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Comment by sheri | Hacker News Reader

I find it quite incredible that these days a company can go from a position of almost unassailable strength to total collapse in a few years. That too in a market that is booming rather than falling. Blackberry had over 50% market share back in the mid to late 2000's, and now is defunct. In India back in 2008 Nokia was king. Pretty much every phone was a Nokia phone, and now Nokia too is trying to claw back.

Now that the smartphone market seems to have matured, do we expect to see the current market situation to remain relatively stable over the next decade or so?

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You should read The Innovators Dilemma. This is a fairly common pattern - a company optimises for an existing customer base, what they value the most, and ends up with happy customers and good revenues/profits. http://en.wikipedia.org/wiki/The_Innovator's_Dilemma

Some disruptors come in, and they are worse by the same things those existing customers value. They are often more expensive by the same measures. The existing company doesn't really do anything about it because the disruptors aren't of interest to the customers, nor is there sufficient profit to be made. But what those disruptors do different does end up being valued by some and eventually it becomes the mainstream market, and it is too late for the original company to catch up.

The book uses hard drives as an example, and repeatedly the disruptors are smaller form factors with lower electrical consumption, with less storage space and higher $/mb costs.

Blackberry was good at email, battery life and minimising mobile data traffic. The iPhone was none of those, and more expensive. But what it did better (especially web browsing) turned out to be more valuable.

I highly recommend reading http://asymco.com which follows the mobile industry and related spaces. It is strongly data driven with lots of graphs (ie a constrast to "opinion" sites). His research is that mobile companies suffering their first loss tend to die or get bought out in about two years http://www.asymco.com/2013/10/04/estimating-htcs-post-trauma...

Everyone should read The Innovators Dilemma (link to cheapest used Amazon merchant copies, the printing I read: http://www.amazon.com/gp/offer-listing/0066620694/ref=tmm_pa...) And as a matter of fact, his strongest example of disk drives, for which he had the best data, is a field I followed for most of the period he discusses, and he nails it as far as I can tell. But he also has other examples, e.g. hydraulic excavators defeating steam shovels---and at the denouncement you'll viscerally understand why--- or how Honda came over here trying to compete with e.g. Harley-Davidson and ended up taking a very different path.

One thing to emphasize, and it's true for all these examples, is that the disruptors got their start serving new markets that the established companies couldn't, wouldn't or didn't even see a need to.

But I'm not sure that's entirely to blame here: hasn't Blackberry suffered some terrible technical execution failures lately? Multiple well publicized crashes of their backend email systems? A tablet that couldn't do email without a nearby Blackberry cell phone, an amazing lapse who's cause is strongly rumored to be from being unable to write the necessary working software in time?

See also some handset screwups elsewhere in this discussion: https://news.ycombinator.com/item?id=6669481

The things Blackberry thought mattered most about their product were battery life, "security", email (keyboards, data backend for that) and minimising data usage (makes the carriers happy). The iPhone is a terrible product along those lines. Heck it runs a full blown Unix, compositing graphics, and is positively profligate with data consumption.

Asymco covers this in detail, but what happened on the carrier side was they found that iPhone users were prepared to pay more for large data plans (by Blackberry standards) and hence the carrier could subsidise the iPhone price because of that. (Many carriers moved over to the handset subsidy model for the iPhone.) RIM thought carriers were trying to make maximum usage of their network, when in fact they were trying to maximize revenues. Consumers valued full blown Internet access highly and then apps. That led to the iPhone taking off.

Blackberry had a platform that was all about economy (use minimal memory, cpu, network etc). They did react hence the QNX acquisition. But Apple and Android both had a head start on them. RIM had to bootstrap a new platform, redevelop most apps, and try to catch up, all in a shorter amount of time than Apple and Android had, also while changing core values (minimalism/efficiency). It would be a rare organization indeed that could pull that off.

Globe and Mail have a good long article with the insider details http://www.theglobeandmail.com/report-on-business/the-inside...

Thanks for the link, although I can't justify spending more time reading it than getting to the introduction of the Storm, which per my last link, supports my point about technical execution.

It's one thing to find it difficult to figure out how to fight a disruptive innovator or a paradigm shift---and the iPhone was mostly the latter, I think, only partly a disruptive innovation since it only did a few things worse than the Blackberry, and the lack of a keyboard was deliberate.

It's quite another to make your first product to answer that challenge, that addresses the company's "most important strategic opportunity since the launch of its two-way e-mail pager" and have it fail to work (well). Probably damaging the brand while they were at it, certainly displeasing Verizon Wireless.

