[d3r3k79]

As a former Z10 owner who was admittedly over critical of BB10 and now using a Samsung S5, I have soooooo much more appreciation for BB10.

The feel, flow and organization of BB10 is hands down superior to Android. Navigating throughout Android is slow and painful. Nothing seems to have any design considerations. It just feels like Google just put anything everywhere. It's so unorganized. Messaging is brutal and the calendar is pathetic.

That being said, I am very much a fan of BB10 after using Android for the last 2 weeks.

I now find myself critical against BlackBerry for an entirely different reason. Why the phuck has BlackBerry still not launched any sort of marketing campaign that differentiates themselves from the likes of Android and other mobile OS's?

IMO, if consumers were educated on the NEW BlackBerry instead of the old legacy bricks, BlackBerry would be gaining market share instead of continually losing market share.

This absolutely boggles my mind for a company that is struggling for survival.

Any thoughts?

Posted via CB10

[johnny_bravo72]

Blackberry is now more focused with enterprise, so it's no surprise to see less marketing for consumers.

Posted from a D618

[Lendo]

Off to Armchair CEO you go

[Troy Tiscareno]

The short answer is: money.

The long answer is: the launch of BB10 at the beginning of 2013 was BB's last chance at being a real competitor against Apple, Google, and Microsoft in the consumer market, and the launch was a failure. That's what led to BB putting the company up for sale that fall, which also failed to secure a buyer. BB ended up borrowing $1.25B (not including interest, of course) from Fairfax in order to sustain operations, plus further downsized the company by over 40% (after previous big cuts), sold off all of their real estate, and did a number of other things to cut expenses so that the company as a whole would survive. I'm not sure if everyone understands how dire BB's financial situation was, and still is.

For that reason, BB has effectively ceded the consumer market (except for some emerging markets in Asia and Africa where they still had some strength in the market) and focused all of their hardware efforts on the enterprise markets, in particular regulated enterprises (government agencies, big government contractors, and large financial institutions, primarily) - the kinds of companies for whom BB's main area of differentiation - security - is still a top priority.

Consumer marketing is extremely expensive, and even if you spend the money, it's only effective if the marketing is done very well, with ads that are effective and part of a larger, coordinated campaign. Plus, of course, the product itself has to be attractive to consumers in the first place, with enough strengths to counter any weaknesses it might have. BB's marketing has always been lousy and marginally effective at best, and when perceptions about BB's brand image started to sour around 2010, when BB failed to effectively counter the IPhone and Android, BB did absolutely nothing with their marketing to deal with the brand image. And when BB10 finally launched, they completely failed to educate the public that these new phones had an all-new-from-the-ground-up, powerful, modern operating system, so many people simply assumed that this was just the next minor upgrade of BBOS, as 6 was to 5 and 7 was to 6. Just watch the Superbowl ad and look at how ineffective it was and how disconnected it was from the reality of BB's brand image in early 2013. Nothing about that ad makes you want to go buy a BB10 device.

And since that time, BB's situation hasn't really improved, and in some respects, has gotten worse. In particular, developers' wholesale abandonment of the platform is a huge blow - in early 2013, BB could point to hope that devs would flock to BB10 and build a great ecosystem of apps and services - the announcement of 10.3's integration of the Amazon market and the shuttering of big chunks of BB World is an acknowledgement that all those hopes are now gone, and that BB has to piggyback on the competition's ecosystem for apps and services. It's very, very hard for marketing to spin that reality into something positive for consumers, even if BB had the money to do so.

But money is very tight, and BB, like any company who is trying to be in the mobile device business in 2014 MUST continue to research and develop new technologies in order to remain relevant, and so what money BB does have MUST be funneled there, or BB will get left behind completely.

By focusing on enterprise sales, BB can spend money on corporate account reps to work directly with enterprises, which is how large companies buy things anyway. There is no need for consumer marketing, and BB can do very limited, very targeted marketing to enterprise IT groups to maintain visibility there, even if consumers never see any of it.

But any illusion that BB is going to be competing in the consumer market against the Big 3 should be completely gone, because it's not gonna happen. BB is happy if consumers make the effort to track down a BB device from enterprise sales channels, but they aren't going to spend any money trying to make that happen, which means that from a carrier perspective, if that carrier doesn't need to carry BB's to service their enterprise accounts, then they aren't going to do so. In the US, that likely means that BB's will only be available from Verizon and AT&T - otherwise, you'd need to buy an unlocked device directly.

