Blackberry Ltd. is a Canadian company that produces smartphones and tablets. However, the firm is also known as a Research In Motion Limited that provides highly secure software throughout the world. However, during the past several years company’s market share has sharply decreased, mainly because of the remarkable success of the iPhones and Android gadgets. As reported by the Economist, BlackBerry now accounts for less than 1% of the market share.
The company adopts different measures to stop the failure and to return its leading positions in the market. As John Chen, the CEO of the company stated, launching a new tablet, namely “the Passport” in 2014 with its new QWERTY keyboard was the first step to shorten the expenses. The firm’s lost was slightly reduced, which was argued to be the first sign of the company’s return to profit in 2016 (“BlackBerry. Not there yet”). Yet, launching one new product in a rapidly developing market can not bring any significant changes. And Mr.Chen shows his understanding of these tendencies by stating that in case of failure, the company will switch to cooperation with large companies and governments. However, BalckBerry still used one of its benefits over the closest rivals by presenting a new service called Blend. Marketing researches proved that modern consumers use more than one device and definitely more than one messanger. Which is why new service was developed to offer the customers an opportunity to synchronize all their messages on all devices. This service is not only a BlackBerry’s superiority on the retail market, but also an advantage in B2B cooperation with big firms, who are interested in the ability of their employees to access corporate mails 24/7 anywhere (“BlackBerry. Not there yet”).
The company reported a 119% increase in the last quarter’s revenue already in December 2015 (Austen, 2015). Which proves that a strategy of changing into a service oriented firm was fruitful and justified. Besides that, the overall results showed a $15 million loss in 2015, which was much lower than previously expected by Thomson Reuters. John Chen is sure that newly implemented strategy shows its results. The article published in The Economist in September 2014 claimed that BlackBerry still had enough money and investments to cover its expenses during the next few years (“BlackBerry. Not there yet”). Meanwhile, the new turnaround plan gains to decrease company’s expenses rather than fund its losses. Apart of strengthening its share in the service and software industry, BlackBerry’s acquisition with Good Technology allowed to enlarge the company’s sales. Mr.Chen also reported that profits from the new technologies let the company to cover expenses on supporting older smartphones. Precisely, revenues from the new BlackBerry’s licenses for the software rose by 43% (Austen, 2015).
Despite the positive shifts reported, BlackBerry has laid off 200 workers at the beginning of 2016, which was explained by the company’s CEO as an option to enable the firm to capitalize on growth opportunities (Austen, 2016). For many years BlackBerry was a large producer of cellphones and smartphones with a unique software, which made the company a household name. Unfortunately, its hardware producing business struggled and caused heavy losses. New turnaround plan was mainly targeted at software and service, and a new BlackBerry 10 operating system was a strong proof of that. However, launching the latest smartphone with an Android OS appeared to be a big surprise for the BlackBerry’s customers (Austen, 2016). Despite the fact the company explained that their choice of implementing an external software with the fact that new BlackBerry 10 does not support a number of apps, this did not look trustworthy for its clients.
It was expected that new software will bring back the company’s repute and increase revenues. Meanwhile, many loyal clients, both corporate and private, perceived this action as abandoning the strategy of strengthening the BlackBerry’s brand. Moreover, John Chen states that this choice was made to benefit in the device business and overcome some shortcomings of the new operating system. Taking into account that BlackBerry’s largest target audience is North America, which brings almost 50% of the company’s income, it becomes clear that company’s management is oriented on getting the highest profits possible at the moment, since Android operating systems are highly welcomed in the USA (Austen, 2015). Yet, despite the expected success of the new BlackBerry smartphone with Android OS, the company faced some decline in their wireless business.
The New York Times says that adopting Google’s Android for the new smartphone, J.Chen diversified possible risks and shifted the financial burden of developing new software to another company (Austen, 2016). It is obvious, that Mr.Chen has quit the strategy of getting higher profits and is now mainly oriented on reducing possible costs. First of all switching from mainly hardware to software developing shortened expenses on materials. But at the same time, developing of an up to date competitive operating systems required millions to be spent on researches and hiring new specialists. Secondly, the costs were tended to be reduced through decreasing the number of employees. However, large layoffs, like the one the BlackBerry recently had are mostly perceived as a negative sign of bad financial conditions of the firm. The third step to reduce the costs was to eliminate the burden by a close cooperation with the largest market leader.
If I were an economic adviser of the BlackBerry Ltd., I would have suggested the company to stick to the first offered strategy, namely to shift the company’s business to services and software development. From the economic perspective, decreasing the number of employees and shifting financial burden in a single product creation are the ways to limit short-term expenses and thus to get higher profits in a short period. However, in a long time perspective, these steps may have negative consequences, for example, these can spoil the company’s repute, which can lead to the sales shortening. Meanwhile, computer and wireless technologies become more and more popular nowadays. Thus, BlackBerry’s existing powers and established relations with big companies and governments can be used as a huge advantage in the software market. Furthermore, the latest service presented, Blend, is a proof of the company’s strength in the industry and ability to get profits by developing and launching new software. This path will require some patience, as large revenues are possible only in a long time perspective; however, the company can strengthen its reputation and later come back to the hardware producing, occupying both product and service niches at once.
Works cited
BlackBerry. Not there yet. The Economist.Web.Sep 27th, 2014. Available at: http://www.economist.com/news/business-and-finance/21620699-blackberrys-promised-comeback-has-not-yet-materialised-not-there-yet?zid=291&ah=906e69ad01d2ee51960100b7fa502595
Austen, Ian. BlackBerry Lays Off 200, Pointing to Shift Away from Phones. The New York Times. Feb 5th, 2016. Web. Available at: http://bits.blogs.nytimes.com/2016/02/05/blackberry-layoffs-point-to-shift-away-from-phones/?_r=0
Austen, Ian. BlackBerry Reports a Jump in Software Sales. The New York Times. Dec 18th , 2015. Web. Available at: http://www.nytimes.com/2015/12/19/technology/blackberry-smartphone-q3-earnings.html
