Nokia and BlackBerry are out of touch with reality

There is no room for sentiment in the winner-takes-all innovation game

At the February 2017 Mobile World Congress in Barcelona, two mobile phone makers, household names in the not too recent past, yet all but forgotten now, announced ‘comeback’ products in the smartphone segment. Both these brands once dominated the market in their respective segments and then faded away as they failed to understand evolving trends in a market that sells more unit devices than any other in the world. Why are BlackBerry and Nokia trying to make a comeback? Have they learnt from their past blunders? Will they succeed? Here’s a quick take.

After 25 years in the telecom industry, I just could not comprehend this obsession with an inelegant and ungainly piece of plastic and glass. The BlackBerry phenomenon caught me unawares and left me shaking my head. Any aesthetic sense I had could not find anything attractive in a physical keyboard with tiny, raised buttons that needed two thumbs to operate. Free flowing conversations with friends and colleagues would be rudely and mercilessly interrupted by this device; furrowed brows and deep concentration would take over as the incoming email could not wait to be answered for even a second.

This was BlackBerry. This was the era when you were scornfully dismissed as infra dig, if you didn’t carry one. Companies handed these out to employees hoping to make corporate email slaves out of them. BlackBerry (BB) was on top of the world. There was no close competitor. Push email, taken for granted now but a novelty then, a secure email server, and BB Messenger, a free messaging service between users, created a sort of unassailable comparative advantage. In 2011, BB revenues peaked at $20 billion with 51 million devices shipped that year.

Far removed from the BB-infested corporate canyons of Manhattan and London, in the heaving towns of the fastest growing mobile markets in the world in Asia and Africa, Nokia dominated handset sales like no other firm has since. With the exception of Japan, Nokia’s market share grew to overwhelming proportions and made it the market leader in just about every country in the world. In 2006, it had 38 per cent market share in China, 65 per cent in India and about the same in Indonesia. Nokia’s feature phones (devices without Internet access) were sturdy and reliable and its user interface was easy and logical. One in three mobile handsets sold in the world were made by Nokia — creating an aura of invincibility that bordered on invulnerability and verged on arrogance.

In 2006, I was working in Hong Kong for a start-up that had evolved a unique supply chain solution for mobile handset

In a hilarious recent televised demo, the CEO of BlackBerry found it difficult to explain how to operate his own company’s product.

makers, where factory to retail chain supply was cut to two simple steps. The result was that we supplied retailers on a just-in-time daily basis. This process had cut significant costs and enabled shops to order exactly what they thought they would sell the next day. We helped Motorola double its market share in China that year to 20 per cent. We tried approaching Nokia to do likewise but were rejected as they felt they did not need any outside help. As a precursor of what was to come, Motorola imploded in 2007. The company that was a co-inventor of mobile telephony (AT&T’s original Bell Telephone Laboratories was the other) became a shadow of its former self and has lost significance in the mobile space. If anything, this should have been a wake up call for Nokia.

Massive disruption came in the form of Apple’s iPhone, introduced in 2007 with a new form factor, app-based operating system and a sense of cool. And Google’s Android operating system (OS) allowed any phone manufacturer to use it and customers acquired the facility to add a huge galaxy of apps, most of them free. Neither of the two fat cats, BB and Nokia, realised what was happening, or if they did they were caught like a deer in the headlights — not knowing which way to move.

The rest, as they say, is history. BB remained wedded to the enterprise segment, not realising that the vast consumer market was where Apple and Android were squarely training their sights. BB’s secure BES platform was a selling point with enterprise IT and security managers. But governments in several countries, concerned about national security, began demanding access. App developers ignored BB’s operating system and concentrated instead on Apple’s iOS and Android. Most of all, BB failed to see that the smartphone had been reinvented and redefined with iPhone’s launch.

Nokia had further to fall when it too failed to see the smartphone revolution happening. Like BB, it clung to its feature phones, its ungainly WAP-based browsing and its Symbian operating system. It later switched to Microsoft’s Windows OS but this was like jumping from a burning ship to a flaming piece of flotsam. From the Olympian heights where it had dominated the mobile handset market for so long, Nokia plunged to depths nobody could have envisioned. The causes were similar to the fall of BlackBerry, chief among them arrogance, which led to the inability to read the market, understand what consumers wanted and evolve with the times.

Apart from introducing a couple of Android smartphones that appear to be no different from the scores of makes and models flooding the market and which were barely noticed, Nokia’s recent comeback centered on the 3310 model. This once much-beloved, indestructible feature phone has a new avatar with a colour screen and a few other features. But apart from evoking nostalgia in Nokia aficionados, I cannot imagine this phone having any kind of impact, even among feature phone users in the bottom end of the demographic. With basic smartphones now costing less than the proposed 50 euros price tag of the new 3310, it is hard to see how Nokia could possibly dent the market.

BlackBerry’s comeback model, Android-based with a QWERTY keyboard, is also likely to be a non-starter. Most users today are comfortable with touchscreens. In a hilarious recent televised demo, the CEO of BlackBerry found it difficult to explain how to operate his own company’s product.

While BB and Nokia lost their way, the market kept evolving. Market shares keep changing from year to year. A clutch of Chinese manufacturers is now nipping at the heels of Samsung and Apple. The market does not forgive mistakes and has a short memory span as well. For Nokia and BB to try to reprise their past glory with a couple of retro models makes no sense. They, more than anyone, should realise that the market is in the here and now and has no time for sentimentality. Dr Sanjay Modak is Visiting Professor of Economics at the Rochester Institute of Technology, Dubai. Earlier, he held senior executive positions with AT&T and Telstra.