When Canadian engineering students Mike Lazaridis and Douglas Fregin set up electronics company Research In Motion in Canada in 1984 they set about developing a handheld device which would allow users to securely send and receive emails while outside the office.
The result - the BlackBerry - soon became a must-have device for every business executive, government official, US president and Hollywood starlet and revolutionised how people do business and interact with each other.
Fast forward to the new millennium and the onset of competition from the likes of Apple's iPhone and rival devices running on Google's Android software and its popularity, market share and profitability has strunk dramatically
It’s once idolised BBM messaging system has also faced challenges from WhatsApp and other imitators and the once unique selling point has now been opened up to other operating systems - with Microsoft's Windows Phone being the latest to adopt it.
Statistics from the Middle East show the story
isn’t great either, with analysts claiming that BlackBerry’s share of the
smartphone market in the Middle East and Africa region has dropped quarter-on-quarter
from almost 20 percent in 2012 to just under 5 percent in Q1, 2014.
That said, in the UAE it is still proving popular, with Nielsen rating showing the Canadian telecoms icon holds 21 percent of the smartphone market, but with Samsung the runaway winner with 35 percent and Apple holding 24 percent. This is despite the fact that there was issues in the past with security of data and the availability of some functions and applications on newly launched models.
So can the company turn its fortunes around and does it have a future? It certainly still generates a lot of interest, the launch of the latest Z3 model spurred a lot of interest on ArabianBusiness.com among users when it was announced it would become available in the UAE from this week.
In terms of profit, the company last month posted a narrower-than-expected quarterly loss as its turnaround efforts appear to take hold. John Chen, who took the reins at BlackBerry late last year, has worked rapidly to trim costs, giving the Ontario-based company more time to stabilise its struggling handset business and earn more money from services and software.
With quarterly revenue down to $966 million, from $3.07 billion a year earlier, are consumers, retailers and analysts convinced Chen can achieve his goals and revitalise the company? Will the Z3 be the saviour everyone hopes?
We asked a select group of telecoms experts from various fields and from around the world to give us their two cents on some of the pertinent issues and many offered up further food for thought for BlackBerry and its customers.
The expert panel debating the issue consists of (in no particular order):
Christophe Corsie, Country Director, UAE, BlackBerry
Nabila Popal, Research Manager at International Data Corporation (IDC) MEA
Brandon Ackroyd, Head of Customer Insight and Mobile Phone Expert at Tigermobiles.com
Nadeem Khanzadah, Head of Retail at Jumbo Electronics
Daniel Gleeson, Senior Analyst, Mobile Devices & Networks at IHS Technology
Manish Punjabi, Channel Marketing Manager at Alcatel-Lucent Enterprise
Michael G Jacobides, Associate Professor of Strategy and Entrepreneurship at London Business School
Haritha Ramachandran, Industry Manager, Information and Communication Technologies Practice, Middle East and North Africa at consultancy firm Frost & Sullivan
Join the debate by having your own say in the comments section below
Click on the next page to hear from our first expert: Blackberry's own representative in the UAE...
BlackBerry has made significant progress on its plan to return to growth and profitability, says Christophe Corsie, Country Director, UAE, BlackBerry
We listened to our customers and have engineered a new strategy to stabilise the company. We are focusing on several key areas to capitalise on our traditional strengths in security and enterprise, while also leveraging our QNX Embedded business to focus on future growth opportunities in machine-to-machine (M2M) communications. Our company is well-positioned for the future with differentiated solutions that deliver on our core strengths, including security, productivity, communications and collaboration and transforming mobile.
We continue to make significant progress on our plan to return BlackBerry to growth and profitability. In Q1, all financial metrics show stabilisations or improvement. The revenue came in at $966m, relatively flat compared to last quarter. We also had an adjusted gross margin of 48 percent, up from 43 percent last quarter due to a favourable portfolio and revenue mix and have strong financial foundation with cash at $3.1bn, up from $2.7bn at the end of last quarter.
We have accomplished a lot in Q1 – BES 10 is getting traction globally. We have a very strong uptick of the EZ Pass program and have issued over 1.2 million licenses. We have released BBM Protected and the reception has been very strong. We closed a strategic investment in health with NantHealth and announced Project Ion for the Internet of Things which involves a secure public cloud platform powered by the QNX technology as well as the BlackBerry secure enterprise mobility management.
BlackBerry will continue to be the number one player for customers who care about enterprise mobility, and for individuals who want to get the most out of their smartphones to maximize their productivity, communications and collaboration. The device business is an important element in the end-to-end solutions we offer government and enterprise customers.
BlackBerry devices are still desirable products around the world. Key features of BlackBerry that differentiate our smartphones from the market include the iconic keyboard experience, battery life, integrated hub and ease of sharing information and photos across social networks. We are still committed to providing the best private social network experience to BBM users, regardless of platform.
