Blair Currie’s blog: What should we make of the BB10 launch and will it succeed?

On January 30^th Research in Motion (now rebranded “Blackberry”) launched its much awaited, BB10 operating system.  This launch featured two new products – the touch screen based Z10 and the keyboard based Q10 – both with a number of advanced features.

While the launch was portrayed by the media and business/technology analysts to be a “last ditch” effort to save RIM, it was really an overdue opportunity to bring a great brand back life, reverse sagging sales, and prevent the company from selling off assets and shrinking in size, to remain a going concern.

Blackberry did some things  well with this launch, other things not so well; but as this post will argue, the event has put the brand back on the map, and provided a new foothold for Blackberry to succeed again in the world of Fast Moving Mobile Devices (FMMDs).

1.)What do Blackberry do well?

There were a number of things that Blackberry did well during the launch, including strategy, tactics and execution:

• Campaign leading up to the launch. In the 2 months prior to the January 30^th launch,  Blackberry’s “PR Machine”  helped raise Research in Motion’s stock price up by almost 200% from a low of USD6 per share in October 2012 to over USD18 per share, days before the launch. It brought more attention to this declining brand and set the stage for a successful launch and possible turnaround.
• Focus on new users before addressing existing users.  Blackberry made the correct choice of launching the Z10 touch screen product first, to lure new or lapsed customers from the iOS and Android-based franchises. After that, Blackberry would appeal its core franchise through the Q10 keyboard device.
• The Company did this for two reasons. The first was that this sequence would better address the investment    community’s demand for growth. If Blackberry had launched with Q10, the investment community would have punished it for appealing to a “Shrinking audience”. And the investment community matters more at first because it can immediately react, whereas it will take time for customers and consumers to react.
• Second, the initial focus on the Z10 was based on Risk Management.  This choice gave the Company a chance to fall back on the Q10 to at least secure its existing users, if the Z10 was slow to catch on. As such, the launch strategy was designed to optimize returns while reducing its risk.
• It was also not possible to effectively support both models given resource and time constraints.
•  One key differentiating feature. Blackberry did well by starting out with a key feature that set itself apart from other mobile devices – the Blackberry Flow. This feature allows the user to seamlessly flow from one application to the next without dealing with the “In-and-out paradigm” (Thorsten Heins’ quote) which users of Apple’s iOS face with the iPhone and iPad.
• Blackberry Peek enhances this experience by allowing users to check on a notification window without having to leave the particular App. This key differentiation feature is critical in a market that takes quantum leaps when it comes to innovation and quickly evolves.

• A series of advanced features.  Blackberry “raised the bar” of innovation further than its key differentiators, by adding a series of new product features. This helped put more distance between itself and its competitors. These advances include the Blackberry Hub (an amalgamated list of apps on the BB10 with real time updates) the novel Blackberry Time Shifting Camera (a way to help capture the perfect moments by altering individual faces, during live action) and the Blackberry Story maker (the ability to make short movies of your journeys that can immediately be posted on YouTube) as well as a upgraded Blackberry World App Store.

• As FMMD’s unique benefits and features are quickly reverse engineered, combined with other innovations, and introduced in to new products, this reduces the time any given player will be seen to be innovative.  One key feature is not enough to stay ahead in this world, as Samsung showed Apple with its touch technology. With this series of innovations, Blackberry demonstrated that it could again compete in this fast moving game.
• Target unserviced market segments.  With Blackberry Balance the Brand was able to target two market segments. First it addressed the segment of people who previously required two telephones – one for Business and one for Personal needs.  Second it targeted the growing “Bring your own device” (BYOD) segment of the mobile device market.
• “Balance” tackles these segments because it allows users to have two distinct Personalities and to switch from say “Work mode” to “Personal mode”, with encrypted security walls that restricts the transfer of data between modes. This solution is great for businesses and particularly IT and Security managers, and consumers alike.
• Build on existing strengths.   The Blackberry Messenger (BBM) is a key difference in security that sets Blackberry ahead of its competitors.  The biggest addition to BBM is an idea called “Screen sharing” where any two BB10 devices can share what they’re seeing on their displays through video conferencing.
• Fix the old problems.  The BB10 devices have apparently fixed the problem of switching from App to App where an “Hourglass” would appear and require one to pull the battery to reboot the entire system. This could not be tolerated with the new Blackberry Flow technology.

