Recent headlines told stories of Amazon’s cloud collapsing. The second outage hit consumers and mobile phone users hard, when the cloud disrupted Netflix, Pinterest, and Instagram services. These failures shone a public and mainstream light on cloud services and data centers. Amazon is not the first company to experience a failure in its data center that leads to widespread issues for consumers around the world. In 2010, Research in Motion (RIM), the creator of the formerly omnipresent Blackberry, had a switch failure at a data center in Europe. This failure affected Blackberry users worldwide.
Unfortunately for RIM, its 2010 issue with its data centers was only the beginning of its demise. The former dominant force in the smartphone industry has struggled. Reading headlines about RIM is like reading an impending obituary.
A Google search giving these headlines makes it difficult to remember the RIM and Blackberry of its glory days.
In just the past year, their struggles have included
- Posting a $518 million loss in Q1
- Stock valuation decline by 70%
- Firing co-CEO’s
- Delaying release of BlackBerry 10, RIM’s last minute Hail Mary
- Cut 5,000 of its 16,500 jobs
RIM wasn’t always the loser of the mobile and smartphone market. In fact, it was a former leader. Where did it go wrong and what lessons can we draw from it.
Error 1: A six hour data center error lasts longer than six hours. Take a quick look at this graph. RIM was already struggling to maintain market share in 2010. The switch failure in October put the nail in the coffin. Unreliable service compounded with consumers’ desire for different features led Blackberry users into the open arms of Apple and Android. The ripple effects of its data center glitch are still being felt. The switch failure foreshadowed RIM’s future failures.
Error 2: RIM made bad bets and didn’t leverage their strengths. As one of the earliest movers in the smartphone market, RIM had some distinctly unique advantages. They had (and still have) the best email capability. The security of their phones and services was unrivaled. RIM bet that simplicity and security were more important than features and mobile web. Hindsight is 20/20, and that was a bad bet. They compounded their bad bet as they failed to leverage their corporate relationships. They not only lost their identity as the premier provider of mobile email and secure smartphones, but they also lost their relationships with enterprises when enterprises decided that iPhone’s security was “good enough.” Their value no longer had a place with enterprises or consumers.
Error 3: Its bureaucratic structure prevented effective crisis management and adaptation. Their structure created many missed opportunities. In 2010, RIM generated a report that keyboards would soon be a small piece of the market and would eventually fade into an obsolete feature, but executives ignored the report. Similarly, research showed a growing trend where consumers bring their own smartphones to work and ask employers to let them work with them. Allegedly, the executives couldn’t agree on what action RIM should take. So, they did nothing. What happened? iPhones are the new corporate phone of choice, not Blackberry.
Error 4: When they began to struggle, the left behind their ideas and jumped on Apple’s bandwagon. But they never quite jumped on board. More accurately, they are hanging by a thread from Apple’s bumper and trying to imitate Apple while dragging along the ground. In its imitation efforts, RIM lost sight of their own strengths, particularly their enterprise connection. Blackberry used to be the smartphone of choice for corporations. In the past 3 years, however, corporate America has rejected the Blackberry and now prefers Apple smartphones. By trying to copy the customer centric mindset of Apple, RIM handed their corporate market over to Apple and didn’t get a slice of the customer pie. Even in its recent actions, BlackBerry is imitating Apple. With the announcement of the delay of Blackberry 10, RIM also announced it would first release in Europe, a month before the United States. Coincidentally, two-thirds of Apple’s revenue comes outside the United States.
So what are the key lessons from RIM? First and most glaringly, adapt or die. No matter what your industry is, you must adapt and be an industry leader, not an imitator. Second, RIM’s struggles highlight the trend toward the consumerization of IT. This trend presents major struggles, seeing as consumers in technology are fickle, demanding, and disloyal. This trend is relatively new, but businesses can learn what not to do from looking at RIM. Third and finally, your data center choice can impact your business more broadly than you might expect. RIM’s switch failure did nothing to help the state of an already struggling business. Making a smart data center decision impacts your business beyond your IT department. In some cases, like RIM, it could mean corporate life or death.