Blackberry’s Future

Today I read that BlackBerry is shuttering its hardware side of the business. Its future will be in software development. Here are some thoughts on Blackberry’s future.

The mobile phone company from Canada, Blackberry, used to be the most popular business phone. When I took up my masters, many of my friends were businessmen who ran their own companies. Some of them were working for others, doing sales or management. And they all had one thing in common: They smoked.

Just kidding … The one thing they had in common was their use of the Blackberry. It was like a club for them. In those days, I owned a cheap Android phone. They used to laugh at Android. Most of them encouraged me to pick up a BlackBerry for its “secure messaging”. But then they would tell me about how there’s a small bill every month where their messages would be routed through a server in Canada. I was turned off by the idea of a subscription that I could not opt out of.

But those were the days before Samsung became the world’s number 1 mobile phone maker. Before iPhones were the popular thing. Because companies wanted security and performance, and the Blackberry offered that. 

Mobile Apps Ecosystem

But the Blackberry did not offer the wealth of mobile apps that Google’s Android could offer, and could not even beat the iTunes store. It had its own catalogue of apps, but they did not appeal to the young crowd. The Millenials were into free things. They did not mind ad-supported apps, as long as they had the option of buying an ad-free version. But those were early days.

Over the years, the business model for mobile phone makers has changed. The world is now dominated by Apple’s iPhone and Android. Most people think “iPhone” when they think of Apple in the mobile phone industry, and that shows how they identify the phone as something that “just works”. The main question that you will get is, “What version of iPhone is it?” 

On the other hand, when you ask somebody about Samsung or Xiaomi or Oppo or Sony, they all mention one thing: “Does it run on Android? What version?” That shows that in most people’s minds, Android-powered mobile phones are interchangeable. And perhaps it was, by design, so that most people would realize that Google is the force behind the phone. Google has now positioned itself as the manufacturer of an open source operating system for mobile phones, and this has lifted the burden from the shoulders of mobile phone makers everywhere.

I still remember the days of dodgy mobile phones from China, when my mother came home with a “China iPhone”. You had to press the screen really hard for the buttons to work. There was no access to the iTunes. And the apps available for the mobile phone were nothing like the popular apps in the magazines. But if you were to leave it on the coffee table while talking, it looked like the iPhone. And people were impressed in those early days by the iPhones, because they were expensive. 

In those days, Blackberry’s branding was still the BBM, which is short for BlackBerry Messenger. I always wondered what extras BlackBerry had to offer the Android and iPhone users that could make them switch. After all, with the wide array of mobile apps flooding the Google Play store and iTunes, it seemed that Android and iPhone users did not lose much by not using BlackBerry. Except for BBM. And even then, the BBM made its appearance in the Google Play store shortly after they realized that people were shifting to other platforms.

Microsoft started getting in on the game, by purchasing Nokia. It saved Nokia, which is one of the good things that has come out of the past few years. But then Microsoft axed the Symbian operating system, which had been powering Nokia’s mobile phones, and started pushing Windows Phone. In its latest iteration, Windows 10, there has been a push towards “universal” operating systems, in which the user can use the mobile phone and switch “seamlessly” to desktop mode. BlackBerry, despite its earlier success, and its large war chest, was in no position to attempt to replicate and compete with Microsoft, Apple, and Android phone makers. 

Some time back I started the DBA, and one of the questions in the final exam was about what Blackberry could do to save its company. I distinctly remember writing about how it should focus on its strengths, because innovating its hardware was a losing battle. With its early lead, it could have open sourced the operating system, and built the app ecosystem that is now Android. But it did not do that, because, when men are fighting a losing battle, it’s only natural for them to go into battle mode. And that means falling back on their training and on what they know. 

The best soldiers on the battlefield are easily overwhelmed by gunfire and smoke and shouts. They all fall back on their training, by falling to the ground, crawling through the field to cover, and grabbing a gun before aiming it at an enemy sniper. It’s been rehearsed in their drills. It’s what’s going to save their lives. But mobile phone wars are something new, every day. It’s an evolving battlefield that takes evolving battle tactics to win.

