Caught in The Disruptive Storm: Blackberry and Nokia

Hi All,

I stumbled upon a report by Kantar Worldpanel. According to the report, BlackBerry’s (BB) share of the smart phone market in the United States has all but disappeared.  According to the research firm, during the three months ending May 2012, the once-dominant cell phone maker had a market share of 4.6%.  Of course, this is a far cry from its glory days just a few years ago when it commanded over 50% in all units sold.  Kantar Worldpanel’s report goes on to say that BlackBerry’s market share during the three months ending May 2013 had falling precipitously to 0.7%. Symbian platform has also suffered the same fate, in 2012 it has an staggering market share of 65% which came down to 0.3% in three month ending April 2013.

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I was wondering, what happened suddenly?

I believe that The drastic fall in the market share of Symbian based Nokia and BlackBerry can be attributed to the two most significant disruptions which happened Between 2007 and 2008 in the mobile phone industry:

  • One At The High End With the launch of IPhone : The iPhone was released on June 29, 2007. iphone was a really disruptive innovation. Apple  launch took the market by storm and replaced  leaders like BB and Nokia from the top and established itself as an ultimate smartphone purely on based of the ultimate user experience and established ecosystems
  • In Lower End, The Launch Of Android OS And First Android Phone: Android was unveiled in 2007 and the first Android-powered phone was released in October 2008. Android platform lowered the technological barriers to smartphone market entry  and with development of China as a low cost manufacturing hub for mobile phone, host of new competitors started entering into the mobile phone manufacturing with low prices and feature rich phones

There are three phenomena (in the same order) happened because of the above two disruptions, which leads to the fall of BB and Nokia

  • Shifting of High Demanding Consumers: When Iphone launched , many of the high demanding current and future consumers choose iphone over BB and Nokia which resulted in the upward shifting of existing consumer base of BB and Nokia
  • Downward Shifting of Consumers: In the android platform, as the time passes and with the establishment of Android as a credible OS for mobile phone new competitors started entering the market. At this point of time, downward shift happened where less demanding consumer shifts to android platform. As the time passes, rate of adoption of technology among these new entrants and its predecessors becomes faster (depicted by increasing straighter lines in the graph as you move right in X-axis- Performance increases with time) due to competitive pressure and availability of technology which enabled them to flood the market with different types of phone resulting in different price points, better customer targeting within these group of customer and even the non-consumers
  • Parallel Shift: Due to above mentioned technological advancements disruptors who are focused initially on serving the least profitable consumers. Now, once the disruptors has gained a foothold in this customer segment, it seeks to improve its profit margin and having gained sufficient expertise disruptor (read Samsung) starts matching the quality of incumbent and this is where parallel shifting start taking place where existing and would be customers of Nokia and BB starts considering the newer entrant as the option

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As a result, Nokia and BB caught in the middle of these two major disruptions which blocked their way of going either premium or low cost and they keep losing their market share.

It could be the classic case of perfect disruption where both high end and low end disruptions happened almost simultaneously and led to the downfall of symbian and BB platform

Hope you guys will like my post. Please do share your feedback

Thanks

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