“The company plans to end all internal hardware development and will outsource that function to partners.”
John Chen, CEO Blackberry
Blackberry, formerly known as Research in Motion (RIM), a leading Canadian telecommunication and wireless equipment company, has recently announced the halt of its internal manufacturing business including smartphones and will move onto software development, utilising core technologies in the intensive environment.
Although glory still exists in the software division, the hardware segment as a portion of the entire business is performing way worse compared to decades ago when it had just started. The stock price has been plummeting for a long time and even after the CEO’s announcement the price dropped slightly due to low investor confidence in the hardware field.
Early Years And Growth
Blackberry was founded in 1984 by Mike Lazaridis and Douglas Fregin and was the first data technology developer in North America. Back then, it was financed by some venture capital firms with outstanding reputations. After some 15 years of development and research, smartphone models such as the Blackberry 850 Pager came out with basic mobile functions.
By further customising and developing functions, Blackberry invented smartphones with an enhanced design and services with excellent data safety technology. The company successfully built a platform that could fulfil customers’ expectations and needs and attracted an enormous amount of smartphone users, including enterprise clients, to its market. The entire development process took 17 years, from 1984 to 2001.
After acquiring the real-time operating system QNX, Blackberry stepped onto the magnificence stage of its cycle with a way above-industry-average stability and liquidity. The company’s net income peaked in 2011 at $3.4bn and began to slump afterwards.
However, changes in time and the appearance of various uncertainties brought Blackberry challenges of a new era. Competitors and conditions became difficult. The number of clients declined significantly after 2013, hinting booming challenges in the market.
Below is a brief previous Porter’s Five Forces analysis of Blackberry.
- Threats of new entrants – Moderate, although the industry is attractive to many startups and those firms have the intention to take part in, the barrier is high. Also, it takes a long time for a company to build its own unique platform and develop technologies to differentiate itself. Attracting enough clients in a certain time frame can be a tough issue. Moderate threats from new entrants are good news for Blackberry, giving it more time to focus on self-improvement.
- Bargaining power of suppliers – High; the demand in the market is high which causes suppliers to have more options and will not limit to only one company such as Blackberry.
- Bargaining power of buyers – High; buyers definitely have more choice nowadays since new brands and devices continuously come out. Parallel competitors such as Apple and Android devices have also posted a threat to Blackberry in terms of market share.
- Threats of substitutes – Intensive; customers can find substitutes for specific products including Blackberry with similar functions easily within a short period.
- Competitions among rivals – Intense, with Apple and Samsung together controlling more than 50% of the market. Other firms which have already successfully overcome barriers and are in their growth stage could stimulate more competition.
New Age, New Game
Uncertainties have forced Blackberry to change its stance by outsourcing its hardware manufacturing to overseas countries where mass amount of cheap labour is available. Moreover, it is necessary for Blackberry to reinforce its software technology as a core competency for data encryption and protection expertise.
According to Reuters, Blackberry teamed up with Samsung for a “spy-proof” tablet for Germany, signifying the potential for further cooperation on the data privacy technology and competing with other giants in the market such as Apple.
The trend has lead Blackberry on a more software-focused path and the possibility of reversing the game is high. Last but not least, it will not be a lonely battle for Blackberry in search of a bright future, especially after the kickoff of the cooperation with other industry leaders.
Google to Open Artificial Intelligence Centre in China
Google will be opening its first artificial intelligence (AI) research centre in China, despite many of its services being blocked there.
Fei-Fei Li, Chief Scientist of Google Cloud, said:
“I believe AI and its benefits have no borders. Whether a breakthrough occurs in Silicon Valley, Beijing or anywhere else, it has the potential to make everyone’s life better for the entire world. As an AI first company, this is an important part of our collective mission. And we want to work with the best AI talent, wherever that talent is, to achieve it.”
The research centre will focus on basic AI research, and will consist of a team in Beijing, who will be supported by Google China’s engineering teams.
Google’s search engine and its Gmail are banned in China. However, the country has 730 million internet users, making the market too large to ignore.
Google is not the only tech giant facing restrictions in China. Facebook is also banned, while Apple’ App Store has been subject to censorship. In order to comply with government requests, Apple removed many popular messaging and virtual private network (VPN) apps from its App Store in China earlier on this year.
China has recently announced plans to develop artificial intelligence, and wants to catch up with the US. However, human rights groups are concerned by China’s use of artificial intelligence to monitor its own citizens.
A Deal Looks Likely for Disney’s Fox Takeover
Disney is on the cusp of confirming a deal to buy most of 21st Century Fox in a $60bn deal, reports claim. The sale would see Disney acquire 20th Century Fox film studios as well as Sky and Star satellite broadcasts in the UK, Asia and Europe, according to the BBC.
21st Century Fox would retain broadcasting network Fox News and Fox Sports 1. While both would remain independent initially, they “could consider a merger later with the Murdochs’ publishing company, News Corp.,” reported Bloomberg’s David Hellier and Anousha Sakoui.
Fox CEO James Murdoch could potentially be offered a senior position at Disney once the deal is done.
Why It’s Important
Fox has reassessed its place in the current media landscape and decided that to in order to be successful it would need to scale up. Disney has the scale that Fox lacks. By consolidating their efforts around news and sports, Fox will be able to play an important role in the media industry.
On the other hand, Disney’s acquisition will extend the company’s reach. Plans to roll out a new Disney streaming service could benefit from the increased international exposure, where there appears to be the most growth.
Disney would also acquire Fox’s streaming service Hulu, opening new opportunities for Disney to compete with the likes of Netflix and Amazon Prime Video.
ExxonMobil under Shareholder Pressure
The world’s largest oil group has agreed to publish the impact of climate policies on its bottom line.
In recent years, shareholders of the world’s largest oil and gas conglomerates have been pushing companies to publish analysis of the threat they face from climate change and the threat of green policies. In a regulatory filing, Exxon announced that it would change how it reports its results to include a paper on how climate policies are hurting its business. The proposal was backed by around 60% of Exxon’s shareholders back in May, which was led by the New York state employees’ retirement fund. The move follows Exxon’s gradual shift towards addressing climate change; in the 90s, the group campaigned against the Kyoto protocol but has since committed to reducing emissions.
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