BlackBerry kills its smartphone division, will turn to software and service licensing
BlackBerry, born RIM, has announced that it will no longer develop its own hardware for smartphones or tablets. The company is currently in the process of moving from a hardware-centric business to a software development business. He hopes to complete this transition more efficiently now that he has ended his own internal hardware efforts.
âOur new mobility solutions strategy is showing signs of momentum, including our first major device software license agreement with a telecommunications joint venture in Indonesia,â CEO John Chen told investors. âAs part of this strategy, we are focusing on software development, including security and applications. The company plans to stop all internal hardware development and outsource this function to partners. This allows us to reduce capital requirements and improve the return on invested capital.
Today’s news marks the end of an era for BlackBerry, but one that has been long in coming. The company is a classic example of the innovator’s dilemma, in which a powerful company that dominates a market is unable to anticipate the kind of products its customers will demand in the future. Rather than experimenting and introducing new products and services, a business will double down on the features and capabilities that made it popular.
BlackBerry’s missteps began with its systemic refusal to adapt to the iPhone and what it stood for. Like Microsoft (at the time), it dismissed the iPhone and its touchscreen as a gimmick. BlackBerry built its business on corporate contracts, physical keyboards and emails, not media streaming, user-friendly feature sets, and large (again, at the time) LCD screens. . In 2011, BlackBerry lined up ever popular smaller models like the Pearl, Curve and Bold, the executives’ favorite. At the same time, companies like Apple and Samsung were releasing dual-core hardware with bigger screens, higher resolutions, and user-friendly feature sets. Perhaps more importantly, Apple and Samsung were at the forefront of a burgeoning new mobile app scene that was way ahead of what was happening for third-party (and mostly vertical market) apps. on BlackBerrys.
At the time, joint BlackBerry CEOs Jim Balsillie and Mike Lazardis insisted that the company’s fortunes would be restored through increased penetration into overseas markets and strong partnerships with companies around the world. whole. By the time BlackBerry woke up and realized that its entire market was being eaten away, it was too late to catch up.
The company’s latest and long-awaited BlackBerry 10 operating system may have been popular with a small segment of BlackBerry devotees, but it has failed the market altogether. BlackBerry was betting business executives would revert to its physical keyboards, but by the time those devices were ready, the market for physical keyboards in a smartphone was all but dead. The company’s first Android device, the Priv, was not Wrong, but it wasn’t great either, especially not at its original price of $ 700.
The problem with betting on physical keyboards wasn’t that people didn’t like them. The problem was that the overwhelming majority of smartphone users today never had a BlackBerry device or a physical keyboard. The key feature of the Priv was an attempt to generate excitement in a declining market, not an ability that would inherently attract new customers who are looking at BlackBerry for the first time.
Earlier this year, BlackBerry released the DTEK 50, a rebranded Alcatel Idol 4. Any future devices the company releases will likely be licensed from other manufacturers as well. The good news is that BlackBerry’s software and services division is showing signs of growth and may be enough to move the business forward, for a little while anyway. It is less clear whether he can continue to take advantage of this growth now that it is all about hardware licenses.