I also suspect (but of course, can't prove) that BB10 devices are simply a means to an end, and that end is: getting enterprises to use BB services, including BBM and BES, and that they are only maintaining handset sales until they can strengthen those services on the competing platforms. Once BES and BBM works well enough on iOS, Android, and WinPhone, there will be considerably less justification for keeping the device business around, due to low sales volumes, and BB may well kill the handset business in the next couple of years. But BES and BBM still aren't there yet, and currently they only work really well with BB phones, so Chen has to keep the handsets around until they can finish and polish the cross-platform capabilities of those services.

If you believe that, as I do, then spending dollars to market BB10 phones to consumers makes no sense at all - it's a road to nowhere. The writing is already on the wall, and we're just waiting for things to play out. Chen has a schedule and a plan, but to reveal it all now would kill current handset sales, and he can't let that happen at the moment - he still needs to sell handsets to keep BB alive until the transition is complete.

[JeepBB]

Excellent post, as always, Troy.

I was ticking off your points as I read, and agree with it all.

I agree particularly with your closing remarks. Matches my own view that the upcoming BB10 handsets are a Trojan horse to get enterprises hooked into the BB services. Once those enterprise services run seamlessly on other platforms, the BB10 handsets will be allowed to die (i.e. no successor device announced and entering that limbo of waiting for EOL).

The sentimentalist in me regrets the passing of the BB consumer era, while my pragmatic side can only admire John Chen for his hard-headed determination. Chen may indeed save BB, but I do wonder how many CB'ers will care about the Enterprise services & software company that BB becomes.

[Uusi Puhelin]

By focusing on enterprise sales, BB can spend money on corporate account reps to work directly with enterprises, which is how large companies buy things anyway. There is no need for consumer marketing, and BB can do very limited, very targeted marketing to enterprise IT groups to maintain visibility there, even if consumers never see any of it.

Thank you, Troy! Your post is an eye opener for me! Now I understand the why of the lack of consumer marketing.

Posted via CB10

[LuvULongTime]

Troy, I don't agree about them completely abandoning BB10 and the HW behind it. As good as BES and BBM can eventually be on iOS and Android, the handset itself is still an important piece of the security puzzle. Just ask Angela Merkel if she would be happy using an S5 connected to a BES. I'd say no. This is why Chen stated that he only needs to sell 10 million devices a year to make that division profitable. He is managing expectations and also letting shareholders know that HW will no longer be a drag on the company. It will be small piece of the new enterprise SW and services focus. I truly believe that when Chen first came on board he was ready to kill the handset business right away, but as he got to understand the company better he realized how important it was to the overall E2E solution. And if all he needs to do is sell 10 million devices a year and can outsource all production to foxconn, why kill it off? It just doesn't make sense especially know that there are still a subset of enterprise customers that actually want a BB10 device.

[sandman10]

Troy, well written and educated post.

You should be a crackberry editor.

I do believe that the consumer market is put on the back burner now for obvious reasons, but I'm not fully convinced that they are done with it yet.

This space changes frequently and rapidly...... it would be shrewd for them to "keep in touch" with the consumer market.

Posted via CB10

[Tre Lawrence]

Troy, well written and educated post.

You should be a crackberry editor.

There would be a coronary or two LOL.

But yes, his insights are usually on point. And direct.

[Troy Tiscareno]

As good as BES and BBM can eventually be on iOS and Android, the handset itself is still an important piece of the security puzzle.

I don't disagree with this - there's no question that BB's handset security is better because security was always BB's first and top priority. I don't think any knowledgeable person is going to argue that BB's handsets aren't inherently more secure than iOS and Android (but neither of those are nearly as bad with security as many CB folks often suggest).

But when you make a niche product without the benefits of economies of scale, you must be able to charge (and GET) a premium price for your product, or making that product simply isn't sustainable, regardless of how much better it is than the competition.

BB is in a weird position - now they're competing against themselves. On one hand, either BB10 is required to get proper security, which means BES12 is going to be inadequate (if used with something other than BB10 phones), OR, BES12 is a good enough product to provide security that's good enough for the majority of BB's customers, and thus, BB10 isn't really necessary. You can't have it both ways.

And with that being the case, if handset sales are continuing to lose money and drain R&D and production resources, then no matter how much better BB10 phones are than than the other OSs, it won't make financial sense to continue to produce them.

