A lot has changed since the early, heady days of mobile phones. Back in the early 2000s, when Google still stuck strictly to search and Apple had not yet released the iPod, it seemed companies like Nokia and Motorola would always be on top of the heap, with their functional devices, permitting brand-new features - like the ultra-futuristic SMS texting! But a Canadian telecommunications company turned all that on its head. Though Research In Motion was founded in 1984, making it positively venerable in mobile phone terms, it didn’t achieve mainstream success until its diversification into pagers in 1998, courtesy of its Inter@ctive Pager 950, which solidified its reputation as a sturdy provider of devices for businessmen. A few short years later, RIM began releasing Blackberry mobiles, and the age of the feature phone was born.
But just as Nokia is struggling to compete in the Android and iOS dominated market of the modern clime, things haven’t stayed so rosy for RIM, either. In 2011, they reported a revenue drop for the first time in nine years, and their stock swiftly followed suit, dropping to its lowest level since 2006. In the years 2008 – 2011, RIM’s shareholders suffered staggering losses; around 82%, as RIM’s market capitalization dropped from $83 billion to $13.6 billion, the largest recorded decline for a telecommunications equipment provider. And things have only gone from bad to worse. The statistics speak for themselves: their shares are currently worth less than $8, from an all-time high of $140 in 2008. RIM’s fall from King of the feature phone market to its biggest loser has been dramatic indeed – but why did it happen?
The answer is simple: Smartphones. In 2007, the release of the iPhone changed the entire face of the feature phone market, in much the same way the initial release of the Blackberry (with its miscellaneous services such as internet access) changed the face of the early mobile market. Companies like Google and Samsung managed to stand up the challenge via diversification (today, Google’s Android OS and Samsung’s range of top-end Galaxy Smartphones stand toe-to-toe with Apple), but Blackberry misidentified their market position, and thought that they could maintain their niche in the feature phone market: devices superior to bare-bones mobile devices, but significantly weaker than their Smartphone counterparts. The modern user, however, proved Blackberry wrong – nowadays, even the least tech-savvy consumer uses their mobile devices for a plethora of tasks, with phones and texts buried under the ability to browse the internet on the go, play games from the app store, or connect to their friends via social networking sites. The modern user is simply not interested in stripped-down devices, when convenience is readily available.
RIM’s future is uncertain. Doom-sayers are already claiming that the company is in its final throes: they predict mass desertion from consumers, followed by a mercifully swift death. But that’s not necessarily the case; RIM still has a faithful consumer base amongst corporate businessmen, who value Blackberry devices for their security features and easy, intuitive usage of e-mail. They undoubtedly made a mistake in attempting to diversify into a radically different market, one they didn’t understand the implications of, and they have suffered accordingly – but with the BB10 OS slated for release by 2013, RIM could hang on until the first quarter and recoup losses… as long as they’re willing to tighten their belts and accept that things may get worse before they get better.
But just as Nokia is struggling to compete in the Android and iOS dominated market of the modern clime, things haven’t stayed so rosy for RIM, either. In 2011, they reported a revenue drop for the first time in nine years, and their stock swiftly followed suit, dropping to its lowest level since 2006. In the years 2008 – 2011, RIM’s shareholders suffered staggering losses; around 82%, as RIM’s market capitalization dropped from $83 billion to $13.6 billion, the largest recorded decline for a telecommunications equipment provider. And things have only gone from bad to worse. The statistics speak for themselves: their shares are currently worth less than $8, from an all-time high of $140 in 2008. RIM’s fall from King of the feature phone market to its biggest loser has been dramatic indeed – but why did it happen?
The answer is simple: Smartphones. In 2007, the release of the iPhone changed the entire face of the feature phone market, in much the same way the initial release of the Blackberry (with its miscellaneous services such as internet access) changed the face of the early mobile market. Companies like Google and Samsung managed to stand up the challenge via diversification (today, Google’s Android OS and Samsung’s range of top-end Galaxy Smartphones stand toe-to-toe with Apple), but Blackberry misidentified their market position, and thought that they could maintain their niche in the feature phone market: devices superior to bare-bones mobile devices, but significantly weaker than their Smartphone counterparts. The modern user, however, proved Blackberry wrong – nowadays, even the least tech-savvy consumer uses their mobile devices for a plethora of tasks, with phones and texts buried under the ability to browse the internet on the go, play games from the app store, or connect to their friends via social networking sites. The modern user is simply not interested in stripped-down devices, when convenience is readily available.
RIM’s future is uncertain. Doom-sayers are already claiming that the company is in its final throes: they predict mass desertion from consumers, followed by a mercifully swift death. But that’s not necessarily the case; RIM still has a faithful consumer base amongst corporate businessmen, who value Blackberry devices for their security features and easy, intuitive usage of e-mail. They undoubtedly made a mistake in attempting to diversify into a radically different market, one they didn’t understand the implications of, and they have suffered accordingly – but with the BB10 OS slated for release by 2013, RIM could hang on until the first quarter and recoup losses… as long as they’re willing to tighten their belts and accept that things may get worse before they get better.
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