BLACKBERRY INTERNAL ASSESSMENT
IS THE CURRENT GROWTH STRATEGY CAPABLE ENOUGH TO TAKE BLACKBERRY TO A PROFITABLE STRIDE?
The advent of smartphones and the rapid changes in technology have caused massive shifts among many smartphone companies. Blackberry is a company which has been affected badly in the recent years and suffered huge losses. This has made blackberry reconsider their strategies and future goals. This commentary will make use of Blackberry’s recent financial statements and various other articles from international press to determine if their current strategy will be able to cover losses and bring sustainable growth for Blackberry. The financial statements referred from Blackberry’s annual report of 2014 are its balance sheet, income statement, and statement of cash flow.
The analysis must be performed on the basis of their growth strategy which can be obtained through secondary research. The Management tool of SWOT analysis will be used to determine the results based on the findings. Theories about how innovation is important among smartphone companies and importance of adaptation to customer demand in smartphones is critical will be used to determine results.
There are various articles which have claimed that Blackberry is on a losing streak in the smartphone market and have tried to analyze why the company is failing to make a comeback. The article from BBC states that Blackberry has faced a loss of 5.9 billion USD in the year 2014. (BBC, 2014) Blackberry is recovering financially which can be observed from their financial statements of the last quarter where their net loss has decreased from 207 million to 148 million compared to the previous quarter. (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2014) In their last investor’s meeting the CEO of Blackberry John Chen claimed that in their Canadian market share will improve at the other hand, their revenue in the north American region have dropped by around 5%. (UMIASTOWSKI, 2014)Actual growth in revenue can only be seen in the regions of Asia Pacific and Europe, Middle-East and African Regions. (Blackberry Limited, 2014)
Blackberry’s attempts to enter the smartphone market through new products have also failed in recent history. The reasons have been determined as Blackberry not being able to meet the latest demands of the customers. (CONNORS & GRYTA, 2013) There have been attempts to analyze their financial figures and growth strategy of earlier quarters which also show considerable losses with shares being sold off in high quantities. (Yang, 2014)
Blackberry’s downward path has been volatile but in the same direction. Blackberry shows growth in certain specific regions and there has been reduction in losses but if Blackberry does not make a successful re-entry in the smartphone by utilizing innovation then it will reach the point of no return at a financial standpoint and will have to succumb. Blackberry was initially successful due to the fact that it was a preference for people in the corporate sector through its push mail and BBM facility. The superior typing convenience was also a huge factor behind its sales which attracted the consumers of young age as well business people. The fall of Blackberry was due to their failure to sustain in the smartphone market with new rivals like Apple and Android Devices. (CONNORS & GRYTA, 2013) Apple and other Android devices brought innovation with their superior, compact and flexible usage capabilities and succeeded while Blackberry with its RIM (Research in Motion) platform didn’t bring anything new to the table for the consumers and lost its market share. United States which was a huge source of sales became a market sector for the company where its market share reached zero percentage. (Newman, 2014)
(Yahoo Finance, 2015)
Although, Blackberry has made attempts to innovate and retake its market sector and it has gained coverage in Mexico and Canada. Blackberry has a good amount of market share countries like United Kingdom, Spain, Canada and Italy which is a positive sign and an opportunity for recovery. (Cecere, Corrocher, & Battaglia, 2014) Even if Blackberry’s losses are decreasing and it is going in an upward direction, looking at its past record, it can be observed that the company’s growth has been volatile. It is crucial to analyze their strengths, opportunities, weaknesses and threats to determine if Blackberry still has a chance to regain its market shares and start making profits.
• Phones with high security
• Strong Focus on chosen customer segments
• Convenient keypads in phones • Increased demand of cloud based services
• Strong growth in advertising possible
• Possible improvement in smartphone market
• Patents obtainable through acquisitions
• The Blackberry Operating system
• Poor sales in tablet range
• Dependency on government contracts • Increase in competetion
• Large coverage of rivals due to innovative hardware and software
• Rapid changes in technology
Looking at the strengths of Blackberry, it can be observed how it grew in the previous years of the smartphone era as it was a preference among business people and smartphones weren’t as accessible as they are today. Due to functionalities like email, instant messaging (BBM) and HTML through phones which was a very secure method of communication due to its encryption techniques. Blackberry’s curve was the most successful model which was also a desirable choice among the youth due to its keypad.
Due to the entry of Apple’s iPhone models and the beginning of the android phones with open source operating system, they quickly reached high levels of growth among all the market sectors. Apple brought innovativeness in its design and android phones started becoming available at cheap rates. Android’s strength was also the myriad of apps available in the android market which became its strength. Blackberry did not introduce either new technology nor provided the same range and variety of applications as other phones and its sales started dropping. Due to a stagnant innovation strategy and promotion being a weakness, it lost its customers in all the market sectors.
