Friday, 13 July 2012

The Blackberry Death Spiral. A possible struggle game for one of the smartphone founders of mobile mail. A lot of companies will follow.

Why does every Tech CEO want to do the Steve Jobs style of presentation even when it doesn't suit? Thorsten Heins above, CEO of Blackberry, thinks taking off his tie and wandering around the stage, clapping, is eh, jobs-esque. "Have a great Blackberry world", he says "And let's rock and roll this". Really. Sometimes you're just better off just being you. It's 35 minutes long but you get a sense of Thorsten after 5 minutes.

And if you haven't seen Microsoft's CEO Steve Ballmer, another man under real pressure, go to the other extreme, do it. Honestly it's cringe worthy.

But I'll save you the trouble...what the?

Thorsten presides over continued troubles this week at 'Research in Motion' the Canadian public quoted company parent of The 'Blackberry'. A company which a lot of Canadians held up as a "national treasure" because it was the inventor of "mobile mail".

And it's the story of how a one-time market dominant player is struggling.

You have to see parallels between Blackberry and Nokia. Old world dominant brands who have lost their value because they didn't keep up. Online bloggers now are referring to it as 'The Blackberry death spiral'.

The first Blackberry (named by Lexicon branding by the way) appeared in 1999 as a two-way pager in Germany. Today, it retains about 3% (a massive drop from 9% in a year) of the smartphone market competing with Android, Windows and iphones where it has really struggled. Whilst, at the same time, Samsung, Apple and HTC have boomed. 

With over 70 million subscribers, the Caribbean and Latin America (yep, you know that) have the highest penetration of Blackberrys.

Although considered as "more secure" as an email sender, it's widely known in the US as "The Crackberry" which indicates its high usage amongst drug dealers because of that security. It was famously used in the London riots by thugs. However another well known "user" is Barrack Obama whom during his 2008 Presidential campaign became dependent on it and it acted almost as a celeb 'endorsement'. Which should have done a great marketing job for Blackberry, but didn't.

The problem is sales.

Up to March 2012, they shipped 11 million Blackberrys which was down 21% on the previous quarter. In its fourth quarter it announced a loss of 125 million usd and plans to save 1 billion usd this year by cutting up to 6,000 jobs out of its staff of 17,000.

Morgan Stanley downgraded the stock and shares have hit an all time low this week, down 94% off their peak value. That's 94%. Which is why its investors are not happy - not one tiny bit - and they're saying it loudly. Employees too are writing letters and posting about how unhappy they are with the company direction.

New CEO German Thorsten Heins (ex Siemens) who took over in January, promised investors he'd transform Blackberry into a "lean mean hunting machine" (I wonder did he mean "fighting machine" and it got lost in translation?) and used real rallying cries of corporate pride. The share price fell a further 5% as he spoke.

As the "new" CEO he says a lot - "Blackberry will be in the top 3 smartphone producers, soon" - but it should be remembered that he's actually been with the company since 2007.

"I have assembled a leadership team for RIM that's truly capable of taking us into future,"
he told shareholders but at the same time, pushed back the launch of Blackberry 10 until next year, missing out on the holiday sales at the end of this year. This will allow his competitors to further extend their lead on Blackberry and of course, they'll have to suffer the launch of iphone 5 which might take more Blackberry customers.

Seemingly Thorsten felt that they'd rather postpone their launch until they got the new Blackberry "right". Quality before Speed. Hmmmm, great if you have the time luxury to do that - which this company just doesn't.

Apart from what is considered his "poor" communication skills (one reason perhaps is because he's hard to understand - never a good start in the old communication stakes) and the company's poor R&D (no touchscreen for example), he has an inability to convince staff to remain with the troubled company.

On Wednesday the head of the Australian/New Zealand operations stepped down only months after he was given the job in April. The head of the business in India left in November and a steady stream of senior staff have left too including its head of legal, head of global sales, a CEO and head of software.

It's really extraordinary that Blackberry can't plough on with a base of over 70 million loyal subscribers (they have to be loyal at this stage). But it's become an old world, Nasdaq quoted, middle aged corporate with no right to be involved in the new space. A lot of companies are going to go this way in a lot of sectors. 

But perhaps I'm being unfair - maybe they will do it - a lot of people don't think so though.


Think what happened to video stores when Netflix came along and ask yourself, how did they let that happen? Think about major book chains who let ebooks get past them. Think about how mobile carriers (I know this is heresy but it will happen) are going to be decimated by Skype/voip? Think about traditional TV/Press broadcasting compared to online publishers? And it goes on and on.

The Web is the great brand leveller.

Funny really that no one in Blackberry even had the commonsense to see an irony as to where they had chosen to have this weeks investor meeting in Canada.

It was in Ontario. 
A city called....Waterloo.