The fall of Apple and rise of Blackberry - what comes around goes around

Posted by Rob Enderle

Blackberry was the most powerful smartphone vendor just a short decade ago. Indeed, the corporation managed to translate its massively successful two-way pager business into what was ultimately dubbed the Crackberry, simply because people were so addicted to them. 

As you may recall, Apple was finishing a turnaround, just short of reaching true success with the iPod, while working on the disastrous ROKR phone with Motorola, a device that both companies would rather forget.

Back then you would have been a fool to bet on Apple over Blackberry for smartphone dominance. But a short four years later Apple launched the iPhone, Blackberry (then RIM) made a series of strategic errors, and Apple passed both Blackberry and Nokia to become the dominant smartphone vendor. 

However, just to illustrate how much things can change in a relatively short period of time, Apple is currently losing market share to the Samsung/Google machine. Meanwhile, Blackberry’s latest Live event was like an Apple presentation of old, perhaps even more than Cupertino itself can muster these days. To be sure, Blackberry is fired up on a message of hope and change, with a weakening Apple in its sights. If things continue along the same path, well, by this time next decade the two firms may have swapped places yet again.  

Changing Places: Then

Blackberry’s fall wasn’t just due to Apple’s success, rather, it was predicated on a series of mistakes where customers were put at risk and clear advantages changed to disadvantages. The first mistake? When challenged for intellectual property theft and when it was clear they would lose the lawsuit, Blackberry’s then leadership implied they would shut down their services - effectively holding customers hostage and forcing companies to consider other vendors.  

When foreign countries asked for access to Blackberry’s secure communications transport systems they appeared to get it - turning what had historically been a security advantage into a disadvantage, all while scaring companies away from its platform. Finally, RIM finally seemed to lose track of who its customers were in a futile attempt to chase Apple with features and functions.  

Meanwhile, Apple’s rise was on the back of the Mac faithful who flocked once again to Cupertino's products and made up some of the most creative people in any industry.   They were more focused than any other company as Steve Jobs took them back to basics and marketed tightly against a clear young demographic with broad campaigns and launches that made its products seem magical. They had a killer service in iTunes which they used to drive interest in their smartphone, taking that market by storm as a result. 

Changing Places: Now

Blackberry appears focused on the business Blackberry faithful and are using the demographics to aggressively move back into the market.This group is made up of some of the most productive folks in government, insurance, and healthcare. Now that Blackberry is back to basics, they are doubling down on security, assuring the protection of company data (currently they are the most secure smartphone provider).

Plus, they are taking their most powerful application, BBM, treating and positioning it like Apple did with iTunes but on a business user opportunity. In addition, they have fixed branding and marketing so their financial spending is vastly more effective at creating and driving demand. Blackberry even has a killer service in BBM which it is using to drive the market back to its platform. It is probably worth noting that I’ve interviewed companies which have tossed out both Android and iOS simply because of BBM’s speed.  

Apple’s fall appears to be connected to a series of mistakes where customers were put at risk and advantages changes to disadvantages. For example, their heavy design focus resulted in Antennagate where phones lost connectivity when held. More recently, Cupertino tried to cover up a defective switch in one of their latest offerings - resulting in a class action lawsuit and racketeering charge

Rather than acting in their customer’s best interest and recalling defective phones, they seem more interested in covering those defects up, holding their customers hostage in  two year contracts with devices whose warranty expires before the problems become apparent, and long before the expiration of their two year contracts with carriers. Simply put, they have largely lost the magic and exclusivity by selling in stores like Walmart which don’t align at all with Apple’s luxury and exclusive brand image. Plus, Cupertino seems to have forgotten it serves an affluent customer where status is important by focusing on sales volume instead of preserving the phone’s semi-exclusive status. And last, but certainly not least, Apple is being out-innovated by Samsung who used to chase them and now appears to be chased by them.  

Wrapping Up:  What Comes Around…

The market moves in cycles. Firms that are dominant one decade like Netscape and Palm are often gone the next. Particularly in consumer facing companies the ability to survive successfully over a decade seems almost to be a lost art. But much as we saw Sun almost take IBM out and then IBM return to demolish Sun I think Blackberry is positioned to eventually pass Apple. Indeed, if Samsung and Google separate, as is rumored, Blackberry might even pass Samsung and return to dominance. Granted, Nokia will be chasing them to that spot and also appears to be strengthening. I guess the old saying “what comes around goes around” may again be proven true in the smartphone market.