Companies fail for many reasons, and often for multiple reasons. I'm just pointing out that RIM started to fail in technical delivery, in new products such as the Storm and that silly "can't do email by itself" tablet, and in its core existing business (e.g. email system outages ... and poorly handled ones at that, and probably more as well).

I don't think the execution failures are specific to them. They were having to sustain an existing business, plus do accelerated development of a new platform and devices, plus the core apps and libraries on top of that, starting from a laggard position with the competitors having a several year head start, and all the time spent doing this the competitors continue to move ahead.

I'd expect the majority of companies to fail at trying to pull that off. Much of it is the kind of work where adding more people will be of no benefit.

The surprise isn't that they failed - it is that anyone expected them to succeed!

It happens.

It's happening increasingly quickly now as compared with 20, or 40, or 80 years ago.

The “topple rate,” the rate at which big companies lose their leadership positions, has more than doubled, suggesting that “winners” are in a precarious positions. (Quoting Denning). Companies stay at the top of the heap for ever shorter periods of time. Similar statistics on residency in indices such as the DJIA or S&P 500 support this observation.

The long-term decline in ROIC (return on invested capital) 1965-2009. From 6.2% to 1.3%. Though there've been some ups and downs, that's a very long-term consistent slide.

And it's pretty much always been the case that technology companies, especially those that don't have deep and broad connections elsewhere, fall over fairly quickly. AT&T and IBM managed to get themselves deeply wedded into corporate and government fabric. Xerox and Land (the instant photo camera company) not so much. Consumer electronics has been pretty fickle, and Blackberry grossly overplayed its hand in the mid-2000s.

More on the transition of businesses in the Shift Index:

http://www.forbes.com/sites/stevedenning/2012/01/25/shift-in... http://edgeperspectives.typepad.com/edge_perspectives/2009/0...

well, the current market situation for smartphones will be stable...but that likely means the cutting edge of innovation shifts to another frontier (which I think we are already beginning to see, as smartphone innovation plateaus and interest in wearables and IoT speeds up).

I for one think it is entirely feasible that the smartphone itself could become a glorified cellular hotspot (a "dumb pipe" if you will), a hub connecting you and a personal area network of micro-gadget sensors and nearby displays to the Internet at large. In which case "where the value is" will once again shift from today's winners to tomorrow's winners.

All glory is fleeting.

That depends on if there's any more massive paradigm shifts, and if those shifts are created by new players or not.

My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants.

That said, the crowdsourcing of Firefox and Ubuntu phones could potentially disrupt things a little longer come 2014.

> My guess is that, due to Apple and Google's expertise in touch screen and motion capture software, you won't see any new players coming out of the woodwork with a new phone everybody wants.

What does that have to do with anything? Samsung is the largest smartphone maker and you didn't even mention them. Xiaomi is likely to be a huge force in the next couple years. I'm sure there will be more.

Samsung primarily make phones which run Google software, and unless Samsung want to do an Amazon and ditch the Google Play Services infrastructure for all intents and purposes they are Google phones.

Samsung sells lots of phones: how many of those phones are running Tizen (né Bada)?

I think the point the OP was trying to make is that it's highly unlikely we'll see a company collapse to the extent that RIM/BlackBerry did unless there's a major paradigm shift in mobile technology. Are Xiaomi going to be driving that? I'm not sure.

Exactly. I don't see current companies (including Samsung and Xiaomi) making enough of an impact to dethrone Apple or Google from their places unless one of these smaller companies can literally rival the touchscreen shift in market disruption.

> for all intents and purposes they are Google phones

... Except in profits.

Shift happens.

There are plenty of hardware players in the Android space. Samsung is ahead, it seems, but the last two Nexus devices are LG, and we probably haven't seen the full extends of what Google will do with Motorola yet. At the bottom end of the market, China is overflowing with dirt-cheap Android devices.

In the software (App-store) space, Amazon is pretty aggressive about taking on Google. I can't say that I've heard of any of them, but Wikipedia list another dozen live third-party Android app-stores: http://en.wikipedia.org/wiki/List_of_mobile_software_distrib...

It's hard to predict where the iOS ecosystem is going. It's definitely got momentum, but controlled, mono-culture ecosystems are vulnerable and iOS devices are definitely fashion-devices with all the fickleness that comes with that territory.

"you won't see any new players coming out of the woodwork with a new phone everybody wants"

Exactly. You WILL see new players coming out of the woordwork with a new, post-phone device everybody wants.

I'm not claiming I know what it is. But its emergence is a certainty.

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