And with all of the competition in the MDM/EDM space (and more and bigger players entering), I'm not sure BB is going to be able to get premium prices ($1000-$1500 per handset) to compensate for only producing 5-7M phones a year (the current sales rate) across several very different models, which further erodes economies of scale. An analogy to cars is often made in these discussions, but rarely is it brought up that a Porsche, while certainly performing much better than an average car, is also priced at least 2-3 times what an average car costs. If BB can't get that premium price in the face of all of the competition, which I think is highly unlikely, then sooner or later, pressure from investors will force BB to exit the money-losing handset business.

Keep in mind that Chen is a Software & Services guy, and is not in any way wedded to the hardware, except to the extent that he has to keep it alive for now until BES12 and protected-BBM are launched and working well enough to take over.

[Troy Tiscareno]

There would be a coronary or two LOL.

No doubt this would be true! LOL.

[LuvULongTime]

BB is in a weird position - now they're competing against themselves. On one hand, either BB10 is required to get proper security, which means BES12 is going to be inadequate (if used with something other than BB10 phones), OR, BES12 is a good enough product to provide security that's good enough for the majority of BB's customers, and thus, BB10 isn't really necessary. You can't have it both ways.

I see where you are coming from, however I don't really see them competing against themselves. I see it more as two different solutions. Some of their customers may be very security conscious and will want an E2E solution, this is where BB10 handsets come into play. Others may not have such stringent security requirements and can live with BES 12 and iOS/Android handsets.

I completely agree with you that if they continue to lose money on HW they will look at alternatives. But I could see them first outsourcing all production to foxconn and scaling back the # of models to two (keyboard and touch) and have them share internals before completely shuttering the business. But if that fails then yes, no disagreement here, the handset business will go.

Didn't they sign a 5 year deal with Foxconn to manufacture HW for them? I believe they did. Assuming there is no out clause, we should see some type of BB HW for the next 5 years. And I'll also add, that 10 million device sales a year is not a difficult target to reach. If that is all they need to make a profit then I can see them hitting the target, making money, and keeping the HW business around provided it can completely sustain itself.

Overall, it would be a shame to lose BB10 as it is quite good as an OS. Ecosystem is lacking, no doubt, but the OS is a pleasure to use. I would cringe at the idea of having to use iOS or Android. I would rather go back to my old flip phone.

[Troy Tiscareno]

Didn't they sign a 5 year deal with Foxconn to manufacture HW for them? I believe they did. Assuming there is no out clause, we should see some type of BB HW for the next 5 years.

Oh, I promise you, there is an "out" clause.

And I'll also add, that 10 million device sales a year is not a difficult target to reach. If that is all they need to make a profit then I can see them hitting the target, making money, and keeping the HW business around provided it can completely sustain itself.

Given that BB10 sales have only hit the right number to sell 10M phones a year ONCE in the last 6 quarters, and that it was more than a year ago with the first full quarter that BB10 devices were available, were stocked in stores by all carriers, and there was still consumer advertising, I'm not sure that 10M phones is quite as easy as you think, especially with so many carriers no longer stocking devices or dropping BB entirely.

Overall, it would be a shame to lose BB10 as it is quite good as an OS. Ecosystem is lacking, no doubt, but the OS is a pleasure to use. I would cringe at the idea of having to use iOS or Android. I would rather go back to my old flip phone.

I agree with you - I'd like to see BB10 survive. Competition helps all consumers, by forcing all manufacturers to keep improving their products. But business is business, and when something stops making dollars, it stops making sense.

[LuvULongTime]

Oh, I promise you, there is an "out" clause.



Given that BB10 sales have only hit the right number to sell 10M phones a year ONCE in the last 6 quarters, and that it was more than a year ago with the first full quarter that BB10 devices were available, were stocked in stores by all carriers, and there was still consumer advertising, I'm not sure that 10M phones is quite as easy as you think, especially with so many carriers no longer stocking devices or dropping BB entirely.



I agree with you - I'd like to see BB10 survive. Competition helps all consumers, by forcing all manufacturers to keep improving their products. But business is business, and when something stops making dollars, it stops making sense.

The inability to hit the 10m mark more than once can also be attributed to the belief that they were going under, which forced enterprise clients to seek HW elsewhere. If they can convert existing legacy BES 5/OS7 shops over I think 10m devices a year is achievable. Chen must also think it is as well given he threw that # out there.

