Blackberry's failure to innovate

PUBLISHED : Friday, 16 August, 2013, 12:00am
UPDATED : Friday, 16 August, 2013, 3:01am

Pioneers who have developed disruptive technologies glory in creative destruction because they couldn't imagine they might one day become obsolete. BlackBerry is a case in point.

Its mobile devices were once mandatory for corporate executives. Research in Motion, as its Canadian maker was formerly called, was the pride of a nation, Apple and Microsoft rolled into one. Its billionaire founder Mike Lazaridis was celebrated as a national hero, and Waterloo, Ontario, where the company is headquartered, was the nation's Silicon Valley. How times have changed. Now some Canadian hi-tech companies have moved out of Waterloo; many start-ups didn't even consider moving in.

The rot began when Lazaridis and his lieutenants failed to recognise the mortal challenge posed by Apple's first iPhones and were slow to respond to rapid changes in the smartphone market they themselves had helped create.

Sales have stalled and the customer base is shrinking fast, though, strangely, it remains popular in some Asian countries such as Indonesia. Now, after a failed bid to reinvent itself with a new phone, a new operating system, and even a new corporate logo, CEO Thorsten Heins appears to be ready to throw in the towel.

The mobile device pioneer probably had no choice but to announce this week that it is considering "strategic alternatives", meaning it is either up for sale or a tie-up with a stronger competitor. Either way, BlackBerry's days as a standalone entity are numbered. From a peak of nearly US$140 a share, it was recently valued at just US$9 per share, though the for-sale announcement helped boost share prices this week. Among companies rumoured to be interested in a takeover is China's PC giant Lenovo.

BlackBerry is still a valuable entity. Its secure e-mail service is considered the gold standard in the industry. Its patent portfolio is still worth a lot. Alas, when it comes to innovation, creative destruction cuts both ways.