BlackBerry: A Story of Failure and Constant Success

BlackBerry Limited (BB) has a long history of both extraordinary success and failure. Prior to January 2013, it was known as Research in Motion (RIM). Many people believe it to be the inventor of the smartphone. Additionally, there were 85 million BlackBerry users globally at the height of the service in September 2011.

Nevertheless, its popularity dropped by over 75% as a result of the popularity of Apple's iOS and Google's Android platforms. As of April 2024, BlackBerry's stock price had practically crashed from highs of $147 to about $3.

How might a cutting-edge tech business so quickly become overshadowed? The story was made into a movie that opened in Canada in May 2023.

Key Takeaways

• BlackBerry pioneered the creation of handheld devices but lost market share to larger rivals such as Apple.
• From 1999 to 2007, the company, originally known as Research in Motion, had rapid growth due to the positive reception given to its novel product lines.
• The 2007 release of the touchscreen iPhone led to a significant move away from BlackBerry handheld devices.
• Dreams of a reversal have been crushed as the business battles fierce competition from bigger tech firms.
• In just two years, BlackBerry has lost more than half of its market value.
• On May 12, 2023, "BlackBerry," a film about the company's founders, had its Canadian premiere.

History of BlackBerry

With its trademark QWERTY keyboard, a pioneer in bringing email services to handheld mobiles, BlackBerry became a favorite of world leaders, corporate giants, and the rich and famous all at the same time. In fact, owning a BlackBerry device was a status symbol, and BlackBerry addiction was a prevalent condition

Businesses found great value in the always-on, always-connected wireless environment that provided dependable, secure email access. The Inter@ctive Pager 950, BlackBerry's first well-known offering, was released in 1998.

With its compact screen, keyboard keys, and recognizable trackball, it provided seamless access and smooth syncing to business email. After it became instantly popular, there was no looking back.

The business released the 850 pager in 1999, which allowed "push email" from Microsoft Corp. (MSFT) Exchange servers. The BlackBerry 957, the company's first smartphone, was released in 2000.

RIM's revenue growth from 1999 to 2001 was exceptional, mostly attributable to increased adoption by governments and businesses. BlackBerry OS and BlackBerry Enterprise Server (BES) features continuing to be expanded by the firm. BlackBerry's expansion into new markets and the introduction of additional products to its lineup occurred during its heyday, from 2001 to 2007. BlackBerry entered the consumer market after effectively establishing itself in the business sector. Following the launch of the Curve and Bold model lines, the BlackBerry Pearl series proved to be incredibly successful.

The film "BlackBerry" narrates the tale of the innovators behind the first smartphone in history. Sean Silcoff and Jacquie McNish's book "Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry" served as a loose inspiration for the satirical history. It premiered in Canada on May 12, 2023.

The Game Changer

In the middle of 2008, BlackBerry's stock price reached an all-time high of $147. Apple Inc. unveiled the iPhone, the first well-known touchscreen phone, a year earlier. At first, BlackBerry disregarded it, believing it to be a better phone with entertaining features aimed at younger users. But the iPhone was a big success, and this marked the beginning of BlackBerry's downfall.

Not only was the iPhone designed for consumers, but it also attracted corporate executives, breaking into BlackBerry's main market. This was followed by a deluge of other manufacturers' email-enabled cellphones. Nevertheless, BlackBerry was able to hold onto its reputation as a "business email device." In the past, people might carry two phones: a personal phone and a BlackBerry for work.

In 2008, BlackBerry unveiled Storm, its first touchscreen phone designed to rival the iPhone. However, following a spike in sales, grievances over the device's functionality began to surface. This marked the beginning of investors', analysts', and media's concerns regarding BlackBerry's business prospects.