But overall I completely agree with you... if it doesn't make money then it doesn't make sense. Fingers crossed it makes money.

[xBURK]

BlackBerry WILL be marketing as soon as the Passport and 10.3 arrive. Mr. Chen and Mr. Sims have stated this a few times already. It would be a complete waste of time and money if they did it before then.

"BB POWERED" C001C1D66

[prplhze2000]

The Zs and Qs were half baked until 10.2.1. Even then, the OS still needed improvement i.e. preloaded Amazon Appstore and smoother experience running Android apps.

Chen knows carriers and consumers are frustrated with BlackBerry and the reasons for it. He is not marketing to them until he has a phone that meets his standards. Period. The passport will be the first one that does. He has been marketing the Z3. He's going to do it when he's ready and do it right. The passport and classic meet his philosophies more than the previous BB10 phones do. Just wait and see.

Posted via CB10

[superairwolf]

The short answer is: money.

The long answer is: the launch of BB10 at the beginning of 2013 was BB's last chance at being a real competitor against Apple, Google, and Microsoft in the consumer market, and the launch was a failure. That's what led to BB putting the company up for sale that fall, which also failed to secure a buyer. BB ended up borrowing $1.25B (not including interest, of course) from Fairfax in order to sustain operations, plus further downsized the company by over 40% (after previous big cuts), sold off all of their real estate, and did a number of other things to cut expenses so that the company as a whole would survive. I'm not sure if everyone understands how dire BB's financial situation was, and still is.

For that reason, BB has effectively ceded the consumer market (except for some emerging markets in Asia and Africa where they still had some strength in the market) and focused all of their hardware efforts on the enterprise markets, in particular regulated enterprises (government agencies, big government contractors, and large financial institutions, primarily) - the kinds of companies for whom BB's main area of differentiation - security - is still a top priority.

Consumer marketing is extremely expensive, and even if you spend the money, it's only effective if the marketing is done very well, with ads that are effective and part of a larger, coordinated campaign. Plus, of course, the product itself has to be attractive to consumers in the first place, with enough strengths to counter any weaknesses it might have. BB's marketing has always been lousy and marginally effective at best, and when perceptions about BB's brand image started to sour around 2010, when BB failed to effectively counter the IPhone and Android, BB did absolutely nothing with their marketing to deal with the brand image. And when BB10 finally launched, they completely failed to educate the public that these new phones had an all-new-from-the-ground-up, powerful, modern operating system, so many people simply assumed that this was just the next minor upgrade of BBOS, as 6 was to 5 and 7 was to 6. Just watch the Superbowl ad and look at how ineffective it was and how disconnected it was from the reality of BB's brand image in early 2013. Nothing about that ad makes you want to go buy a BB10 device.

And since that time, BB's situation hasn't really improved, and in some respects, has gotten worse. In particular, developers' wholesale abandonment of the platform is a huge blow - in early 2013, BB could point to hope that devs would flock to BB10 and build a great ecosystem of apps and services - the announcement of 10.3's integration of the Amazon market and the shuttering of big chunks of BB World is an acknowledgement that all those hopes are now gone, and that BB has to piggyback on the competition's ecosystem for apps and services. It's very, very hard for marketing to spin that reality into something positive for consumers, even if BB had the money to do so.

But money is very tight, and BB, like any company who is trying to be in the mobile device business in 2014 MUST continue to research and develop new technologies in order to remain relevant, and so what money BB does have MUST be funneled there, or BB will get left behind completely.

By focusing on enterprise sales, BB can spend money on corporate account reps to work directly with enterprises, which is how large companies buy things anyway. There is no need for consumer marketing, and BB can do very limited, very targeted marketing to enterprise IT groups to maintain visibility there, even if consumers never see any of it.

But any illusion that BB is going to be competing in the consumer market against the Big 3 should be completely gone, because it's not gonna happen. BB is happy if consumers make the effort to track down a BB device from enterprise sales channels, but they aren't going to spend any money trying to make that happen, which means that from a carrier perspective, if that carrier doesn't need to carry BB's to service their enterprise accounts, then they aren't going to do so. In the US, that likely means that BB's will only be available from Verizon and AT&T - otherwise, you'd need to buy an unlocked device directly.

