Learning from Apple’s strategy
BlackBerry has revealed that it’s working toward a solid spot in the Indian market. It is targeting the Indian youth market through the Q5, a new mid-range phone. In an interview with The Wall Street Journal, BlackBerry India’s managing director, Sulnil Lalvani, argues that competitive pricing will be the key to success. You don’t need a crystal ball to know that BlackBerry will not be able to hold price wars with Asian manufacturers. Most local competitors are more interested in making sales than they are in maintaining a brand. There is a price level that BlackBerry will not be able to dip below because of margin and image concerns. Local competitors, on the other hand, will not mind going as low as possible, considering their significantly lower assembly and production costs. Considering Asia is a middle-income market where price tops the list of consumer incentives, BlackBerry Ltd (NASDAQ:BBRY)’s strategy is set to fail.
Apple Inc. (NASDAQ:AAPL)’s strategy has always been to present a ‘cool’ product at a premium price. It never dips into the mid-range market and has, on recurrent occasions, ignored hundreds of specialists’ calls to lower prices in view of the growing middle-income Asian market. This is because Apple understands that going back on prices will destroy its brand and push it into the same category as BlackBerry. Even as other handset makers producing mid-range devices in Asia continue to reap, Apple remains contented with its consumers.Its consumers, on the other hand, get exactly what they want from Apple Inc. (NASDAQ:AAPL) – coolness, recognition, and exclusivity. In fact, Apple’s brand remains top in the UK, even in the face of a huge tax-avoidance debacle that revealed the Cupertino-based tech giant gives back very little to the UK in terms of taxes.
Conclusion
The 2.9 % market share BlackBerry commanded at the outset of the year is less than half the share a year ago. However, not all is lost. Its turnaround peer, Nokia, is also in the red and is cutting 400 jobs in view of the $0.06 per share losses it posted in Q2. This could, however, change going by the pace at which Windows Phone is catching on. BlackBerry Ltd (NASDAQ:BBRY) needs to get back to its roots before all is lost. While it will be undeniably hard to rope in some of the enterprise users who lost faith in the company, it will be even harder to stand up against the prevailing forces in the consumer market. If BlackBerry doesn’t turn ship, a takeover or total shutdown is inevitable. That is the reality.
The article Where BlackBerry Went Wrong and Why It Should Reverse Strategy originally appeared on Fool.com and is written by Lennox Yieke.
Lennox Yieke has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Lennox is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