Financial objectives and strategy are on track and we feel good about where we are and what it will take to get BlackBerry back to profitability in FY2016.
Agree? Join the debate in the comments section below. Next up is a telecoms analyst about why BlackBerry is struggling but its too soon to write it off just yet...
BlackBerry is clearly struggling but it’s still too soon to write it off says Nabila Popal, Research Manager, International Data Corporation (IDC) MEA
BlackBerry, with once a significant share of the worldwide mobile phone market, is now clearly struggling. However, it is still too soon to “write –off” the brand – as many analysts around the world are quick to jump towards. Aside from having a significant fan base from its glory days, both in enterprise and consumer segments, BlackBerry is a company that is not going to go down without a strong fight. It has been trying hard to shake things up with some key strategic moves.
BlackBerry is trying to capture the mid-priced smart phone segment with launch of Z3. Although many analysts suggested that this move was a sign that BlackBerry was giving up on its high end enterprise market segment, I strongly disagree. It is simply them reaching out and meeting the needs of other segments as well. It is a good strategic move on the company’s part to capture the growing segment of lower mid-priced smart phones – as smartphones under $200 represent almost 40 percent of the MEA market and have gone up 8 percent over the past two years. The price of high end smartphones is dropping, and at the other end you have the emergence of so many other vendors launching devices within the lower end segment. So for them to launch a model that fits in that segment is a good approach. Although successfully received in some markets, it will be interesting to see how it unfolds in the MEA market, that has seen the share of BB drop quarter on quarter from almost a 20 percent in 2012 to just under 5 percent in Q1, 2014.
I am not saying this will give giants like Apple and Samsung a run for their money, but it is an effort worth looking into. Who knows, these initiatives might just begin the U Turn in the decrease of BlackBerry’s market share.
International Data Corporation (IDC), a market research, analysis and advisory firm specializing in IT, telecommunications, and consumer technology.
Agree? Join the debate in the comments section below. Next up is a consumer expert who believes poor designs, production delays and buggy software are at the heart of BlackBerry's problems...
Poor designs, production delays and buggy software caused BlackBerry to fall way behind the pack, says Brandon Ackroyd, head of customer insight and mobile phone expert at Tigermobiles.com
BlackBerry devices are some of the least popular handsets listed on our website. Our help and advice section (https://www.tigermobiles.com/faq/) can get anywhere between 20 and a 100 questions per day and 90 percent of questions we get relating to BlackBerry are based on people moving away from the handsets to Android, Windows and Apple devices.
I like to look at BlackBerry with 2 key questions in mind: do they have a future in some shape or form? The answer I think is yes. But do they have a future as a fully fledged handset maker that competes against Apple and Google? The answer to that is resounding no.
Poor designs, slow to market, production delays on BlackBerry 10 and buggy software have caused BlackBerry to fall way behind the pack. In this game things move so quickly that they have no way of regaining that lost market share. We've seen companies like Nokia struggle to sell phones but BlackBerry take it up a notch by struggling to even launch them in the first place.
I can say with confidence that they're never going to reach the heights that they hit 5/10 years ago so their only real hope is to carve out a niche and carry on doing what they do well. They have two USP's right now: an ultra secure platform when compared to other ecosystems and the QWERTY keyboard. All that combined with a few patents and some other revenue streams means they are not dead in the water just yet.
For them to succeed they will have to go through a rapid downsizing and restructuring process to shave overheads. Then they must focus on the corporate and governmental world where security and privacy are top of the agenda. BlackBerry are still the phone of choice for many of the US government agencies so they might be able to corner that market.
It's worth noting too that a big chunk of BlackBerry's revenue still comes from the service side of the business rather than physical handset sales. If they can convince businesses and organisations that rely on privacy and security of data to use BlackBerry services to manage their employees device usage then they have a fighting chance.
TigerMobiles.com is an online mobile phone comparison site and advice hub for all things smartphone and Ackroyd’s role is to help customers make better buying decisions by using qualitative and quantitative data.
Agree? Join the debate in the comments section below. Next up is a leading UAE retail executive who claims the latest BlackBerry launch is proving popular...
BlackBerry is still popular with consumers, says Nadeem Khanzadah, Head of Retail at Jumbo Electronics
The BlackBerry Z3 has just launched in the Middle East and has triggered a lot of consumer interest in the region after successfully launching in other markets. The BlackBerry Z3 extends the BlackBerry 10 platform to a new generation of customers in the Middle East and offers them more ways to connect, share and be productive. It adds on to the smooth and adaptable interface offered by the highly popular BlackBerry Z10 and BlackBerry Z30 models.