2. What could Blackberry have done better?

Blackberry could have improved its launch, as follows:

• Clear external focus. Blackberry should have focused exclusively on the benefits and less about internal matters, during the launch. While the Company certainly did introduce some great new features, it spent time talking about its journey – include a salute to a former CEO – that was distracting from the launch message.
• While acknowledging the management and staff of Blackberry should have been done, the launch should have been focused solely on external stakeholders. Internal stakeholders should then be addressed separately. After all, investors and end users (apart from true fans) don’t really care that much about the journey taken: they care mainly about the results.
• Product in stores. The BB10 launch was done without product being immediately available, let alone widely distributed, in stores. So while the launch might have raised end-user interest, this could not be translated into immediate sales. This issue may not matter to some markets where consumers will patiently wait for a global product roll-out; but in efficient “impatient” countries such as Japan, the United States, Singapore and Hong Kong – that are used to getting the best products as soon as they launch – this will be a problem.
• Professional presenter. The BB10 launch lacked pizzazz and should have considered a celebrity presenter to host it. Although Steve Job set the convention of CEO’s launching mobile devices, this is definitely not a reason for others to follow.
• Thorsten Heins, Blackberry’s CEO, did a decent job of introducing the products,  but it would have been much better and break the mold set by Apple and turn the BB10 launch event into a show. Perhaps a funny man would have helped – someone like Robin Williams perhaps?  Or perhaps Alicia Keyes could have helped more with this, to justify her choice as Creative Director. (Why did Blackbeery do this, apart from say “we can play this game too”?)

• Corporate name change? Blackberry did not handle the change in the parent company from Research in Motion (RIM) well. While it was clear that the change in brand name was meant to put the “old RIM” behind them, this was more important to an internal audience than an external audience.  Given that the launch was geared more to investors than employees the announcement of the brand name change created two problems. First it diluted the focus from how the new Z10 and Q10 would have strong appeal.
• Second, there are significant costs in changing a brand (including signage, contracts, stationery) that can affect the valuation of a company. The logo “RIM” is proudly placed on all of the Company’s buildings. It will be expensive to change and analysts/investors know this.
• Third, a question arises as to whether this brand change was really necessary. The business and consumer communities already considered the brand to be Blackberry.  Why not just position this as a new page in the proud history of RIM vs. something we must put behind us? Few companies thow aways their history; rather, the update it and use it as part of their story. Finally, the move to Blackberry can be seen to paint the company into a corner as a one product wonder. Clearly it is more than that.

3. The first test – investors

Investors seem to have had a net “Neutral” (albeit slightly negative) response to the BB10 launch. Blackberry’s stock price fell by about $3 over the first three days of trading, indicating that the investment community was not convinced by the launch. But at USD13 per share the stock price remains well above the November 2012 price of about USD8 per share.

Clearly the launch was not seen by them to  a “home run”. That said, the investment community seems to be waiting for real world results before making up its collective mind.

4. The real test – consumers

The real test for Blackberry will of course be how well the brand does in the market place.  At this point only the Z10 touch screen product is available in Canada, the UK and UAE with 70k available apps (much fewer than its competitors). Distribution is very low.  As such, it is really too early to tell at this point in time; however, there are some early positive signs including:

• eBay pricing – two days after the Z10 launched in Canada, the UK and UAE, unlocked devices started appearing at rates of US$1500 – $1700 a significant margin over the $599 that most US carriers will charge for an unlocked product when the product is available in March. Clearly some are willing to pay a premium for this to be an “Innovator” or very early adopter.
• As of February 2^nd, the sales of the Z10 are off to a “Strong start” in the UK according to Jefferies Analyst Peter Misek.  Some stores in the UK had line-ups and others quickly sold out of product

5. Prognosis for Blackberry

Overall the launch has probably stopped the declines Blackberry brand and given it support to rebuild the business and its reputation.  While a poor launch might not have put Blackberry under, it would have likely caused the Company to break up by selling off assets. Now it appears to have some breathing room to recover.

