Blackberry ltd.

by Evgenii Em
Technology/Innovation
It has been more than a year since Blackberry introduced their latest OS Blackberry 10 (BB10
OS), which is used in all the latest devices developed by Blackberry. The key features that
differentiate Blackberry 10 OS for its primary competitors are: advanced typing technology,
more intuitive multitasking function, and ground breaking camera software. BB10 OS is
supposed to target consumers with high demand in social networking, planning capability, and
business applications. The built in application called Blackberry Hub was designed to receive
and send messages from different sources: social networks, e-mails, text messages, all in one
application.
Convenient typing always was one of the key features that Blackberry used to attract consumers.
Long time ago, in 2002 Blackberry introduced their first phone with QWERTY keyboard, the
Blackberry 5810 and since then all Blackberry products were bearing QWERTY keyboards. But
not until 2010, when Blackberry followed the trend of the smartphone industry and implemented
touchscreen technology in their devices which replaced the physical QWERTY keyboard on
some devices. Although, despite of rocketing popularity of full size touch screen technology,
Blackberry decided to continue the production of QWERTY keyboard smartphones.
Blackberry were originally built with the enterprise market in mind, which resulted in a device
with unprecedented levels of security. The encryption method used in Blackberry is sometimes
labeled as NSA-proof that means that all the conversations and messages are highly secured
from being discredited. (CBC News) Blackberry created 3 separate networks to secure their
users: BIS Blackberry Internet Service, the personal e-mail service, BES Blackberry
enterprise server, the enterprise e-mail service, and BBM Blackberry messenger, a global
Blackberry to Blackberry messenger network.
Although, their encryption technology has become their success factor, to some extent it also
became their obstacle to new markets. Blackberry devices were banned in several countries such
as United Arab Emirates, India, Saudi Arabia, Indonesia, and Lebanon due to national security
issues, because their security agencies could not crack Blackberrys encryption technology. Also,
the high level of security provided by Blackberry devices granted Blackberry a number of big
contracts with corporations and government structures.
Messaging is another feature that highly contributed to Blackberrys former success. Their
instant Blackberry to Blackberry messenger made it easier to connect with people, without
paying any fees for messaging. Blackberry users became addicted to their devices because of
this messaging feature, and lately Blackberry devices were referred as Crackberries (ref. to the
highly addictive drug substance Methamphetamine, also known as Crack). (Techopedia)

Marketing plan and analysis

As it was mentioned earlier Blackberry devices were developed specifically for enterprise
customers, granting them high level of security and effective communication technologies.
Blackberry was positioned first of all as a productivity machine that is supposed to meet the
need of professionals, also defined by Blackberry as prosumers. Thus, target markets are
enterprise employees, government employees, and people concerned with their security
Generally, Blackberry always followed their initial concept of a device for professionals, but
later they decided to follow the trend and address younger customers by adding camera
functions, and refining the design of the devices.
The following SWOT analysis will show the current situation faced by Blackberry ltd.
Strengths
1. Highly secure devices
2. Strong focus on narrow segment
3. Recognized design

Opportunities
1. Constant growth of smartphone
market
2. Shift from laptops and desktop PCs to
mobile devices
3. Obtaining patents through acquisitions

Weaknesses
1. Inability to market the brand
2. Usage of their own OS (blackberry
10)
3. Highly dependent on government and
enterprise contracts
4. Comparatively small number of
available applications
5. Poor presence in tablet market
Threats
1. Rapid technological change
2. Saturated smartphone markets in
developed countries
3. Increased competition for government
contracts

Strengths
Highly secure phones. The primary Blackberrys competitive advantage is its very secure mobile
phones. The company released its phones with secure encrypted network that allowed sending
emails between phones without possibility of stealing the information. This became the USP
(unique selling proposition) of Blackberries and was a very attractive feature for corporates and
governments that other phones didnt have. As a result, Blackberry became no.1 choice for
enterprises and governments.
Strong focus on narrow customer segment. Unlike other mobile phones and smartphones
companies, Blackberry tries to appeal for a narrow customer segment governments and
corporates. The result is a more focused approach to satisfying the needs of this narrow segment,
something that other businesses rarely do.

The physical QWERTY keyboard became their ultimate design solution that is widely
recognized. Blackberry managed to create a very strong association between QWERTY keyboard
and their brand, though today physical keyboards are being substituted by virtual keyboards.
Weaknesses
Inability to market the brand. BlackBerrys brand was known for the market long before Apples
iPhone launch or Samsungs Galaxy success. When the iPhone was launched, Blackberry had a
better quality Blackberry phone in the market, enjoyed larger sales and greater brand reputation
but was unable to build on that due to poor marketing efforts. It spent and continues to spend
significantly lower amounts ($41.3 million) on marketing, about 10 times lower than Apple
($400 million) and 8 times lower than Samsung ($334 million) in 2012, according to CNET.
Even with better quality products, the company would be unable to sell them to consumers as
it would be overshadowed by Samsungs and Apples marketing spending.
Inability to market the brand also resulted in declining brand reputation and low customer
loyalty. According to Interbrand, Blackberrys brand was one of the top declining brands in 2013
out of the top 100 best global brands. It was valued lower than Apples, Samsungs or Nokias
brands. Declining brand value indicates decreasing brand appeal to consumers and lower sales.
BlackBerry OS. Blackberry phones and tablets are powered by RIMs own OS. While, in Apples
case this yielded some competitive advantage, Blackberry experiences different effects. First,
Blackberry customer base is too small to be profitable for major application developers. Low
amount of apps in store deters customers from buying the phone or the tablets. Second, the
company lacks enough funding and coordination to develop its OS properly. The company has
already suffered from using the outdated version of OS on its phone and multiple delays of new
OS introduction.
Dependent on government and corporate contracts. Blackberry is highly dependent on
government and corporate contracts as these make up the largest companys customer base.
Although BlackBerry offers the most attractive phones for governments and corporates due
phones high security features, the company is not guaranteed to receive long-term contracts from
the government and a loss of contract with at least one government agency or corporate results in
substantially lower sales.
Small amount of applications. According to crackberry.com there are 99,500 applications
available on the Blackberry Application World. Although, the number seems to be not that small,
when it comes down to comparing it to the numbers of rival Apples iOS 1,000,000 apps and
Googles Android 1,200,000 the gap cannot be ignored.
Poor presence in the tablet market. Blackberrys PlayBook tablet was an unsuccessful effort to
enter the tablet market and the product captured only the small market share, resulting in losses
for the company. Poor presence in the tablet market decreases companys chance to successfully
compete with Apple or Samsung who enjoy significant income and profit growth due to the
tablet sales.