The Swings

RIM was ranked #1 among Fortune's 100 fastest-growing firms in 2009. According to Comscore, RIM has the greatest market share (37.3%) in the US smartphone market as of September 2010.There were 41 million subscribers worldwide. Regretfully, RIM's market penetration in the US peaked at that point. After that, the corporation continued to lose territory to competing operating systems—the Apple iOS and Google’s (GOOG) Android —and was never able to make it back.

As of November 2012, Apple and Google held a combined 53.7% and 35% of the U.S. market share, while BlackBerry's share had fallen to just 7.3%.BlackBerry maintained its success abroad despite dropping sales in the United States. In the final quarter of 2012, it recorded 77 million members worldwide, indicating the success of its global expansion.

Due to local losses compared to global success, the stock has seen extreme volatility. The worst year was 2011, when BlackBerry's stock price fell by nearly 80% due to a drop in market share. Consistent earnings shortfalls led to further declines - most prominently a first quarter loss of $84 million in 2014, which caused the stock price to drop by nearly 30% the day after the announcement.

Corporate Comeback

The stock's extreme volatility is ascribed to multiple efforts at a comeback, corporate developments, related analyst recommendations, and rival developments. The real-time operating system QNX, which served as the foundation for the BlackBerry Tablet OS, was purchased by RIM in April 2010. On the QNX platform, the BlackBerry Playbook tablet was released. Unfortunately, because of its expensive pricing, scant features, and subpar performance, it proved to be an absolute disaster.

BlackBerry 10, the next generation phone, was announced in 2011, but sales of the device were not successful. Nevertheless, the company's shares rose 14% in November 2012 on expectations that BlackBerry 10 would surpass sales projections based on initial estimates. The stock had risen by nearly 50% by January 2013, but volatility persisted.

The first half of 2014 saw positive growth, sometimes up to +35%. Their foundation came from BlackBerry's announcement that it was moving from making mobile handsets to making mobile solutions. The plans yielded results that were not very significant.

A further uptick occurred in January 2015, following rumours that Samsung was considering acquiring BlackBerry. The latter's share price increased by 30% as a result of this. But the increase turned out to be a passing fad, as the stock fell back into decline over 2015 and 2016.

In 2020, enterprise software sales will account for 44% of BlackBerry's total revenue.

Hopes for a significant turnaround at BlackBerry have repeatedly been dashed. After two years of growth, the stock hit a high of $12.66 in early 2018, nearly doubling in value. Since then, however, the company's stock has lost more than half of its market value as competition has eroded its mobile business and forced it to refocus its efforts on other markets, such as corporate software.

Will BlackBerry Survive?

BlackBerry Limited has essentially given up on smartphones as a business and is now a provider of cybersecurity and Internet of Things (IoT) services. The company said on April 3, 2024, that its total revenue for the fiscal year (FY) 2024 was $853 million, of which $815 million came from IoT and $280 million from cybersecurity. Q4 fiscal 2024 sales for the company’s IoT business demonstrated 25% year-over-year (YOY) revenue growth, according to BlackBerry.

A technological company may need to change its identity, as it is frequently essential to do so. Trailblazers in that field include Google and Meta (previously Facebook) (META). But BlackBerry will not only need to change, it will also need to get over its image as a failing manufacturer of smartphones. As they say, only time will tell if BlackBerry is capable of handling these duties. Keep checking back.

Now that BlackBerry has stopped producing smartphones, what kind of business is it?

At the moment, BlackBerry Limited focusses mostly on offering Internet of Things (IoT) and cybersecurity services. The business just disclosed $853 million in total sales for FY2024.

Why Did BlackBerry Smartphones Fail?

Consolidation of competition. BlackBerry lost market share following the release of the Apple iPhone, which it didn't take seriously and couldn't regain. As more companies joined the smartphone market, BlackBerry was eventually pushed out.

When Was the BlackBerry Movie Out?

"BlackBerry," set to premiere in Canada on May 12, 2023, tells the story of three people who took an idea and turned it into the world's first smartphone. Described as more satire than history, the film is based on the 2015 book "Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry."

Source: investopedia.com