The device marks a new phase for BlackBerry innovation, and we expect to see consumers lining up to upgrade to the BlackBerry Z3 that wonderfully combines the brand’s strengths of unparalleled security and productivity.
Established in 1974, Jumbo Electronics has 24 retail stores and six service centers spread across the UAE and has a growing distribution and retail presence in Oman, Qatar, Bahrain and Kuwait.
Agree? Join the debate in the comments section below. Next up an analyst tells us why he believes the key elements that made BlackBerry smartphones “must have” devices five years ago are now obsolete...
The key elements that made BlackBerry smartphones a “must have” device five years ago are now obsolete, says Daniel Gleeson, Senior Analyst, Mobile Devices & Networks, IHS Technology
Physical keyboards have been replaced by all touch interfaces, while BBM has been surpassed by other, free instant messaging services such as WhatsApp. Today, BlackBerry is just another smartphone manufacturer. Actually, it’s worse than that as BlackBerry insists on using its own (expensive) operating system, which means limited app availability and an unfamiliar user interface.
BlackBerry sold 1.6m smartphones in its most recent quarterly results. It sold more than 14m a quarter at its peak. Samsung now sells nearly 100m smartphones a quarter. The smartphone war is over for BlackBerry, but there is still hope.
The technology industry is littered with companies that have remade themselves as necessary to survive. Nokia is probably the epitome of this, having been involved in rubber, electricity generation, plastics, paper, consumer electronics and a number of other industries before settling on telecommunications in the 1990s. Since then it became the largest mobile handset manufacturer in the world, which preceded a spectacular fall in market share and the eventual sale of the handset division. Nokia is now again trying to reinvent itself to survive. Similar stories are found at IBM and Apple, while Sony is in the middle of its own turnaround strategy at the moment.
For BlackBerry, this future centres on its enterprise services products. BlackBerry’s heritage as being the device of the professional means its device management system has a foothold in many corporate IT structures.
Services are also simply more profitable than hardware. Many other mobile manufacturers are struggling to make a profit. LG and HTC oscillate around breaking even, whereas Motorola lost Google nearly $2.5bn in less than two years. The rise of low-cost Chinese brands such as Lenovo and Xiaomi will only put further pressure on already tight margins when they start expanding beyond China. On the other hand, enterprise service companies like SAP typically have operating margins close to 25 percent. BlackBerry CEO John Chen is a veteran of Sybase and SAP and will be acutely aware of this.
BlackBerry’s hardware will still have a role to play in providing the most secure, controlled corporate devices, but it is in services that the company’s future lies.
IHS is a global information company with world-class experts in the pivotal areas shaping today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. We employ more than 8,000 people in more than 31 countries around the world.
Agree? Join the debate in the comments section below. Next up an analyst tells us why he believes BlackBerry needs to find new avenues in order to survive...
Samsung, Apple and a whole host of players have taken over, BlackBerry needs to find other avenues to survive, says Manish Punjabi, Channel Marketing Manager, Alcatel-Lucent Enterprise
I travel across Middle-East and Africa often and I depend on my BlackBerry to communicate with business partners, suppliers and family, whether it is email, BBM or WhatsApp. I quite like my BlackBerry because it lives up to a simple promise - communicate no matter where you are in the world. The fact that I can do that on an international data package worth AED 299 ($81) is a definite bonus.
I choose to stick it out with my BlackBerry Z10 with hope that the Canadian smartphone maker will breathe a new lease of life in the BB10 user experience to win back the former loyalists.
Following a major overhaul of the BlackBerry 10 OS (v10.2.1) in the late January this year, the BlackBerry experience was redefined. The latest iteration of the OS (operating ssytem) introduced a host of new features that enhance the usability of the device.
One of the prized features of BlackBerry devices is undoubtedly its secure messaging service, BBM. Last year, BlackBerry launched its proprietary messaging app for Android and iOS however, I do believe that this happened a little too late given the traction WhatsApp had already gained worldwide. BBM is said to have 85 million users (113 registered users, overall) in comparison to WhatsApp’s 500 million users. Today, the omnipresence of WhatsApp has killed BlackBerry Messenger (BBM) to only the faithful few who use a BlackBerry device. Having said that, I will accept that I still do love my BBM.
Talking about the future of BlackBerry in the crowded consumer mobile phone market is futile. Samsung, Apple and a whole host of players that are simply too many to enumerate have taken over. The future for BlackBerry now lies in finding new avenues for parts of its business in the enterprise space - BES, BlackBerry’s mobile-device management software; its secure messaging platform; and its QNX embedded software. BlackBerry can leverage its relationships with a whole host of carriers and enterprises for its enterprise-grade messaging service. Alternatively, QNX can position BlackBerry in the automotive software market, if rumors such as those of Ford replacing Microsoft with BlackBerry are believed (ref).
