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By Thomas Baekdal - September 2013

Blackberry Lost the Consumer Market

Blackberry has hit rock bottom. Operating revenue is down 50%. It loses almost one billion dollars per quarter. It has more than a billion worth of unsold inventory. It's quarterly sale of smartphones dropped to only 3.7 million units (down from 6.8 million). In comparison, Apple sold 9 million just last weekend.

It has announced it will cut 40% (4,500 employees) of it's workforce, and plan to cut of expenditure by 50%.

At the same time, a Canadian insurance company have signed a letter of intent to take Blackberry private, in an effort to lure suckers to come up with a better offer.

BlackBerry's unusual move to put together a loosely structured deal was motivated by its rapidly deteriorating business, several people close to the situation said. By publicizing a deal with a starting price, the company's hope is that will lure rival offers for part or all of BlackBerry

None of this sounds promising for the future of Blackberry.

So what will Blackberry do now? Well, the same thing all big tech companies do when they get in trouble. First, they have announced that they will stop selling smartphones to the consumer market and instead "refocus on enterprise and prosumer market, offering end-to-end solutions, including hardware, software and services."

It's the same old story. When Microsoft started to struggle to find other revenue streams in an increasingly mobile world, people started suggesting it should just refocus on Office and enterprises. Microsoft, luckily, hasn't done that.

When Kodak faced bankruptcy, they too hoped that they their digital printing services for enterprises would save them.

But forget about Microsoft, Kodak and Blackberry for a moment, and just look at the pattern. When tech companies fail, they all refocus on enterprises.

Why is that?

Well, isn't it obvious? It's because enterprises are even more out of date than these failing tech companies.

When the rest of the world starting going mobile, most enterprises started looking at VOIP landline solutions.

When video conferences became a big deal, most enterprises thought it meant buying Cisco's hideously expensive telepresence solutions. Systems which involves a TV in a meeting room ... and not Hangout or Skype on any device, anywhere.

When mobile email became critical, they though it meant buying another Lotus Domino server and combine it with a Blackberry messaging server ... and not Google Apps at $5 per month.

When they needed to start a web shop, they turned to hideously complex and expensive solutions that don't even give them the same features than what you can get with Shopify. But it's integrated, they say. Not realizing that the same integration is actually removing the human element and making the shops feel more like empty supermarkets then a place to be inspired.

This is the enterprise world. So it's not surprising that Blackberry have decided to refocus on that market. It's just like home. And they might even succeed.

Personally, I think it's a shame that we now have one less player in the smartphone consumer space. We need the competition.

But I also think that Blackberry failed not because of its phones, but because of its alliance with enterprise IT. Every single time people had to use a Blackberry, they were reminded by the archaic and cumbersome world of enterprise IT departments.

Instead, people choose to buy an iPhone or a new Android because they are refreshingly free of all that nonsense.

 
 
 

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Thomas Baekdal

Founder, media analyst, author, and publisher. Follow on Twitter

"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé

 

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