Tuesday, 24 December 2013

Why tech's fail and how BlackBerry can buck the trend

In November 2007 Nokia ruled the mobile world.  It was inconceivable that they could fail, so what happened?

A presentation was recently performed at the University of Washington Computer-Fair Conference.  Following the current fashion of making lists of stuff it was called "Ten Reasons High-Tech Companies Fail".  I have summarised as follows
Lack of Market Focus (a.k.a. Segmentation)
The company is unfocused and confused about its purpose.  It is unable to adequately serve any one market segment and is suddenly swamped with support problems and attacked by more focused competitors.

Excessive Pace of Product Improvement
The rapid introduction of new and improved versions can make a customer regret a previous purchase, delay all new purchases, and agonize over similar purchases in the future, none of which are in the long-term interest of the producer.

Incomplete Products
Customers view products very differently than the people who create or supply them. Most customers consider factors such as product support and company reputation to be more important than specifications.

Undifferentiated Products
Successful companies differentiate their product from all other products on the market in five fundamental ways: function, time utility, place utility, price, and perception. These five elements can be mixed into an almost infinite variety of patterns.

Channel Mismanagement
Unique management challenges exist for each primary type of distribution channel: direct selling, dealers, manufacturers "reps" or agents, OEMs, alliance partners, and inside sales.  These skills must be scaled and developed or the business will choke.

Failure to Establish the Right Competitive Barriers
Traditional barriers to competition are mostly designed to prevent market entry and tend not to work in technology-based business. The most effective competitive barrier in high-tech is the perceptions held by customers.

Using Price Alone To Drive Market Transformation
It is easy to misinterpret the role price plays in market transformation. And it is a mistake to believe that a high-tech product would be widely used and adopted if its cost was low enough. Price reduction alone does not guarantee mainstream market acceptance.

Improper Use of Advertising
A company cannot establish credibility or create a position in the marketplace with advertising. Advertising is a wasted if the target audience is sceptical. Advertising is a way of reinforcing positive differentials not creating them.

Misinterpretation of the Technology Adoption Lifecycle Model
People familiar with the technology adaption model will recognise that it follows a standard bell curve of approximately 2.5% innovators, 13.5% early adopters, 33.4% early majority, 33.4% late majority, and 16.0% latecomers.  However there is a second model that applies to technology which tries to force a change in consumer behaviour such as rolling out a new OS (as tried by BB and MS). This second version shows a gap between early adopters and the early majority. This gap splits the adoption process into three distinct phases, an early market and a mainstream market, separated by a period of time called the valley of death.  If the product fails to gain traction at the early adapter stage it will not “catch on”.

Irrelevant Market Research
Companies routinely perform statistical surveys of customer demand and this does not provide the qualitative information that is needed most. Because the judgments of your target audience often rely as much on perceptions as on facts, qualitative research intended to identify existing perceptions has much greater value in assessing, planning and executing a company's marketing strategy.

We can see from the points above that BlackBerry is guilty of most if not all those failings and we can see how good a company like Apple is at managing the process. Apple have not radically changed anything since the first version of the iPhone was launched which is good as it is difficult to improve on a UI that can be used immediately without coaching by a three year old.  They also have the product launch cycle perfected, it is regular as clock work and there are no surprises to scare customers or investors. 

However there is a chance for Blackberry to recover.

Why Tech Companies Succeed
Think of all the Tech companies that successfully entered the market and changed the way the world worked.  IBM did it with personal computers.  Nokia did it with Mobile Phones and BlackBerry changed the business world with secure Mobile messaging.  Why did these innovative companies subsequently lose the market they created?  Because competitors successfully copied what they did.  Apple or Samsung did not break BB’s monopoly on Mobile messaging, Microsoft did by developing Active Sync to a stage where it was good enough for general use.  If it wasn’t for Microsoft, Apple’s iPhone would have remained a mobile phone/iPod combination with a really nice user interface.

What can BlackBerry do?  Well listening to the noises coming from Waterloo over the last year as well as the last earnings call there is some glimmer of strategy  One hope comes from that now hackneyed phrase “The internet of Things”  so beloved by Thorsten Heins.

In essence the internet of things is the ability to assign an IP address to basically everything and have it connected to everything else.  This is Machine to Machine communications taken to its ultimate conclusion.

Why is this important to BlackBerry?  Because of QNX that’s why!

There are lots of articles that state “QNX is a programming language based on UNIX” Well it’s actually not.  It was originally developed in the 1980’s by two Canadian chaps called Gordon Bell and Dan Dodge who formed a company called Quantum.  They developed the software as a Machine to Machine OS.

QNX is compatible with all processors in current use and is a real time microkernel based OS.  What that means simply is that each computing process runs in its own environment and if it fails it will not bring down the rest of the OS.  This attribute allows QNX to be first choice for mission critical applications such as pace makers and nuclear power stations.   QNX also has the ability to queue instructions based on priority rather than time and has a very clever way of passing instruction sets across a processor.  So much so that benchmarks show that QNX systems can process instructions almost twice as fast as UNIX based systems.  Hence why processing power in QNX is not of paramount importance compared to say a Windows or Apple device running a Monolithic Kernel OS  

QNX is the perfect OS for working in the M2M/Internet of everything environment. 

John Chen is a master at looking at the big picture, jumping past competitors and moving ahead of the game. With QNX he has that opportunity.  Apple, Android or Windows OS will never be able to successfully compete with QNX in the M2M/internet of everything space.  They are limited by their design and cannot evolve to be anything other than operating systems suitable for limited applications.  QNX can run anything form a mobile phone to a space shuttle.

If Mr Chen is looking at M2M and he has hinted that he is then in three years’ time BlackBerry may look like a very different company.  It fact it may look like the Mobile M2M division of SAP, Cisco or even AT&T.

The article “Ten Reasons High-Tech Companies Fail” was originally presented at the University of Washington ComputerFair Conference and was published as part of the conference proceedings.