What Small Businesses Can Learn from BlackBerry's Mistakes

Michael Essany Headshot by Michael Essany on September 22, 2011
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Just a few short years ago, if you were a small-business owner, you simply had to own a BlackBerry. Now it seems that the device’s maker, Research in Motion (RIM), needs small-business owners more than small-business owners need the device.

It’s been a painful year for the BlackBerry. Since the start of 2011, the once-dominant device has largely fallen off people’s radar. Losing market share at breakneck speed to Android and iOS devices, the BlackBerry is on a downward spiral toward mobile-phone extinction, even among enterprise users once enamored of the handset, some industry analysts say.

According to findings presented in an Aug. 30 comScore report, 234 million Americans over the age of 13 own a mobile device, nearly a third of which are smartphones. Today RIM claims only 21.7 percent of the smartphone subscriber base in the U.S. That doesn’t sound awful… but as recently as November 2009, comScore data pointed to RIM as the number one mobile smartphone platform in the U.S. with a 42.1 percent market share.

“RIM lost its way when it failed to adapt to the emerging economic conditions and mobile trends that became apparent to all of us three years ago,” says Mike Randazzo, a business analyst with Woodforest. “RIM failed to acknowledge that the industry it once dominated had changed exponentially in the wake of global economic unrest beginning in the summer of 2008.”

Lack of Leadership Led to Problems

“You’re out of touch. I’m out of time,” Randazzo says, invoking the lyrics of a 1980s Hall & Oates hit single. “Essentially, that’s what we have here. RIM grew out of touch, and mobile consumers quickly thereafter decided to give their time to another smartphone.”

What RIM has done — or failed to do — is a textbook-worthy case study for corporate leadership and vision. “When you fail to adopt or restructure at a time when everything around you and your industry is changing, any success you once had will soon be a distant memory,” Randazzo says. “If anything good can come from BlackBerry’s debacle, perhaps it’s a greater understanding of the dangers posed to your business when your business model grows out of touch with your industry.”

Rob Enderle, a prominent consumer and technology analyst who heads up the Enderle Group, agrees that economic instability helped drive away the large corporate clients that once purchased BlackBerrys without thinking twice. With belt-tightening under way at all levels in the business community, Enderle says millions of employees now have no choice but to purchase and maintain their own smartphones. And general consumers want cool new devices.

“RIM hasn’t been as successful at attracting individual buyers as Apple and the Android-platform companies have. As a result, they are bleeding customers,” Enderle says.

Randazzo adds, “This is how Apple and Google one-upped RIM. RIM continued catering to businesses. They just didn’t understand the general wants and needs of the general consumer from 2008 forward. And RIM certainly didn’t market adequately to the general consumer.”

A Buyout Could Revive the Brand

When Research in Motion announces earnings results Thursday, investors and mobile industry analysts will be watching closely. On the heels of Google’s acquisition of Motorola Mobility, many believe RIM is the next major acquisition waiting to happen.

“RIM makes a great product, but RIM doesn’t make the best business decisions,” Randazzo says. “That’s why I think there’s still hope for this company, particularly if it finds a buyer to breathe new ideas and more focused energy into the company’s brand. There’s no reason why BlackBerry should have given up this much ground so quickly across the smartphone landscape. It certainly isn’t because RIM makes a bad smartphone.”

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