BlackBerry

Once a giant in mobile phones, BlackBerry will no longer make them. What happened?

By Tina Irgang

This week, BlackBerry announced it would stop making its own phones and rely on other companies for any future hardware projects. Before the iPhone came along, the company dominated the mobile phone market. How did things go so wrong?

BlackBerry made the announcement in its quarterly earnings report, released Sept. 28. “We are focusing on software development, including security and applications. The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital,” says CEO John Chen in the report.

Back in the day, BlackBerry was “caught off-guard by the launch of the iPhone and the dawn of the smartphone era. It never recovered, and has dwindled further and further into irrelevancy ever since,” as Business Insider sums it up.

As recently as June 2008, about a year after the first iPhone was released, BlackBerry’s shares traded at $144. Five years later, they were selling for $6.50, according to The Guardian. That development was largely due to the company’s failure to adapt as markets changed: “The difference between technology companies (and companies generally) that survive and those that don’t is [simple]. As with biological species, it’s all about adaptability. If you can’t adapt, then you will be erased by history,” The Guardian adds. Indeed, Apple could have shared BlackBerry’s fate if it hadn’t recognized that it needed to branch out from its successful iPods into the smartphone business, the paper notes.

Safe, but not much fun

At the same time, BlackBerry had focused on dominating the corporate phone market and failed to anticipate the important role consumers, not businesses, would play in the smartphone revolution, notes Time. “Second, BlackBerry was blindsided by the emergence of the ‘app economy,’ which drove massive adoption of iPhone and Android-based devices.”

Simply put, BlackBerry phones were safe and reliable, but they weren’t much fun. In 2012, the company’s head of developer relations told ZDNet that he was trying to avoid filling the BlackBerry App World with the “garbage” found in other stores. At the time, App World offered some 60,000 apps, compared to 500,000 in the iOS and 300,000 in the Android app store.

Arguably, that was too little, and too late. “BlackBerry failed to realize that smartphones would evolve beyond mere communication devices to become full-fledged mobile entertainment hubs,” notes Time.

It’s unclear how successful BlackBerry can be as a software company. In early 2016, the company had announced it would no longer offer any phones running its own BlackBerry 10 software. Instead, all BlackBerry devices would use Google’s Android software, Cnet reported at the time.

In the earnings report, CEO John Chen strikes an optimistic note: “Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia.”
Here’s hoping that BlackBerry the software company will be more alert to coming shifts in the market than BlackBerry the phone maker turned out to be.

Tina Irgang is the managing editor of SmartCEO magazine and SmartCEO.com. Contact her at tina@smartceo.com.