SWOT analysis of Blackberry

| February 16, 2013

This is BlackBerry SWOT analysis in 2013. For more information on how to do a SWOT analysis please refer to our article.

Company Background

Key Facts
Name BlackBerry
Logo
Industries served Telecommunications equipment
Geographic areas served Worldwide
Headquarters Canada
Current CEO Thorsten Heins
Revenue $ 18.435 billion (2012)
Profit $ 1.164 billion (2012)
Employees 12,700 (2013)
Main Competitors Apple Inc., Google Inc., Nokia OYJ, Samsung Electronics Co., Ltd.

You can find more information about the business in its official website or Wikipedia’s article.

SWOT

BlackBerry SWOT analysis 2013
Strengths Weaknesses
  1. Highly secure phones
  2. Strong focus on narrow customer segment
Weaknesses
  1. Inability to market the brand
  2. BlackBerry OS
  3. Highly dependent on government and corporate contracts
  4. Poor presence in the tablet market
Opportunities Threats
  1. Growth of tablet and smartphone markets
  2. Strong growth of mobile advertising market
  3. Increasing demand of cloud based services
  4. Obtaining patents through acquisitions
Threats
  1. Rapid technological change
  2. Saturated smartphone markets in developed countries
  3. Increased competition for government contracts

Strengths

  1. Highly secure phones. The primary RIM’s competitive advantage is its very secure mobile phones. The company released its phones with secure encrypted network that allowed sending emails between phones without possibility of stealing the information. This became the USP (unique selling proposition) of Blackberries and was a very attractive feature for corporates and governments that other phones didn’t have. As a result, BlackBerry became no.1 choice for enterprises and governments.
  2. Strong focus on narrow customer segment. Unlike other mobile phones and smartphones companies, BlackBerry tries to appeal for a narrow customer segment – governments and corporates. The result is a more focused approach to satisfying the needs of this narrow segment, something that other businesses rarely do.

Weaknesses

  1. Inability to market the brand. BlackBerry’s brand was known for the market long before Apple’s iPhone launch or Samsung’s Galaxy success. When the iPhone was launched, RIM had a better quality BlackBerry phone in the market, enjoyed larger sales and greater brand reputation but was unable to build on that due to poor marketing efforts. It spent and continues to spend significantly lower amounts ($41.3 million) on marketing, about 10 times lower than Apple ($400 million) and 8 times lower than Samsung ($334 million) in 2012, according to CNET. Even with better quality products, the company would be unable to “sell” them to consumers as it would be overshadowed by Samsung’s and Apple’s marketing spending.
    Inability to market the brand also resulted in declining brand reputation and low customer loyalty. According to Interbrand, BlackBerry’s brand was one of the top declining brands in 2012 out of the top 100 best global brands. It was valued lower than Apple’s, Samsung’s or Nokia’s brands. Declining brand value indicates decreasing brand appeal to consumers and lower sales.
  2. BlackBerry OS. BlackBerry phones and tablets are powered by RIM’s own OS. While, in Apple’s case this yielded some competitive advantage, BlackBerry experiences different effects. First, BlackBerry customer base is too small to be profitable for major application developers. Low amount of apps in store deters customers from buying the phone or the tablets. Second, the company lacks enough funding and coordination to develop its OS properly. The company has already suffered from using the outdated version of OS on its phone and multiple delays of new OS introduction.
  3. Dependent on government and corporate contracts. BlackBerry is highly dependent on government and corporate contracts as these make up the largest company’s customer base. Although BlackBerry offers the most attractive phones for governments and corporates due phones high security features, the company is not guaranteed to receive long-term contracts from the government and a loss of contract with at least one government agency or corporate results in substantially lower sales.
  4. Poor presence in the tablet market. RIM’s BlackBerry PlayBook tablet was an unsuccessful effort to enter the tablet market and the product captured only the small market share, resulting in losses for the company. Poor presence in the tablet market decreases company’s chance to successfully compete with Apple or Samsung who enjoy significant income and profit growth due to the tablet sales.

Opportunities

  1. Growth of tablet and smartphone markets. Tablet market is expected to grow by 50% annually from 2011 to 2015. According to estimates, it will be worth $100 billion by the end of 2015. BlackBerry has a great opportunity to strengthen its position in this fast growing market and capture larger market share.
  2. Strong growth of mobile advertising market. The growth of mobile advertising market is an opportunity, which could be exploited by BlackBerry on its smartphones and tablets.
  3. Increasing demand of cloud based services. Cloud-based services market is expected to grow significantly until 2020 and reach $240 billion worth. BlackBerry has an opportunity to expand its cloud-based services and benefit from the growing demand.
  4. Obtaining patents through acquisitions. The key competitive advantage in technology sector is strong patent portfolio. Patents can be discovered by engaging in costly R&D or through acquisitions of other firms, which is the best option available for BlackBerry now.

Threats

  1. Rapid technological change. One of the most severe threats BlackBerry and the other tech companies are facing is rapid technological change. Companies are under the pressure to release new products faster and faster. The one that cannot keep up with the competition soon fails. This is especially hard when a company wants to introduce something new, innovative and successful. RIM has been subject to this threat a few times when it couldn’t release its new BlackBerry OS on time and when it rushed its PlayBook tablet to the market.
  2. Saturated smartphone markets in developed countries. Smartphones market in the developed economies is saturated and experience slow growth rate. This affects BlackBerry’s ability to expand its market share in US and Canada.
  3. Increased competition for government contracts. Government renews its contracts with suppliers every few years and BlackBerry has to compete with such formidable players as Samsung and Apple for contract renewal. Although BlackBerry has an advantage over competitors in providing highly secure mobile devices, it has to compete on other phone features (at which the company competes poorly) as well. BlackBerry has already been outcompeted by Samsung on renewing some of US government contracts last year.