In the WSJ, Jacquie McNish and Sean Silcoff published an overview of their new book, “The Inside Story of How the iPhone Crippled BlackBerry”.
It’s an excruciatingly painful account of BlackBerry executives’ response to the iPhone. Having worked in the mobile industry since 1994 and, most intensely since 2006, these executive reactions are familiar to me.
From my perspective, they reveal several key reasons why BlackBerry, and companies like it, struggled:
1. Lack of In-House Technology Development
- “How did they do that?” Mr. Lazaridis [Blackberry co-CEO] wondered.
- “By all rights the product should have failed, but it did not,” said David Yach, [BlackBerry’s] chief technology officer.
When executives at this level are shocked by new technology, or don’t understand it, it means they haven’t been leading their company to scout new technology, and haven’t been doing enough in-house development to push limits.
2. Focus on the Wrong Customer
- Mr. Balsillie’s first thought was [BlackBerry] was losing AT&T as a customer.
It’s true that an operator is a customer of sorts. But the people using your product are the ultimate customers – i.e., the consumers. While BlackBerry focused on satisfying the operator executive, Apple focused on satisfying the consumer.
3. Narrow Definition of its Market
- “It wasn’t a threat to [Blackberry’s] core business.”
- Offering mobile access to broader Internet content, says Mr. Conlee, “was not a space where we parked our business.”
BlackBerry isn’t alone in this. Nearly every mobile company at the time paid lip service to the Internet. But they defined it as the “Mobile Internet” and, critically, none acted to provide a device that consumers could easily use. They thought of their devices, and their market, as narrowly limited to phones, not general computing devices. And when your device isn’t a general computing device, the Internet is an afterthought.
This fundamental framing also limited technology development (#1 above). Most mobile companies, if they developed technologies in-house, limited them to the cellular radio, rather than more general areas: computer interfaces (e.g., touchscreen), computer software platforms, the Internet, or imaging. Nokia was the exception, but it’s too complex to discuss here.
4. Denial, Masked by Mischaracterization of the Disruptor’s Success
- “I learned that beauty matters […]. [BlackBerry] was caught incredulous that people wanted to buy this thing,” Mr. Yach says.
- This was no ordinary phone. It was a cult with a devoted and rapidly growing following.
- “The carriers aren’t letting us put a full browser on our products,” [said co-CEO Mike Lazaridis].
Similarly, from my experience as a mobile analyst during that time, no executive in the industry admitted (for a very long time) that the iPhone was a better device. Seeing leaders in denial, in my experience, weakened their ability to focus their companies on the right things. Which leads to point #5.
By the way, the point about “the carriers aren’t letting us”: The price of entry for a “full browser” was a stellar product. And that was under BlackBerry’s own control.
5. Tactical Responses to Strategic Problems
- Mr. Lazaridis believed the four pillars of BlackBerry’s success—good battery life, miserly use of carrier’s spectrum, security and the ability to type—still ruled in the new smartphone world and gave his company its competitive advantage.
- [BlackBerry] would take another stab at a clickable screen with Storm 2.
They brought features to a platform fight. Tellingly, the word “platform” (which means operating system – one of the iPhone’s major strengths) appears one time in the article. [I’m not faulting the authors. I’m saying it’s a reflection of the thinking – and BlackBerry’s thinking — at the time.] And even as features, none of them – except the long standby battery life –matched the iPhone. And, damningly, part of the reason that BlackBerry phones had better battery life was simply that people used them less. They were “phones”…
All this led to the following:
To Mr. Balsillie, [BlackBerry] was in an existential crisis, mired in what he describes as “strategic confusion.” The company’s business had been disrupted on several levels, with no obvious path forward.
Part of the answer — the part that gives you glimpses into the path forward — is #1 above. When you shape your own technology, you can see the future before others do. Is there another part to the answer? Yes — having a great product shaper. And it’s hard to grow, or recruit, a great product shaper if you don’t give them new technology to work with.