E Blackberry - Lost In Communication

Research in Motion (RIM), renamed BlackBerry Ltd (BBRY), was founded in 1984 and was involved in several activities related to wireless communications. In the beginning of the century, the company introduced a pager that could push email through its proprietary BlackBerry enterprise server. In order to leverage the potential of its own server, RIM introduced its first mobile phone in 2000. Due to the push email and use of encryption technologies, the company was able to gain access to government contracts. The company quickly introduced more phones directed to the consumer market as well. RIM was able to capitalize on its orientation to internet services like email. Through the development of mobile phones with a qwerty form factor, the phones were applicable to both enterprise clients and youngsters addicted to SMS. For this last group of customers the company had a service called BlackBerry Messenger (BBM). This messaging product was a huge success since allowed BlackBerry users to send free unlimited messages. Summing up, RIM specialized in offering low power phones that allowed email access, through its own servers, which was a good edge over competition.

The problems started with the iPhone and the agreement Apple (AAPL) made with AT&T (T) to provide unlimited data packages. This enabled users to have a fully capable internet browser on the iPhone, something that Blackberry wasn’t prepared to fight. The company’s systems were much older and didn't provide the same feel-good experience as the iPhone. On the same note, never before had carriers allowed the unlimited data package offer that Apple was providing. RIM’s management had never thought that was possible, so they weren’t prepared for the day that could turn into reality.

RIM’s management was so deeply immersed in doing business as usual that they never thought about exploring such a possibility. On the other hand, Apple being a complete newcomer to the marketplace was capable of thinking up out-of-the-box solutions which could revolutionize the whole industry. With this fast shift from low powered phones to high processing smartphones, RIM’s technology was no longer the best in the market and enterprise clients started to adopt other solutions, like the iPhone and Android OS phones.

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Kate Monroe 4 years ago Member's comment

Part of the thing people cite in terms of BBRY's intrinsic value is its patents. In your opinion, are those patents outdated? Do they still have value?

Nelson Alves 4 years ago Author's comment

If you ask me if they are still useful, I think so. The Nokia case illustrates this, Nokia has been able to keep extracting money from patents. But capitalizing on patents made in the past is not exactly a business with a great future. I think the question is more if they can put those patents to use in order to serve a customer segment better than anyone else. Because if they do, they will start adding valuable patents again.

During the troubled times, when they still had the double CEO model, one of them suggested focusing on messaging, which was what they were doing better than anyone else. No one can know for sure, but this could have been a smarter move.