Why Brand BlackBerry will endure
Canada's tech giant may be down, but it isn't out
Tim Querengesser is senior editor with Alberta Venture. He once snowmobiled to the Arctic Ocean to interview a guy in elf shoes about reindeer. Really. Peace Pipe is his critical look at the intersection between Indigenous peoples and industry. Email Tim
by Tim Querengesser
In February I binned my iPhone for the BlackBerry Z10. Now, half a year later, Canada’s once peerless mobile technology company has announced that it is exploring “strategic alternatives” – code for selling to private equity or partnering with another tech firm.
Am I quivering in a corner? Nope. I’m still happy with my purchase, actually. BlackBerry has a better chance of surviving, as a brand, than its eulogizers have considered. Analysis has focused on what went wrong and what happens next, while few have considered reasons why BlackBerry could survive. And I’ll get to those in a second.
But first, the detractors. At the New Yorker, Vauhini Vara rightly argued that BlackBerry phones have been made last-generation technology by the touchscreen iPhone and haven’t adapted fast enough. At the Globe and Mail, Sophie Couisineau argued that whoever buys BlackBerry now will likely sell it for its parts, including a patent portfolio worth between $2- to $3-billion. At the CBC, Don Pittis contemplated which company might be interested in buying BlackBerry – Dell, Microsoft, Samsung or even Apple have been suggested as possibilities. And at the Toronto Star, longtime BlackBerry critic David Olive argued that the writing is on the proverbial wall, because “Going private is for troubled sofa makers, not growth companies …”
What hasn’t been considered by this crew, however, is how valuable a unique brand like BlackBerry will be in the coming smartphone wars. That’s why I’m not wishing I’d bought a Samsung or an Apple phone six months ago.
The high-end smartphone business is saturated in North America, leading to lower than forecast sales for Apple’s flagship iPhone 5 (a lower priced model, the 5C, will launch in September as a response to this shift) and Samsung’s Galaxy S4 (and, frankly, all of BlackBerry’s newest high-end BlackBerry 10 phones, aside from the mid-market Q5, released this week). But research by ABI reveals that the market for middle ($250-$400) and lower-end (less than $250) smartphones isn’t saturated. Instead, ABI expects it to triple by 2018.
The question is whether manufacturers will win these mid-market buyers through better features or stronger brands.
Well, a strong brand certainly appears valuable. The iPhone, as a brand, has arguably been Apple’s saving grace against its many rivals, who now build phones with higher specs, better features and lower prices, yet all run Google’s ubiquitous, anonymous Android platform. Like Apple, BlackBerry builds its own hardware and software, and this combination makes it unique and perceptively more valuable. Emulating this combo is something even Korean tech giant Samsung, whose chips are in near all smartphones, including iPhones and BlackBerrys, hasn’t accomplished. For years it has been developing its Bada and Tizen operating systems, but you’ve probably never heard of them and, judging by reviews, maybe never will.
Though BlackBerry the brand remains one of the most emotive in the tech industry because of past innovations, like mobile email and BlackBerry Messenger (BBM), which launched the texting revolution, it still has its own next-generation software in the new BB10 operating system. And that’s the difference. You don’t hear people talking of HTC, Motorolla, Sony or even Samsung phones as anything beyond commodities. A BlackBerry, like an iPhone, is still different. Motorolla, which was bought by Google in 2010, survived the sea-change shift to touch screens in mobile phones by being acquired. BlackBerry, despite not releasing a true iPhone competitor for six years, remains independent. It has survived on brand alone. And that brand is largely built on security. As the Globe’s Eric Reguly notes, “BlackBerry, like Nokia, is a failed superstar. Unlike Nokia, it has secure networks and devices that will be newly appreciated in a world where privacy is becoming a rare luxury.”
This brand difference is also understood globally, where smartphone growth potential is far larger than North America. A recent Neilsen study noted that amongst BRIC countries, China is the only market where two-thirds of the population own a smartphone. India, Brazil and Russia see less than half the population currently owning one. This matters because BlackBerry is, and has been for many years, the right phone at the right time for these countries and the broader developing world. There, 4G connectivity is a generation or two away, a smartphone is still less about apps and more about communicating and low to mid-market smartphones phones (just as they do in North America) offer the most growth.
BlackBerry, whose secure server installation is also the largest in the world, is well placed to tap this international, non-North American and European growth as these regions catch up. Indeed, a friend in Nairobi recently wrote on Facebook in a debate about smartphones that, “BlackBerry has served us well here – simple and efficient for this terrain. iPhones are too complex and not robust.” When these developing countries improve their mobile phone capabilities, it’s eminently possible that Brand BlackBerry will still resonate in a way it once did in North America. The company’s growth is already almost exclusively now in the developing world. And while research has shown BlackBerry has fallen from 56th to 93rd spot in global brand ranking, as one writer noted, BlackBerry is still cool in South Africa. The same holds true in most countries outside North America and Europe.
And who knows what will happen to Brand BlackBerry when its killer app, BBM, is offered for iPhone and Android users this fall, taking on WhatsApp, Viber, Skype and other messaging services. Together, these services top one billion users worldwide.
What does this mean for BlackBerry in the coming weeks and months? It means that just like Motorolla, bought by Google, or Ericcson, bought by Sony in 2012, or Nokia, which has partnered with Microsoft in order to survive, it will likely find a partner. BlackBerry as we know it, surely, is done. But the smartphone landscape is reorganizing and preparing for a new battle and BlackBerry, the brand, will be part of it. It’s simply too well known, and too unique, to be passed up by a company looking not just for a better phone, but a better brand.