There were things that they could have done, such as open sourcing their operating system. Getting the best programmers to look at their code. Setting up a foundation to oversee the development of the OS. But they did not, because they thought that it was the best thing they had made to date.

They forgot that their best offering might not be up to the mark. Their best offering might have fallen short of the market’s expectations of what the minimum should be. And so their best offering was not widely approved of. As time went on, it was clear to me that mobile app developers were the key, and a key trend for mobile app developers was “other apps that play well with my app”. 

In other words, when there weren’t enough app developers in the BlackBerry ecosystem, it would make it difficult to attract new developers. That made it unattractive to potential users. For the developers, there was another issue: Which platforms should they support? It made more sense for a developer to support platforms which had the most users, because they would get more adverts on screens, or more paid downloads. That meant either iPhone or Android. That’s why you might notice that most mobile app studios claim to focus on the iPhone and Android platforms. 

In recent years, mobile app development has become more simplified. Development software were now saying, “Write once, and compile for your target platform”. But it was too late for the BlackBerry, when it recognised the difficulties of developing for their operating system. In the end, they launched the Blackberry Priv, which was powered by Android. Google Android.

I thought about the most popular Android phone makers. One thing they had going for them was support of the modding community, which liked to create customized versions of the Android operating system that was powering the mobile phones. 

If you look at XDA-Developers, a forum dedicated to discussion and  custom development of Android mobile phones, you’ll notice that many of the popular mobile phones have custom ROMs under the header “Android Development” and “Custom Android Development”. For the BlackBerry Priv, there was almost nothing under “Android Development” and completely nothing under “Custom Android Development”. 

The CyanogenMod custom ROM is a popular option for owners of old mobile phones to extend their phone’s life.

Most phone manufacturers don’t understand why consumers would want to void their warranty by flashing a customized version of the operating system. What they don’t understand is that, consumers can flash a newer version of the operating system which can work with their existing hardware, thereby lengthening the usage of the mobile phone. If you just look at the XDA Developer’s page for Samsung Galaxy S4, a fairly dated mobile phone, you’ll notice that it has numerous custom ROMs. 

It may seem counter intuitive to give up control of the ROM as a way of attracting sales of the mobile phone, yet as a user of Android phones (I’ve never owned an iPhone to date) I can confirm that this is the case. In fact, certain flavours of custom ROMs have become so popular that they’ve become their own distributions, just like Linux distributions. (Think of Ubuntu, OpenSUSE, etc.) That’s probably one of the reasons why Oppo launched its N1 in partnership with CyanogenMod, a popular custom ROM for Android phones.

To paraphrase Winston Churchill, who said that it was not the beginning of the end, but the end of the beginning. And so BlackBerry resets its compass today and emerges unscathed, a software company. CNN declared that it was the “end of an era”. John Chen, BlackBerry’s CEO, was quoted saying that the smartphone market is “saturated”. BlackBerry’s main customer was government. Its main commercial customers were investment banking, law firms, and medical field. 

But it certainly isn’t the end of the BlackBerry story. They have lots of money in their war chest and they can reinvent themselves. Shucking off the hardware side of things and focusing on software isn’t a new thing. IBM had done it before, when it sold off the consumer computing side of its business to Lenovo. Today IBM makes money from its consulting and software businesses. Motorola had done it too, when it sold to Google (along with Project Ara). And just like the IBM story, Google sold Motorola to Lenovo. Google retained the Motorola patents, by the way.

In analyzing the IBM sale of its PC division to Lenovo, it seems that IBM was losing out at that point of time to aggressive pricing practices of Hewlett-Packard, Dell, and others. It wasn’t making money. It was losing money. In the Motorola-Google sale, it was similar. 

Read some of my other pieces:

1. If a fan uploads your music to YouTube
2. Three lessons from Project Ara
3. Dispute the patent, short the stock.
4. Why you need a strong vesting agreement from day 1
5. How to make money from open source

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