Opportunities
Growth of tablet and smartphone markets. Tablet market is expected to grow by 50% annually
from 2011 to 2015. According to estimates, it will be worth $100 billion by the end of 2015.
BlackBerry has a great opportunity to strengthen its position in this fast growing market and
capture larger market share.
Strong growth of mobile advertising market. The growth of mobile advertising market is an
opportunity, which could be exploited by Blackberry on its smartphones and tablets.
Increasing demand of cloud based services. Cloud-based services market is expected to grow
significantly until 2020 and reach $240 billion worth. BlackBerry has an opportunity to expand
its cloud-based services and benefit from the growing demand.
Obtaining patents through acquisitions. The key competitive advantage in technology sector is
strong patent portfolio. Patents can be discovered by engaging in costly R&D or through
acquisitions of other firms, which is the best option available for BlackBerry now.
Threats
Rapid technological change. One of the most severe threats BlackBerry and the other tech
companies are facing is rapid technological change. Companies are under the pressure to release
new products faster and faster. The one that cannot keep up with the competition soon fails. This
is especially hard when a company wants to introduce something new, innovative and successful.
RIM has been subject to this threat a few times when it couldnt release its new BlackBerry OS
on time and when it rushed its PlayBook tablet to the market.
Saturated smartphone markets in developed countries. Smartphones market in the developed
economies is saturated and experience slow growth rate. This affects BlackBerrys ability to
expand its market share in US and Canada.
Increased competition for government contracts. Government renews its contracts with suppliers
every few years and BlackBerry has to compete with such formidable players as Samsung and
Apple for contract renewal. Although BlackBerry has an advantage over competitors in
providing highly secure mobile devices, it has to compete on other phone features (at which the
company competes poorly) as well. BlackBerry has already been outcompeted by Samsung on
renewing some of US government contracts last year.
Based on the SWOT analysis it is clear that Blackberry is losing ground on the smartphone
market. Considering the stock price the predictions are pessimistic: for the past 7 years the stock
price on the NASDAQ stock exchange was constantly falling accounting for $56.52 loss. At this
point there are two possible ways: sell the company and be merged, and to go private, also by
selling all the stocks to a third party.
Finance and Marketing Budget
Recently Blackberry showed some improvements in their financial performance. CNN Money
characterizes this improvement as Things go from 'bad' to 'less bad' and BlackBerry is still
4

losing money, but the bleeding is slowing down. The first quarter resulted in $423 million loss,
slightly more than it was expected, but the result is pretty good in comparison to Q3 2013 results,
when Blackberry announced $4.4 billion loss. The following chart will illustrate the history of
Blackberrys stock prices starting from 2006 until now.

Blackberry Stock price

140
120
100
80
60
40
20
0
Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q1 2014
Blackberry Stock price

From the chart shown above it is pretty clear that the decline of the stock price is drastic. The
company did well during the global economic recession in 2008-2009 but what happened after
borrowed all the optimistic predictions. There are two critical declines in the chart. The first is
between 2007 and 2008 was most probably caused by the launch of the Apples first iPhone. The
second critical decline occurred during the 2011 and that is where things become interesting. In
2011 Blackberry attempted to target the glamorous consumer market, and while doing so it lost
its influence on the core market Business people. (TIME)

Conclusion
Observing all the events that happened to Blackberry I would say that the perspective is dire.
Most certainly, Blackberry will go private to get rid of the burden of pleasing the shareholders.
Also, I would recommend to follow the IBM practice and sell its devices department and
concentrate on what they can do best create high productivity software tools for business
people.

References
http://www.cbc.ca/news/business/blackberry-s-nsa-proof-encryption-a-valuable-asset-for-buyers1.1700752
http://www.techopedia.com/definition/14902/crackberry
BlackBerry (2013). Company. Available at: http://uk.blackberry.com/company
Cheng, R. (2013). How BlackBerry is fixing its once 'broken' brand. CNET. Available at:
http://news.cnet.com/8301-1035_3-57585099-94/how-blackberry-is-fixing-its-once-brokenbrand
Interbrand (2012). Best Global Brands 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012
http://crackberry.com/99500-apps-available-blackberry-app-world-25-percent-which-were-builtblackberry-playbook
http://techland.time.com/2011/07/08/the-tragic-decline-of-blackberry/