Investors have high expectations of any mobile device these days. While they were moderately disappointed and precipiatated a drop in stock price from about USD16 per share at launch to USD 13 per share the next day, the price did not drop  to the USD6 seen in 2012. They seem to have some faith in the product and are waiting to see the results in the marketplace.

Finally, the consumer results, albeit in small numbers, are encouraging. There are many differences with the BB10 vs. competitors and this will both attract some users from other brands and solidify Blackberry’s franchise of loyal users.

6. What else can Blackberry do?

There are many things that Blackberry should consider doing, no matter the success of the BB10 launch and the Z10 and Q10 in particular.  If the Company does well, then it should consider:

• Highlight businesses and celebrities who switch to the new BB10 devices.  Blackberry needs some instant endorsements by influencers and it must secure and publicize these as soon as possible.  This will help build momentum as expert and peer endorsements matter a lot with FMMDs. US President Obama is a fan. What does he think of the new device….or will the NSA allow him to use it?

• Work with Wireless carriers to reduce contract lengths. While Blackberry has relatively strong consumer base and some loyalty in its home market Canada, the local wireless carriers lock consumers into 3 year contracts. This term presents an issue for  both business and consumers in the FMMD segment, for it represents a long term commitment. Technology changes faster than every three years and business and individuals see mobile devices as a competitve advantage. Why force them to buy technology that will “soon” be obsolete. Blackberry should find ways with its telecom partners,  to reduce this to one or two year plans. There is a good chance this is underway. While the product does not go on sale in Canada until February 5th, there are rumours that the product will be made available at a $650 price tag without a plan. We’ll see.
• Integrate Blackberry with QNX. Blackberry should take the BB10 operating system and expand onto other platforms, and in particular, connected vehicles.  Most people do not know that Blackberry’s acquisition of Ottawa-based QNX Systems was where the BB10’s journey began.  QNX operating systems power many of today’s major automotive brands.
•  Just as Apple’s iOS works on laptops, tablets and mobile phones, the BB10 system can work on mobile phones, vehicles and other platforms such as laptops. Migrating the equity of the QNX brand over to Blackberry the company might become known to be a more ubiquitous platform linking homes, offices and motor vehicles – three of the most important places in people’s lives.

Conversely, if the Company does not do as well as this post expects, then it can consider or reconsider some or all of the following:

• License technology to other platforms. Blackberry should also reconsider the option of licensing its BBM technology, and indeed its new features to other FMMD players, in the event that the Company does not deliver to shareholder expectation.

• Sell the hardware business.  While Blackberry has proven it can make good hardware, it is not a low cost producer and should consider whether hardware is at the core of its business.  Software, in the form of the BB10 operating system and firmware, are more of the firm’s forte, and Blackberry might re-engage a company such as Lenovo that showed interest in buying the firms hardware business, just before the BB10 launch.

7. Conclusion

So what should we make of the BB10 launch and Blackberry’s future? At this point, I’m optimistic about Blackberry and its future. The BB10 has unique features that address the emerging needs of the FMMD market, including Blackberry Hub, Peak, and Balance.  The investment community is skeptical but hedging its bets that Blackberry will be a commercial success.   Further, the Blackberry Time Shift might prove to be a game changer especially when linked to Social Media platforms, such as Facebook.

This is not to say that the Brand’s future is assured; rather,  things look a lot better for this great brand following the launch, and I think the BB10 will succeed.

One final word related to disclosure,  I am a Blackberry shareholder, who bought stock at a low point. So I  both put my money where my mouth is, and will directly benefit from Blackberry’s continued success.

The Rising Sun

February 3, 2013

(Blair Currie is a senior leader with solid track record managing creative, digital and media agencies across Asia Pacific (from bases in Japan, Singapore, Hong Kong, Thailand, Vietnam, and Dubai), Canada and the US, with over 25 years experience building FMCG and Technology brands. Blair now works as VP Marketing for a global "Connected car" company. This article first appeared on www.CampaignAsia.com.)