTEL factors in its external environment. Let’s start with technology. The introduction of the iPhone by Apple in 2007 changed the game in the mobile device industry. Equipped with a camera, the iPhone’s slick design offered a user interface with a touchscreen including a virtual keyboard. The iPhone connected seamlessly to other cellular networks and Wi-Fi. Combined with thousands of apps via the Apple iTunes store, the iPhone provided a powerful user experience, or as the late Steve Jobs said, “the Internet in your pocket.” However, BlackBerry engineers and executives initially dismissed the iPhone as a mere toy with poor security features. The everyday user thought differently. They had less concern for encrypted software security than they had the desire for having fun with a device that allowed them to text, surf the web, take pictures, play games, and do e-mail. Although BlackBerry devices were great in productivity applications, such as receiving and responding to e-mail via typing on its iconic physical keyboard, they provided a poor mobile web browsing experience. The second external development that helped erode BlackBerry’s dominance was sociocultural. Initially, mobile devices were issued top-down by corporate IT departments. The only available device for execs was a company-issued BlackBerry. This made life easy for IT departments, ensuring network security. Consumers, however, began to bring their iPhones to work and used them for corporate communication and productivity applications. This bottom-up groundswell of the BYOT (“bring your own technology”) movement forced corporate IT departments to open their services beyond BlackBerry. Caught in the oncoming gale winds of two PESTEL factors—technological and sociocultural—BlackBerry was pushed backward in the smartphone market. Unlike Gretzky, it failed to skate where the puck was going to be and therefore continued to focus on its existing customer base of corporate IT departments and government. Later, feeble modifications in the product lineup appeared to be “too little, too late.” Apple continued to drive innovation in the smartphone industry by bringing out more advanced iPhone models and enhancing the usefulness of its apps for various business and productivity applications. Let’s think about the rapid progress in mobile computing. BlackBerry, once an undisputed leader in the smartphone industry, did not recognize early enough or act upon changes in the external environment. Consumer preferences changed quickly as the iPhone and later the iPad became available. Professionals brought their own Apple or other devices to work instead of using company-issued BlackBerrys. Although the Canadian technology company made a valiant effort to make up lost ground with its new BlackBerry 10 operating system and several new models, it was too little, too late. How would you predict the future for BlackBerry? How would you apply matching strategies (ST, SO, WO, WT) in this case?
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BlackBerry’s Bust
A pioneer in smartphones, BlackBerry was the undisputed industry leader in the early 2000s. IT managers preferred BlackBerry. Its devices allowed users to receive e-mail and other data in real-time globally, with enhanced security features. For executives, a BlackBerry was not just a tool to increase productivity—and to free them from their laptops— but also an important status symbol. As a consequence, by 2008 BlackBerry’s market cap had peaked at $75 billion. Yet by 2015, this valuation had fallen more than 90 percent, to less than $7 billion. What happened? Being Canadian, BlackBerry’s longtime co-CEO, Jim Balsillie, not surprisingly sees ice hockey as his favorite sport. He likes to quote Wayne Gretzky, “The Great One,” whom many consider the best ice hockey player ever: “Skate to where the puck is going to be, not to where it is.” Alas, BlackBerry did not follow that advice. BlackBerry fell victim to two important PESTEL factors in its external environment.
Let’s start with technology. The introduction of the iPhone by Apple in 2007 changed the game in the mobile device industry. Equipped with a camera, the iPhone’s slick design offered a user interface with a touchscreen including a virtual keyboard. The iPhone connected seamlessly to other cellular networks and Wi-Fi. Combined with thousands of apps via the Apple iTunes store, the iPhone provided a powerful user experience, or as the late Steve Jobs said, “the Internet in your pocket.”
However, BlackBerry engineers and executives initially dismissed the iPhone as a mere toy with poor security features. The everyday user thought differently. They had less concern for encrypted software security than they had the desire for having fun with a device that allowed them to text, surf the web, take pictures, play games, and do e-mail. Although BlackBerry devices were great in productivity applications, such as receiving and responding to e-mail via typing on its iconic physical keyboard, they provided a poor mobile web browsing experience. The second external development that helped erode BlackBerry’s dominance was sociocultural. Initially, mobile devices were issued top-down by corporate IT departments. The only available device for execs was a company-issued BlackBerry. This made life easy for IT departments, ensuring network security. Consumers, however, began to bring their iPhones to work and used them for corporate communication and productivity applications. This bottom-up groundswell of the BYOT (“bring your own technology”) movement forced corporate IT departments to open their services beyond BlackBerry. Caught in the oncoming gale winds of two PESTEL factors—technological and sociocultural—BlackBerry was pushed backward in the smartphone market. Unlike Gretzky, it failed to skate where the puck was going to be and therefore continued to focus on its existing customer base of corporate IT departments and government. Later, feeble modifications in the product lineup appeared to be “too little, too late.” Apple continued to drive innovation in the smartphone industry by bringing out more advanced iPhone models and enhancing the usefulness of its apps for various business and productivity applications. Let’s think about the rapid progress in mobile computing. BlackBerry, once an undisputed leader in the smartphone industry, did not recognize early enough or act upon changes in the external environment. Consumer preferences changed quickly as the iPhone and later the iPad became available. Professionals brought their own Apple or other devices to work instead of using company-issued BlackBerrys. Although the Canadian technology company made a valiant effort to make up lost ground with its new BlackBerry 10 operating system and several new models, it was too little, too late.
How would you predict the future for BlackBerry? How would you apply matching strategies (ST, SO, WO, WT) in this case?
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