Of BlackBerries, Apples and Nokia…

Now that some of the initial brouhaha over the Nokia takeover by Microsoft and the slow and painful end of BlackBerry (the company formerly known as RIM!) has eased off, it may be instructive for us to consider some of the lessons learnt from the demise (?) of what were once the world’s leaders in mobile phones.

Nokia, a 148-year old company, at its peak in 2008 had 40% of the world’s mobile phone market, was worth over US$120 billion and contributed to almost 4% of Finland’s gross domestic product. BlackBery on the other hand, in 2008 at its peak was worth over US$80 billon but were bought out a few weeks back for just under US$ 6 billion.

The easy explanation for what happened to Nokia and BlackBerry was that, like so many other companies, it got run over by the juggernaut that was Apple Inc.

However there was a more fundamental problem. The world of technology and social behaviour and patterns changed and BlackBerry and Nokia both did not keep up. Nokia spent their time, effort and resorces primarily around competing against competitors in their immediate space, such as Sony, Ericcson, Motorola, Alcatel, etc. Both Nokia and BlackBerry focused on the enterprise sector and ensured that they remained dominant through supporting business needs more than they did personal consumer needs.

The changing consumer behaviour and tastes also were not picked up on by both companies. Nokia tried to gently enter the era of touchscreen (and there were plenty of engineers and experts within Nokia who claimed that touch-screen was merely a fad that would not take off – the same people who also claimed that the iPad was going to be another technological failure – like the Apple Newton!). They also failed to spot that even within the business world, people were not merely adopting the technology which their companies wanted them to use and the era of BYOD or Bring Your Own Device soon ushered in and enterprises allowed their employees to use their own devices within the business. Businesses and companies have adapted to their employee needs (especially since Apple and Android both improved their security features for enterprises).

The net result is that we had two mobile phone companies (Nokia and BlackBerry) made redundant and obsolete by two companies who were not even from the same sector or industry (Apple and Google who developed Android). Now Apple and Android based mobile devices control more than half the corporate mobile sector.

My (very brief and immediate) views on what went wrong for both Nokia and BlackBerry are as follows:

– they got complacent. Both Nokia and BlackBerry were initially great innovators who led the industry with fantastic technology innovation and progress (such as the Nokia Communicator or BlackBerry/RIM’s enterprise email servers) but became large and bureaucratic and started delaying product launches and did little to lead their industry or the market with innovative ideas and solutions, the way Apple or Google-led Android did; – they focused too much on their immediate competiton and had little long-range planning and scanning for other possible competitors from other sectors or spaces; – they were not responsive or reactive enough to their customers’ (consumers’) needs. The moment you forget your customers is the moment you have peaked and will be on the way down (and these include both internal and external customers). Both Nokia and BlackBery either did not understand shifting consumer patterns and behaviour or simply chose to (criminally) overlook them; – they both stopped taking risks. In the words of Thomas Zilliacus, previously the chief designer at Nokia, “I look back and I think Nokia was just a very big company that started to maintain its position more than innovate for new opportunities. All of the opportunities were in front of them and Nokia was working on them, but the key word is a sense of urgency. While things were in play there was a real sense of saying “we will get to that eventually. Nokia became more of a maintainer, more of an iterator, whereas innovation only comes in re-invention and Nokia waited too long to make the next big bold move.” The lesson here is simple, no risks = no returns = eventual decline. – Nokia thought even if they missed the high-end smartphone market, they still had the lion’s share of the low-cost market. However, what happened instead was that the likes of Huawei and Spice phones (from India) started capturing the low-cost market which Nokia previously were dominant. BlackBerry also thought enterprises would never give up the security functions which they could provide, but that changed the moment Android and iOS both could start coming close to the level of security which enterprises were comfortable with. – they became too bureaucratic and cumbersome – they lost the agility and speed to market which they initially had. Becoming successful has its potential pitfalls – and one of them is around becoming too large, slow and filled with management layers and red-tape. Empire building begins in some functions which is to the detriment of the entire organisation. Microsoft is going through similar pains at the moment too.

The above meant that both Nokia and BlackBerry started their startling and rapid descent into their current predicaments.

Who would have thought when watching Neo of the Matrix dialling into his hyper-cool Nokia back in 1999, that he may one day dial in and find himself stuck in a blue screen of death!

Apple and Steve Job’s first great revival

We often hear of the brilliance of Steve Jobs as he developed the iPod and then the iPhone and iPads, but little mention is made of his turnaround of Apple back in the late 90s. This coincided with the rise of the dominance of Windows.

Many commentators even suggested that Apple should allow themselves to be bought over by IBM, Motorola, Sony or HP!

In 1997, Apple was tottering down the path towards bankruptcy. This was when Steve Jobs took over as CEO again but investors were still bearish about Apple’s chances of any real transformation and were pressing for them to present themselves as attractive targets to IBM or Sony (in the event the IBM move had anti-competitive issues and challenges from the US regulators).

So what did Jobs do?

Secure immediate financing

The genius of Steve was to talk Bill Gates into providing US$150 million to pump some much needed liquidity back into Apple’s operations. He did this by showing Apple’s non-threatening position (at the time) to Microsoft and also explain to them how Apple’s survival will help Microsoft’s battles with the Department of Justice on an monopoly-charge.

Cut the product range and scale back Apple’s inventory

He removed the printer and peripherals department and also cut the number of desktop models (from fifteen to just one). He also reduced the scale of software development and engineering. He also shifted the manufacturing (of a much leaner product range and line) to Taiwan and cut inventory by 80%.

Control product distribution

He also cut over 80% of his existing national retailers and also focused on selling directly to customers through an enhanced website. He later did the same with applications and software through the App Store. The idea was simple – sell a simpler product range through a simpler range of outlets / retailers.

Take things one major leap at a time

Initially, all Jobs wanted to do was to ensure the survival (or going concern) of Apple. Sell a simplified product range through a limited range of sales outlets (both Apple’s Website and the limited retailers). He felt this would help apply pressure on the cash bleed that Apple was suffering from.

Once that was secured, he fixed his OS and had the Mac G3s. He waited before he decided to push on with the revolutionizing how people listened to music through the iPod and iTunes.

He then waited again before embarking on the iPhone and taking on the existing big boys of Nokia, BlackBerry, Sony, Motorola etc and redefined the phone industry.

Next came the iPad and the buttressing of the App Store. This redefined how people bought apps, both for portable devices as well as their laptops and desktops.

 

What did this mean for Apple and Steve Jobs?

Jobs focused on the most pressing matters of the day when he took over: survival. Once Apple’s survival was guaranteed, he then reached out to a niche market of fashionable consumers who became his strongest brand advocates. From there, he launched one big thing after another. This transformed the world of computing and personal electronics.

This is meant to be a very brief overview of how Apple took the steps needed to first survive and then subsequently thrive and then flourish in the technology world! Hope it is helpful!