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BlackBerry has one last chance to survive

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COVENTRY, UK — You may be forgiven for thinking that the smartphone industry lives off radical innovation. There is a noticeable public obsession about identifying the next big thing and the firm engaged in producing it. The story goes that any firm without radical propositions up its sleeve should be ignored and is doomed to perish.

Don’t be misled by this reading of events. Samsung has done very well for itself in the smartphone era, improving and perfecting features pioneered elsewhere, using essentially the same strategy Nokia so successfully applied in the feature-phone era. Even in high-tech industries with rapid product redundancy, this kind of innovation is the bread and butter activity for most firms.

Firms still in the game, that is. For there is one context in which the more radical initiatives are rightly called for: firms that find themselves in continuous gradual decline, riding out the wave of bygone technology generations, and having failed to switch in time to the successor generation. Nokia is typically seen in this light, having long underestimated the disruptive potential of operating systems open for third-party app developments.

Another is BlackBerry. Amongst other things, it did not really look beyond its classic Qwerty keyboard, even as touchscreens emerged as the dominant design.

As the extent of the damage became more and more visible, both Nokia and BlackBerry instigated turn-around programmes. Both focused — mistakenly, as this column argues — on catching up. Nokia tied itself to Microsoft, which belatedly tried to mimic an Apple-esque app ecosystem, and staked its fortune on me-too smartphones, the Lumias. BlackBerry brought out the Q10/Z10j and a new version of its operating system. These products are of decent build but cannot disguise the fact that competitors are already much further down the learning curve, with sizable brand followings. BlackBerry and Nokia/Microsoft also seem to wish away the current winner-takes-all phenomenon in smartphone operating systems.

The inconvenient truth is that 11th-hour turn-around initiatives should concentrate on innovating outside established trajectories. Trying to beat the new market leaders at their own game is futile. What is needed is a move to a less contested space, where laggards can again start to create a momentum.

Ideally, such moves leverage some company-specific strength.

For BlacBberry, this new space might be mobile device management, banking on its enterprise server advantage.

BlackBerry’s Enterprise Server (BES) is the main reason why the company has not yet crashed and burned as badly as it could have. Business clients have hesitated to abandon the secure working environment and efficient integration that BES offers, even if the Blackberry handset experience was lagging.

Whatever little time there is before the last corporate clients abandon the BlackBerry package, the company should use to refocus on its core strength, potentially at the expense of abandoning its device portfolio.

Some recent activities show that BlackBerry could be thinking in this direction. Most notably is the release of the Secure Work Space app that allows iOS and Android users to benefit from BES. BlackBerry Balance should be extended to non-BlackBerry devices, too. Firms are increasingly device-agnostic, but their security needs remain. It is in this new area of mobile device management, including mobile app management and secure connectivity, that BlackBerry’s greatest prospect lie. Core competence meeting reduced competition in a new and growing field.

Of course, in due course, there will be other parties interested in this field, including mobile operators that are ogling the device management needs arising from the bring-your-own-device (BYOD) trend. And newer firms such as MobileIron and AirWatch are starting to attack. But at least, the rules of the game for this emerging market are not yet established. BlackBerrry’s server platform might allow it to put some distance between itself and followers, building a leadership position once again.

Furthermore, revamping devices not only presents a gargantuan uphill battle for RIM in the medium term, it may also be a misguided strategic direction in the long run. Bear in mind that handsets are commoditizing, no matter how much marketeers struggle to have you think differently. The dominant design of a rectangular touchscreen will increasingly serve as a window to an LTE-facilitated cloud, nothing more.

Users will be able to access most apps from most phones, either because Android becomes the dominating platform or because html5 decouples access to applications from operating systems (which, by the way, could also run in the cloud). So why would consumers pay a premium for any one device if all devices are equally-capable connectors to the net? Beyond screen quality and maybe battery life, there is little that will set a future Samsung or Apple phone apart from others.

Providing device-agnostic services to corporate clients thus may hold the greater potential for BlackBerry. But will its management be courageous enough to abandon a former mainstay in devices? Given its seemingly inevitable decline, drastic bets on the strategic direction of the company seem in order.

Radically re-inventing the company will by no means come easy. Nonetheless, BlackBerry should count itself lucky: Nokia does not have a BES advantage; its exit route into new space might have been maps, an area which seems no longer so uncontested.

 

Ronald Klingebiel is assistant professor of strategy at Warwick Business School, UK. He consults and researches the telecommunications industry, with particular expertise in the management of innovation portfolios under uncertainty.

 

—Troy Media

 

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