BlackBerry's Seppuku: The Spectacular Collapse of RIM and What the Rest of Tech can Learn From it
It hasn't been a very good year for Research In Motion (RIM). But, it would be too easy, not to mention wholly misguided to lay blame at the door of market forces, or some other external pressure. No. RIM's woes are all by its own hand.
The cracks started to appear when BlackBerry decided against any new mobile handsets in the first half of 2011. Shareholder confidence dipped - and, unsurprisingly, in a market that now expects new handsets every year, so did sales. Meanwhile, rivals such as HTC and Samsung pushed phones capabilities way beyond what BlackBerry's already ageing handsets could do.
BlackBerry did however enter the tablet market with the release of its PlayBook. Sales were poor, and, RIM has subsequently admitted, it got the marketing strategy wrong. In a recent interview with Patrick Spence, RIM's MD for global sales, he openly conceded, "we could've done a better job."
As a result, RIM cut 2,000 jobs back in July, and more recently slashed the number of people working on PlayBook production by 1,000 at source in Asia.
When it did finally unveil five new handsets in the second half of this year - although technically it was only three - many questioned if this was the bold step RIM needed to convince skeptics it was still in the game.
Hardware had been updated and a new operating system speeded things up. At the demonstration after the unveiling however, there were glitches with the touch screen and the OS's infrastructure wouldn't do the things BlackBerry demonstrators wanted it to do. Was this the corporate message BlackBerry was looking for?
Another key concern was the absence of QNX - a new operating system that would give the BlackBerry user experience the kick up the backside it was in desperate need of. The latest is that its still in development, with a soft-launch expected at BlackBerry's DevCon in San Francisco this week.
But, none of these events would match the failures over the past two weeks to fix what was essentially a failed server in the UK. Users reported problems with emails in the UK on Monday when engineers in Slough tried to update systems serving customers in Europe, Middle East, Africa and India. When the update failed, engineers attempted to revert back to the old system, causing a total collapse. Within three days, RIM's global customer base of some 70 million was affected.
Malik Saadi, an analyst at Informa estimated compensation for the system failure could cost RIM £7.6 million a day, not factoring liability fees or loss of data that could emerge as companies reliant on BlackBerry calculate the costs incurred. Co-CEO Mike Lazaridis has also said problems with email access could echo on until December.
While the failure was unfortunate, angry users had to wait four days before Mike Lazaridis, who shares the role of CEO came out an apologized for the fault. In a year when the company's stock value has dropped 50 per cent, has lost jobs, and has come under fire from shareholders demanding to know why RIM has gone so awry, RIM's leadership structure appears to be failing in its most basic capacity: to lead.
Further damage came when BlackBerry handsets were named as a key tool used by rioters in London to communicate and evade police. While this couldn't have been foreseen, RIM's delayed, and lukewarm response to calls to assist police in capturing looters further tarnished its reputation.
Despite the colossal amount of damage RIM has done to itself over the past nine months, the BlackBerry brand still commands an enviable position among business and teenage users. But it has to acknowledge it has lost its position in the wider smartphone market. For now. It needs to retrench and rebuild its core user base first, instead of trying to mimic market trends and spread its dwindling resources across a field too big for BlackBerry to straddle.
Nokia accepted its software was holding it back and teamed up with Microsoft - whose Windows Phone system is a joy to use, but never managed to capture a significant market share. This combination - which we're starting to see the fruits of now - represents the first significant player in the Android/Apple software war.
RIM isn't a software or hardware powerhouse, but it has a user base of 70 million that are still willing to give it another chance. The sooner it recognizes this and begins to put them first, the sooner we may see BlackBerry return to the top table.