The company formally known as Research in Motion Ltd (NASDAQ:BBRY) held a public event on January 30 and announced a name change for the company to Blackberry. In addition, they launched of a new operating system for Blackberry phones and 2 new phones, the Z10 and Q10. This is seen as a last attempt by the struggling phone manufacturer to regain the market share it once had, and then lost to other competitors like Apple Inc. (NASDAQ:AAPL), Nokia Corporation (NYSE:NOK), and Samsung etc. globally.
Declining stock price and market share
In the early years of this century, Blackberry phones were considered the symbol of corporate glamour and were a prerequisite for the most dynamic industries like Investment Banking etc. Enterprise activation for Blackberry is supposedly one of the most secured networks and data integrity is almost absolute. Besides, their messenger service (popularly known as BBM) was one of the pioneers in the field of social networking. As a result, their market audience was spread across 2 different categories: 1) the corporate individual who would need access to office mails on the go and 2) the young generation who would share messages, pictures, songs, etc. through the messenger service. Blackberry saw huge increases in their annual numbers due to the increasing demand in developing countries and the emerging economies like India, China, Brazil, etc. However, demand slowed down considerably in the US and top European countries.
The only reason for the lack of growth from the developed countries was that the company failed to upgrade its products in line with the ever changing technology. Other competitors raced ahead on account of better quality products offering better features and enhanced user experience. The market share of Blackberry phones started to decline from ~20% in 2009 and have been on a constant decline over the past couple of years to ~5% now as they failed to adapt themselves to the changing market requirements. Luckily for them there was some demand from the emerging markets for the lesser priced phones, and hence they were able to manage some additional sales. On account of all this, the stock price has been going down over the last 5 years and touched an all-time low of $6.22 sometime in the month of September 2012. The company’s management decided to undertake a slew of measures to prevent its downfall. As a result the company axed a few jobs as well to reduce costs and achieve operational efficiency. On the offerings front, a decision was taken to upgrade the operating system so as to include new features and release new versions along with new phones in 2012. However, the product launch has been continuously delayed over the last few months which have further resulted in loss of confidence amongst the Blackberry users and the investor community.
Blackberry finally announced the launch of a new operating system Blackberry 10.0 along with 2 new phones. In terms of configuration both the phones are at par (if not better) with some of the highest selling phones in the market. Operating system 10.0 has better features like Blackberry Balance that acts as a perfect balance between the personal and official enterprise applications. Efficient multi-tasking (Blackberry Peak) and more secured enterprise activation are added benefits along with an appstore with 70K upcoming apps for usage.
With the launch of new features and phones, the company would look out to retain its existing customers and lure the ones who have migrated to other platforms like iOS and Android.
Apple has raced ahead from the competition due to their better touch phones and continuous enhancements made to the devices and the operating system. They have created a niche for themselves and are hugely dependent on the brand loyalty from their existing customer base. iStore applications are growing on a daily basis and there is a huge community to support the development of other applications and features. Additionally, Apple has ensured that they adapt their technology each year in accordance with the latest trends and incorporate the same in the new launches each year.
Nokia has also revamped themselves with the launch of Windows 8 operating system and the Lumia series of phones. Response to their new devices has been very encouraging and it remains to be seen if they maintain the momentum in the longer run. Nokia’s focus on the Windows platform would help them achieve synergies across all different product categories including Laptop, Tablets and Phones. Also, they are using highly effective marketing techniques to attract new customers in the developing and emerging countries.
Is a turnaround possible for Blackberry?
Blackberry 10.0 offers the right blend of corporate world and personal features. There are more than 80 million Blackberry users globally and many are still loyal to the brand. Rave reviews for Z10 would definitely help the firm garner more support for its devices. On the flip side, due to the indefinite delay related to the upgrade, there has been loss of trust and hence there is a higher possibility of people waiting for some time before they get their hands on these devices. Also, it would be very important for the company to gather support from the programming fraternity to prepare apps for the new OS as the App stores of its competitors are growing by the day.
Wednesday’s event can be looked as a right step by the company to come to terms with the current market trends, however there is a long road ahead and they would have to build on the positive momentum generated with the launch. It remains to be seen whether the push would be strong enough to lure back the customers lost to other companies. It would be extremely difficult, but does not seem impossible.
The article Would Blackberry Regain Its Lost Glory? originally appeared on Fool.com and is written by Sujata Dutta.
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