Failure to Execute: 5 BlackBerry Blunders

by Brad Moon | September 25, 2013 10:53 am

[1]There’s no denying that BlackBerry (BBRY[2]) made a series of strategic blunders after the introduction of Apple’s (AAPL[3]) iPhone, failing to recognize the seismic shift of the smartphone market from business to consumer. The company also dismissed touchscreen technology, failed to sign up app developers quickly enough, waited too long to release its new operating system and then failed to recognize the threat of the BYOD movement[4] to its enterprise market.

Outside of these issues, though, one of the most frustrating things about watching BlackBerry in the past several years has been the self-inflicted damage through simple failure to execute. The company chronically self-inflicts wounds by taking a seeming no-brainer and managing to mess it up with obvious design flaws, head-scratcher decisions, rushed releases and sometimes apparent ineptitude.

If Prem Watsa and Fairfax Financial (FRFHF[5]) are successful in taking BlackBerry private[6], failure to execute has to be near the first issue to address. On one hand, being out of the public spotlight might reduce pressure to deliver quickly and allow teams to take the time needed to do things right. But on the other hand, when you lay off 40% of your staff in one shot — and that’s just the latest in a series of layoffs — there’s a good chance you’re losing expertise, potentially making it even tougher to avoid blunders.

In case you doubt just how damaging this apparent inability to execute has been, here are five of BlackBerry’s biggest blunders of the past several years.

PlayBook Tablet

[7]The 2011 PlayBook tablet could have been a home run for BlackBerry or at least bought time in the critical enterprise market. The device incorporated capable hardware and it was praised for its solid build quality. The 7-inch display was dismissed by some but turned out to be a prescient move given the current move away from full-sized tablets[8]. But the PlayBook was a failure that ended up being a $1.5 billion sinkhole[9] at a time when the company could hardly afford a miss. Much of the PlayBook mess was caused by poor execution:

• The company chose to rush the PlayBook out the door without native support for key applications like e-mail or BlackBerry Messenger.
• The PlayBook was incompatible with existing BlackBerry apps, but few apps were available at launch.
• Browser support of Flash was a big marketing point as an advantage over Apple’s iPad, but Flash performance was problematic at release.
• New York Times reviewer David Pogue pointed out that the PlayBook, aimed squarely at a business audience, was just half an inch too wide[10] to slip into a suit pocket, saying, “Whoever muffed that design spec should be barred from the launch party.”

Z10 Smartphone

[11]The Z10 was incredibly important to BlackBerry when announced in January 2013. The touchscreen smartphone was its attempt to woo consumers who had taken to the virtual keyboard on Apple’s iPhone and smartphones running Google’s (GOOG[12]) Android. It was the initial device running the all new BB10 operating system, and it arrived at a time when smartphones running Microsoft’s (MSFT[13]) Windows Phone 8 were threatening BlackBerry for third place in the mobile platform war.

While reviews were generally positive, instead of delivering a a phone that would compete with the best for 2013, BlackBerry had delivered a flagship smartphone that was competitive with last year’s models and brought nothing really new to the game. As one reviewer put it[14]: “Three years ago, the BlackBerry Z10 could have been a revolutionary phone.”

When the 2013 crop of smartphones from competitors like Samsung (SSNLF[15]) and Nokia (NOK[16]) arrived, the Z10 was smoked — it seemed small and underpowered.  BlackBerry is expecting to write off $960 million in unsold inventory[17] this quarter, mostly Z10s which are already being repositioned as “free on contract” devices. Meanwhile,  Windows Phone eclipsed BlackBerry[18] as the third-most-popular mobile platform while those Z10s sat on store shelves.

Q10 Smartphone

[19]Many analysts saw the Q10 as the more important of BlackBerry’s new BB10 smartphones when announced beside the Z10 during the January event[20] where the company rebranded itself and launched its comeback bid. The Q10 was a traditional (though modernized) BlackBerry with a physical QWERTY keyboard, the device millions of enterprise users had been holding out for.

Unfortunately, even though it announced the Q10 at the end of January, carriers had to wait until the summer for the U.S. launch. While BlackBerry claimed sales were strong (they said the same of the Z10),  the Wall Street Journal[21] says sales have been “dismal.” It appears that by delaying the Q10 — for a market it thought it owned — in order to spur sales of the Z10, BlackBerry miscalculated, and more diehard customers simply gave up on waiting and bought a competing smartphone.

Z30 Smartphone

[22]Consumers want bigger smartphones. Phablets are the hot category, and one of the biggest complaints about Apple is its stubborn insistence on sticking with the 4-inch iPhone display. When BlackBerry announced the new Z30 last week[23], it seemed like the company had finally managed to react to market forces quickly, putting together a Z10 replacement that was faster, with a monster battery and packing a big, 5-inch display that put BlackBerry size and performance on par with Android flagships — even leapfrogging the iPhone when it came to display size.

But it turns out they cut a corner, and instead of a triumph, BlackBerry left people scratching their heads and reviewers pointing out a glaringly obvious flaw. Yes, the Z30 has a 5-inch display, but the resolution is stuck at a decidedly previous-generation 1280 x 720 resolution for a pixel density of 295 ppi. In comparison, the iPhone 5s display is 326 ppi, the Samsung Galaxy S4 is 441 ppi, Sony’s (SNE) Xperia Z has a 443 ppi display — heck the Z10 had a 356 ppi display, meaning the new BlackBerry flagship smartphone has a display that’s  being inferior to the model it replaces.

BBM For iOS and Android

[24]BlackBerry very much wanted its BlackBerry Messenger apps for iOS and Android to be a hit. Introducing new users to the BBM experience with its reputation for reliability and security would be a win on multiple fronts. By broadening the pool of users, it would help to keep existing BlackBerry customers onboard (thanks to more people to chat with), it would highlight the company’s cross-platform credibility at a time when potential buyers are sizing up its value, and the experience might just convince some iPhone and Android users to jump ship and buy a BlackBerry.

Instead, the launch has turned into a debacle[25]. The iOS version was meant to roll out last weekend, but an unreleased version of the Android app somehow made its way into the wild, resulting in technical issues and unexpected volume on BlackBerry’s servers that put a halt to the rollout. At this point, the iOS rollout is on hold, released Android apps have been disabled and BlackBerry is now indicating it’s planning a future country-by-country release of the BBM apps.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/09/failure-to-execute-5-blackberry-blunders/

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