Tuesday, August 13, 2013

What Killed Blackberry....... Disruptive Innovation Killed It

The shares of Blackberry caught a bid in yesterday's trading on the news the company's board was exploring strategic options- the euphemism that the 'for sale' sign had been put out in the store front. If the company is sold, and it very well may be considering the patents it holds and the security software it controls, it would mark the end of a long, slow decline for the company that began many years ago. So the question remains, what killed Blackberry.

One of the best magazines out there, Wired, provides some insight but at the same time miss the mark with the piece posted today aptly named- The Mistakes That cost Blackberry Its Crown. Wired provides a few slides showing their opinion of certain events that led to Blackberry's demise. However, one with some understanding of disruptive innovation can stop at and further develop the first page, appropriately named the iPhone.

Although the iPhone can in part be blamed for the start of Blackberry's demise, more importantly it was the cross-competitive environment, specific market dynamics, and Blackberry's reaction there off that ultimately led to Blackberry becoming a shell of its former self. Apple's first iPhone primarily served the consumer segment of the market, a market that was relatively under served in Blackberry's operating model and channel ecosystem. In many ways, Blackberry ignored Apple's entry into the market. The company instead solely focused on where it had a competitive advantage (rightly so in some arguments) and great margins, the business user market where its strong security software platform lent itself to the needs of corporate IT developers.

This blissful ignorance, if you will, of Apple's entry essentially gave Apple room to maneuver and improve with an under served segment of the market. Over the years, Apple moved up market by not only improving their product offering but providing adjacent and complimentary products to the iPhone. By the time Blackberry began to respond and grasp the reality of the new market dynamics (probably around the time of the Playbook was introduced and flopped) the time for more simple and more easily enacted strategic directions for Blackberry had far since passed. Blackberry's own undoing,  similar to for many other entrenched incumbents, was their intent to hold to entrenched markets without an eye on broader strategic landscape all the while ceding lower ends of the market to new market entrants.

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