It has been able to regain some of its customers due to their keypad and security feature. It has possibility of growth if it utilizes android operating system in its handsets. It can also focus on research and development and introduce new technology in its phones after studying the demand of the consumers. It can also grow by retaining their strengths in a separate range of phones while introducing newer technology in another range. (Kang, Lee, & Lee, 2014)
Blackberry can restructure its marketing strategy and benefit by observing the current competitive smartphone market. Innovating is not an option as relying on its strengths will keep the company’s growth anything but stagnant and it needs to grow at a faster pace to survive in the smartphone market. (Cecere, Corrocher, & Battaglia, 2014) The sole reason behind its downfall being the strong entry of its rivals. It needs to acquire small level mobile phone companies after it covers its losses in order to expand and utilize additional technology in its smartphones. There a need for emphasis on the functional attributes of its smartphones and provide superior technology in its handsets. (Kang, Lee, & Lee, 2014)
There is also a need to focus on the tab segment of the smartphone market and introduce devices like its recent playbook but with more functionalities and higher accessibility to a wide range of customer bases. This is a considerable factor as tablet market bound to grow in the following years. Further utilization of its cloud services can also benefits its future growth. It is bound to grow further due to its product mix including new hardware changes and because it shows potential new QWERTY devices and software goals. (Yang, 2014)
Blackberry’s finances show a grim picture in its recent years where it has suffered huge losses. It has also suffered massively in of all of its market sectors by losing its customers. The findings show that it has suffered this loss due to its lack of innovation and inability to meet the growing demand of consumers when it was needed most. The downward tumble began after a strong entry in the market of the company’s rivals Apple and other Android phones. The smartphones produced by these companies brought innovation in its smartphones through the provision of touchscreen features, unique design, myriads of applications, high accessibility and a wide range of prices among its phones.
In order to grow and sustain in the smartphone market, Blackberry needs to focus on its strengths and also needs to develop new ones particularly developing innovation through research and development. It was also deduced that Blackberry needs to work on its weakness of advertising and start by developing a new promotion mix for attracting new customers. There is a dire need to focus on customer’s demands and to adapt to new technology whilst retaining its strengths for a successful re-entry into smartphone markets.
Amit, R., & Zott, C. (2012). Creating Value Through Business Model Innovation. MIT Sloan Management Review. Retrieved from http://sloanreview.mit.edu/article/creating-value-through-business-model-innovation/
BBC. (2014, 3 28). Blackberry reports $5.9bn annual loss. Retrieved from www.bbc.com: http://www.bbc.com/news/business-26787225
Blackberry Limited. (2014). Quarterly Report – BlackBerry Achieves Non-GAAP Profitability and Positive Cash Flow for the Fiscal 2015 Third Quarter. Waterloo: BlackBerry Limited.
Cecere, G., Corrocher, N., & Battaglia, R. D. (2014). Innovation and competition in the smartphone industry: Is there a dominant design? Telecommunications Policy, 1-14.
CONNORS, W., & GRYTA, T. (2013, 8 28). Sales of BlackBerry’s Q10 Keyboard Phone Fall Flat. Retrieved from The Wall Street Journal: http://www.wsj.com/articles/SB10001424127887324324404579041190813417918
Kang, Y., Lee, M., & Lee, S. (2014). Service-Oriented Factors Affecting the Adoption of Smartphones. Journal of Technology Management & Innovation vol.9. Retrieved from http://www.scielo.cl/scielo.php?pid=S0718-27242014000200008&script=sci_arttext
Newman, J. (2014, 1 31). Big fat zero: BlackBerry U.S. market share hits rock bottom, survey says. Retrieved from Tech-Hive: http://www.techhive.com/article/2092237/big-fat-zero-blackberry-u-s-market-share-hits-rock-bottom-survey-says.html
UMIASTOWSKI, C. (2014, 11 17). Why BlackBerry is on the verge of returning to substantial growth. Retrieved from www.theglobeandmail.com: http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/growth-investing/blackberry-could-emerge-as-a-high-growth-enterprise-software-company/article21625469/
UNITED STATES SECURITIES AND EXCHANGE COMMISSION. (2014). Annual Report. Washington: UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
Yahoo Finance. (2015, 1 13). Blackberry Limited. Retrieved from Yahoo Finance: http://finance.yahoo.com/echarts?s=bbry+Interactive#%7B%22range%22%3A%225y%22%2C%22scale%22%3A%22linear%22%7D
Yang, K. (2014, 9 2014). See The Bigger Picture On BlackBerry’s Latest Financial Numbers, Outlook And Strategy. Retrieved from Seeking Alpha: http://seekingalpha.com/article/2525685-see-the-bigger-picture-on-blackberrys-latest-financial-numbers-outlook-and-strategy