I also suspect (but of course, can't prove) that BB10 devices are simply a means to an end, and that end is: getting enterprises to use BB services, including BBM and BES, and that they are only maintaining handset sales until they can strengthen those services on the competing platforms. Once BES and BBM works well enough on iOS, Android, and WinPhone, there will be considerably less justification for keeping the device business around, due to low sales volumes, and BB may well kill the handset business in the next couple of years. But BES and BBM still aren't there yet, and currently they only work really well with BB phones, so Chen has to keep the handsets around until they can finish and polish the cross-platform capabilities of those services.

If you believe that, as I do, then spending dollars to market BB10 phones to consumers makes no sense at all - it's a road to nowhere. The writing is already on the wall, and we're just waiting for things to play out. Chen has a schedule and a plan, but to reveal it all now would kill current handset sales, and he can't let that happen at the moment - he still needs to sell handsets to keep BB alive until the transition is complete.

Very incisive. I'd take you for a business journalist.

I'd sum it up in a word, or two - corporate hubris. It's not that uncommon, and BlackBerry has Nokia to share it's woes with in that regard. Every market leader, at one time or another, reaches that point of feeling "we're too big too fail". Creativity takes a backseat to a cocksure, presumptuous, fatal mindset. Unfortunately, once that realization hits, it's often too late.

[superairwolf]

Excellent post, as always, Troy.

I was ticking off your points as I read, and agree with it all.

I agree particularly with your closing remarks. Matches my own view that the upcoming BB10 handsets are a Trojan horse to get enterprises hooked into the BB services. Once those enterprise services run seamlessly on other platforms, the BB10 handsets will be allowed to die (i.e. no successor device announced and entering that limbo of waiting for EOL).

The sentimentalist in me regrets the passing of the BB consumer era, while my pragmatic side can only admire John Chen for his hard-headed determination. Chen may indeed save BB, but I do wonder how many CB'ers will care about the Enterprise services & software company that BB becomes.

Couldn't agree more.

The re-focus on enterprise is understandable. However, it harks back to a fundamental precept - make something a consumer wants, and you'll won't go wrong. Even enterprise will follow. Highly ironic that BB has always prided itself with enterprise as its core differentiation, and yet that original focus and current re-focusing is what is killing them. A current market share of 0.6% is a grim reminder that even a full corporate focus back on enterprise might not be enough this time around. Enterprise is listening to what consumers want after the advent of BYOD.

[xBURK]

Couldn't agree more.

The re-focus on enterprise is understandable. However, it harks back to a fundamental precept - make something a consumer wants, and you'll won't go wrong. Even enterprise will follow. Highly ironic that BB has always prided itself with enterprise as its core differentiation, and yet that original focus and current re-focusing is what is killing them. A current market share of 0.6% is a grim reminder that even a full corporate focus back on enterprise might not be enough this time around. Enterprise is listening to what consumers want after the advent of BYOD.

While I see and understand your point, this is not the same management team. For that matter, it's not even the same company now. We have no idea what Mr. Chen and his team are capable of behind closed doors and how they will actually tackle launching a new device in North America. I have a strong feeling that we will finally witness how BlackBerry should have launched new devices all along. Yes, all this while BlackBerry's main focus is said to be on Enterprise.

"BB POWERED" C001C1D66

[superairwolf]

While I see and understand your point, this is not the same management team. For that matter, it's not even the same company now. We have no idea what Mr. Chen and his team are capable of behind closed doors and how they will actually tackle launching a new device in North America. I have a strong feeling that we will finally witness how BlackBerry should have launched new devices all along. Yes, all this while BlackBerry's main focus is said to be on Enterprise.

"BB POWERED" C001C1D66

I am totally with you on this as well. I just purchased a new Q10 last month, and I couldn't be happier. While it is just for secondary sim, I find myself doing practically all my messaging - SMS, email, chat - on the Q these days.

Chen appears to be focusing greatly on being able to evolve a superior OS in terms of usability and security. Apple successfully penetrated the mobile market back in '07 because of its superior UI back then. It also helped that they came in sexy hardware. BB10 hardware are more advanced than the legacy handsets they replaced, and if the Passport proves to improve in that regard, I am truly hoping BB will be able to woo back at least legacy BB users like myself.

[kenicolo]

The os was immature

Posted via CB10

[maclaskey]

Most I know don't even know BlackBerry has created a new OS. I've heard that all BlackBerry can do is e-mail. Its awful. Then they see what my phone can do. They are like wow!! Yes, please market!!

Posted via CB10