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Ex-Microsoft Windows President Explains How "Disruption" Led to BlackBerry’s Current State

Mike Lazaridis and Jim Balsillie Years Ago

A few readers have sent in a great article by the ex-Microsoft exec, Steven Sinofsky, who used to be President of Microsoft Windows. He goes through how BlackBerry went from game changing to ubiquitous to struggling for survival. I think it was a whole orchestra of events and changes that led to BlackBerrys current situation but Sinofsky focuses on market disruptions. Those of you who have taken a marketing course have definitely heard about disruptive forces before. Sinofsky does a great job of laying out how a few mindset changes disrupted BlackBerry’s monopoly on the smartphone market they defined starting with the iPhone and then Android. BlackBerry had about 2 years to respond and change their whole company around to accommodate the following changes:

  • Keyboard to touch.  The most visible difference and most easily debated is this change.  Fromcrackberry thumbs to contests over who could type faster, your keyboard was clearly a major innovation. The move to touch would challenge you in technology, behavior, and more.
  • Small (b&w) screens to large color.  Closely connected with the shift to touch was a change in perspective that consuming information on a bigger screen would trump the use of the real estate for (arguably) more efficient input.  Your whole notion of industrial design, supply chain, OS, and more would be challenged.  As an aside, the power consumption of large screens immediately seemed like a non-starter to a team insanely focused on battery life.
  • GPRS to 3G then LTE. Your heritage in radios, starting with the pager network, placed a premium on using the lowest power/bandwidth radio and focusing on efficiency therein.  The iPhone, while 2G early, quickly turned around a game changing 3G device.  You had been almost dragged into using the newer higher powered radios because your focus had been to treat radio usage as a premium resource.
  • Minimize bandwidth to assume bandwidth is free.  Your focus on reducing bytes over the wire was met with a device that just assumed bytes would be “free” or at least easily purchased.  Many of the early comments on the iPhone focused on this but few assumed the way the communications companies would respond to an appetite for bandwidth.  Imagine thinking how sloppy the iPhone was with bandwidth usage and how fast the battery would drain.  Assuming a specific resource is high cost is often a path to disruption when someone makes a different assumption.
  • No general web support v. general web support.  Despite demand, the Blackberry avoided offered generalized web browsing support.  The partnership with carriers also precluded this given their concern about network responsiveness and capacity.  Again, few would have assumed a network buildout that would support mobile browsing the way it does today.  The disruptor had the advantage of growing slowly (relatively) compared to flipping a switch on a giant installed base.
  • WiFi as “present” to nearly ubiquitous.  The physics of WiFi coverage (along with power consumption, chip surface area and more) assumed WiFi would be expensive and hard to find.  Even with whole city WiFi projects in early 2000′s people didn’t see WiFi as a big part of the solution.  Few thought about the presence of WiFi at home and new usage scenarios or that every urban setting, hotel, airport, and more would have WiFi.  Even the carriers built out WiFi to offload traffic and include it for free in their plans.  The elegant and seamless integration of WiFi on the iPhone became a quick advantage.
  • Device update/mgmt by tethering to off air.  Blackberry required tethering for some routine operations and for many the only way to integrate corporate mail was to keep a PC running all the time. The PC was an integral part of the Blackberry experience for many. While the iPhone was tethered for music and videos, the presence of WiFi and march towards PC-free experiences was an early assumption in the architecture that just took time to play out.
  • Business to consumer. Your Blackberry was clearly a business device.  Through much of the period of high success consumers flocked to devices like the SideKick.  While there was some consumer success, you anchored in business scenarios from Exchange and Notes integration to network security.  The iPhone comes along and out of the gate is aimed at consumers with a camera, MMS, and more.  This disruption hits at the hardware, the software, the service integration, and even how the device is sold at carriers.
  • Data center based service to broad set of cloud based services.  Your connection to the enterprise was anchored in a server that business operated.  This was a significant business upside as well as a key part of the value proposition for business. This server became a source for valuable business information propagated to the Blackberry (rather than use the web).  The absence of an iPhone server seemed like a huge opportunity yet in fact it turned into an asset in terms of spreading the device.  Instead the iPhone relied on the web (and subsequently apps) to deliver services rather than programmed and curated services.
  • Deep channel partnership/revenue sharing to someone tense relationship.  By most accounts, your Blackberry business was an incredible win-win with telcos around the world.  Story after story talked of the amazing partnerships between carriers and Blackberry.  At the same time, stories (and blame game) between Apple and AT&T in the US became somewhat legendary.  Yet even with this tension, the iPhone was bringing very valuable customers to AT&T and unseating Blackberry customers.
  • Ubiquitous channel presence to exclusives. Your global partnership strength was unmatched and yet disrupted. The iPhone launched with single carriers in limited markets, on purpose.  Many viewed that as a liability, including Blackberry.  Yet in hindsight this only increased the value to the selected partners and created demand from other potential partners (even with the tension).
  • Revenue sharing to data plan.  One of the main assets that was mostly invisible to consumers was the revenue to Blackberry for each device on the network.  This was because Blackberry was running a secure email service as a major anchor of the offering. Most thought no one was going to give up this revenue, including the carrier ability to up-charge for your Blackberry. Few saw a transition to a heavily subsidized business model with high priced data plans purchased by consumers.

I highly recommend checking out the full writeup over at Sinofsky’s website LearningByShipping (via BGR). I still think BlackBerry has a chance if they double down and focus on leading in their core strengths but Sinofsky does have a point about BlackBerry failing to pivot fast enough. Let me know what you think!

5 total comments on this postSubmit your comment!
  1. Everyone is a General… after the war…

    • Lol, that’s so true!

      I’m off to read the full article, but I dare say both Ron and the ex-MS guy have solid points.

      From what I read here, he could point the little things that led to some of the problems BlackBerry faces today.

      But I agree with Ron: They can still make it… IF they get their game together and execute at 6 sigma levels on EVERYTHING they do from now on for at least the next 2 years.

      • Wow. This. This.

        “Imagine you’ve (RIM) just changed the world and everything you did to change the world–your entire world view–has been changed by a new product. Now imagine that the new product (iPhone) is not universally applauded and many folks not only say your product is better and more useful, but that the new product is simply inferior.

        Put yourself in those shoes…”

  2. Hopefully, BlackBerry learns their lessons and finally puts it together.

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