RIM and the Frailty of the ‘First Mover Advantage’ in Tech

In light of BlackBerry’s proposed firesale, there are a lot of articles going around to visualize the company’s decline. I’d argue that the drop was actually far faster and more dramatic than these representations suggest.

Total market share is a lagging indicator. In the United States, the average smartphone is about 21 months old. As a result, an OEM can have meaningful market share in the market long after it has lost favor with its customers. That’s exactly what happened with RIM. In Q1 of 2009, the company had the number 1, 3 and 4 best selling phones in America. This insulated them from significant market share losses despite signficant growth in the market overall.

By looking at active sales share, it’s clear that RIM’s demise occured earlier than believed. There’s no better case study than Verizon Wireless, which was the world’s second largest smartphone seller in Q1 2009.

RIMDecline2

This view is particularly interesting because it highlights the fact that the iPhone was not the cause of BlackBerry’s downfall. Instead, RIM was felled by broader problems including management’s resistance to consumer interest in media-focused touchscreens, an outdated business model (monthly per subscriber fees to carriers, as well as enterprise clients) and a developer program that was most expensive, restrictive and onerous for developers large or small (until Q3 2011!).

As an aside (and though it pains me as a Canadian and former CrackBerry user) RIM embodies the reason I love the technology space. In no other industry can a series of mistakes or general complacency be so dangerous – and the payoff of the right products and strategy so profound. 


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