Comparing BlackBerry to former telecom giants like Motorola and Palm might be premature as BlackBerry could swing the Apple or IBM way and transform itself into something completely radical. I think BlackBerry is not done yet and it would be interesting to see what the company transforms into in the next 12-18 months under the leadership of CEO John Chen.
Alcatel-Lucent is a French global telecommunications equipment company and focuses on fixed, mobile, and converged networking hardware, software, and services.
Agree? Join the debate in the comments section below. Next up we hear from an academic who believes the BlackBerry revival has begun...
BlackBerry has begun experiencing a revival says Michael G Jacobides, Associate Professor of Strategy and Entrepreneurship at London Business School
For some time BlackBerry tried and failed miserably to emulate Apple and Samsung phones, rather than focus on the keyboard-using, remarkably loyal business clients. The company became complacent and didn’t recognise the threat posed by rival ecosystems. Like many established firms before it, BlackBerry blew the opportunity to become a nodal player and leverage the energies of its complementors, in the way that Apple does with its apps.
But incumbents, like BlackBerry, don’t always have to lose in the game of value capture. So BlackBerry’s demise isn’t just another illustration of an industry leader eclipsed by upstarts.
By playing their cards right, incumbents may be able to sustain their position and both create a value proposition that will appeal to the end customer, and keep their suppliers and complementors in check.
BlackBerry appears to have dealt with its major strategic mistakes and is now undergoing something of a comeback, surprising investors this year with a profit-making first quarter. It’s encouraging news on the heels of lengthy speculation on BlackBerry’s demise.
The story of BlackBerry underlines a new truth about the competitive landscape we live in: success or failure isn’t a function of a good product or service, or a well-run, cost effective company with a sound capital structure. It also requires an effective strategy to manage your ecosystem. Value migration has its own rules.
Apple, unlike BlackBerry, hasn’t just grasped the importance of a solid value proposition; it is focused on managing the ecosystem and brining value its way.
But BlackBerry, under John Chen’s leadership, has begun experiencing a revival - the product of a strategic re-awakening. Playing to its strengths, targeting business and government users who prefer the hard click of a button to a soft swipe of the screen, the company is cutting losses.
BlackBerry has a future, but that future depends on how efficiently it will continue to orchestrate and run its ecosystem, and on how this ecosystem will be positioned against its rivals. Its outlook is ripening, but its story serves as a reminder of the importance of getting strategy right.
Agree? Join the debate in the comments section below. Last, but not least we hear from an analyst who advices BlackBerry to stick to the lower price range of the market in order to survive...
BlackBerry should stick to the lower price range smartphone segment says Haritha Ramachandran, Industry Manager, Information and Communication Technologies Practice, Middle East and North Africa, Frost & Sullivan
BlackBerry by Research in Motion (now the company has been rechristened as BlackBerry™) is a smartphone which has been losing customers in the past five years due to the competition from Android and Apple's cooler interfaces.
The strength of BlackBerry lies in the applications offered to the business/enterprise customers. The company must renew its focus on enterprise security and messaging applications, minimising the risk from businesses that have performed poorly, such as smartphones. For example, the BlackBerry Z10 did not perform well in the market as the battery was just 1800 mAh, which could not last for more than 16-18 hours; the application eco-system is also limited with the interface touted as unfriendly. BlackBerry Q10 remedied its previous battery issues with a 2100 mAh battery and also updated to a square screen shape. However, cramming 35 keys on the keyboard made it tough for non-BlackBerry users to adapt to it quickly.
From a cost perspective, the company is on the right path and has already started to outsource manufacturing of its low-end models to Asian countries (China, Taiwan and India - as competitors such as Apple and Samsung do) to get better margins on the hardware components; the same needs to be done with the higher end models as well, thereby allowing the firm to concentrate on the software/interface at the base station. The key to survival lies in its ability to retain existing clients, by improving the BlackBerry Enterprise Servers offerings like on-premise email server and IT management.
Regarding smartphones, the recent trend observed is that the lower price range segment of BlackBerry smartphones (for example, BlackBerry Z3) is gaining market traction owing to exceptional features and reliable communications, equivalent to a high-end smartphone but at a price lesser than $220. As the smartphone market is highly competitive, and profit margins are low (with the exception of Apple, Samsung and LG), BlackBerry cannot sustain in the higher price range segment. The right strategy would be to target the developing nation’s enterprise class/customers - with certain free applications/software – customised to organisations that subscribe to the service, making it a lucrative bundle.
In conclusion, BlackBerry has potential to grow in the market if it can stick to its core strengths like security, enterprise software and M2M (machine-to-machine) Applications. Targeting the developing countries and concentrating on productivity software tools for businesses with low-end smartphones is essential to its future profitability.
Join the debate by having your own say in the comments section below
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