A year ago BlackBerry was ravaged in the media when CEO Thorsten Heins announced one of the toughest business decisions of his CEO role. Basically it was to move out the BlackBerry 10 launch date by one quarter into the first quarter of 2013. He stated at the time that BlackBerry 10 did not have the quality experience he felt would be acceptable to users.
At the recent FY2014 Q1 earnings call he announced another of those tough decisions: the end of support for the Playbook. More specifically there would be no BlackBerry 10 upgrade for Playbook despite previous commitments. Indirectly he had been hinting at this when he mentioned earlier in the quarter that he was not sure there was a tablet in BlackBerry’s future.
Two factors would come into that decision:
- As has been reported by CrackBerry.com once again Heins made a tough decision based on the inability to achieve a quality user experience within the 1GB RAM of the existing PlayBooks. A major reason behind this was that BlackBerry 10 OS requires 2GB RAM to work smoothly. Attempts to make compromises for a 1GB RAM device did not result in a suitable experience. Once again having a quality user experience trumped a commitment to have BlackBerry 10 OS on PlayBook.
- The total Playbook user base of approximately 1 million that are affected pales in comparison to the over 70 million users of BlackBerry smartphones, whether legacy OS5/6/7 devices or BlackBerry 10.
When looking at the business case two factors:
- Selling 100,000 units in a quarter contributed, at best, about $20MM to overall revenue of $3.1B or less than 7% of overall revenue and probably with very little margin.
- The consumer tablet market is saturated with products and applications; finding a unique user proposition and market positioning would be a significant challenge. Supporting a tablet would place significant demands on company resources – both employees and cash, especially at a time when BlackBerry is transitioning into enterprise services as a business with more significant prospects of sustainability and good margin revenue.
To quote from the CrackBerry post:
“That was a very tough decision to make. I could have done it, but you would have loads of comments on your site – ‘How can Thorsten allow such a crappy product to be launched?’ … It was one of the toughest decisions I had to make because I knew I would break a commitment, but I also made a commitment to quality before that. … I can’t take the hardware back and provide them with 2 GB hardware. I can’t exchange the part – there’s no way to do this… I stand by the decision, as tough as it is. I apologize to the users that I couldn’t get it done. What I did I did because I want them to have a quality experience with BlackBerry 10.”
When you add on the goal of achieving value for shareholders, the PlayBook decision becomes an easy one to make. When involved with a corporate restructuring 20 years ago we failed to drop one product line that had significant resource demands and marketing expense; it simply accelerated the eventual sale of the company at a very low valuation.
There have been many outsiders who thought the 1GB argument to be a cover; trust me it was not. There is a reason the initial 1GB dev alpha devices were eventually replaced by 2GB dev alpha devices, once feedback came in from developers who had been trying their apps out.
On the other hand BlackBerry is considering some form of compensation to PlayBook owners. To be determined, I assume.
One of the more interesting suggestions I have seen, and supports my previous contention about how to grow the mobile computing market, is to have a “dumb” display device that is tablet size, maybe with a keyboard that is wirelessly connected to a BlackBerry 10 smartphone. Recently a few of my acquaintances have mentioned that BlackBerry 10’s are really a full “PC” entering the market through the smartphone space.
Meanwhile I’ll continue to use my PlayBook as a backup for my email (it’s more an issue related to my use of MS Exchange on my PC’s) and a larger screen web browser.
Bottom line: current management is not afraid to make the tough business decisions. All while keeping focus on building the most effective mobile computing platform. And it confirms that, for BlackBerry management, a quality user experience trumps any other reason for making a business decision, including executing on a previous commitment. The joys of product development and learning through experience.
Related articles
- BlackBerry CEO killed off BlackBerry 10 plans for PlayBook because he wasn’t satisfied with it (thenextweb.com)
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