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BlackBerry: Porter's 5 Forces

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by

Indi Campbell

on 30 January 2014

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Transcript of BlackBerry: Porter's 5 Forces

History
BlackBerry

Brand new OS; therefore, less software developers willing to work with them. Each one is significant to Blackberry
“Jabil is considering ending its business relationship with the struggling Smartphone pioneer. Discussing Jabil’s fourth-quarter results during a call with analysts on Wednesday, CEO Mark Mondello said that BlackBerry’s downward spiral has given him reason to reconsider his company’s partnership with it. BlackBerry is Jabil’s second-largest customer overall, making up 12 percent of its business (Apple comprises 19 percent), and its gruesome finances and uncertain future are already negatively impacting Jabil’s business.”
As mentioned in BUYERS, Blackberry can be integrated by many companies that are willing to (due to weak finances). Significant threat of forward
integration
Especially with this slow pace of selling, Blackberry will definitely not be able to even breakeven with their own manufacturing and not buying from suppliers
Bargaining Power of Suppliers
Bargaining Power of Buyers
BlackBerry: Porter's 5 Forces
"A portfolio of businesses"
- Smartphones and tablets are commodities around the mobile computing market, therefore they are commodities
Blackberry's been on evident decline, and their market share shows
-B Blackberry only sells to 39 retailers; they all buy in large volumes, so they have power (big hit if any pulls off)
- Blackberry finances have been bad; very significant chance and threat of BI
Switching costs are fairly low in terms of money; also, nothing much lost other than security in terms of what the user gives up
Any buyer could search it up; $169.41. Very accessible. Gives buyer the upper hand

Samsung sold over 80M and Apple sold over 30M last year. Economies of scale in this market is ridiculously high
-Also, only the top players in the market are able to make decent profit off their sales
-This suggest new entrant would need around at least 10M to
compete, let alone the large fixed costs to begin with
-Access to distribution channels require a lot of contract and negotiations; tough to get over already-established manufacturer
-Not much law barriers from government other than minimal environmental protection
-Competitive retaliation is extreme at the peak. Apple and Samsung have huge rivalry and they show it (the case of $1.05B, 30 trucks)
-If any of them decide to attack the new entrants, it's a matter of time before they are out
-The industry itself is very profitable and almost reaching the peak of its growth (very high and competitive)
Threat of New Entrants
Inter-Firm Rivalry
Nokia Lumia 920
BlackBerry Z10
Specifications
Central Processing Unit (CPU)
Graphics Processing Unit (GPU)
Display
Random Access Memory (RAM)
Wireless Frequencies
Storage Capability
Qualcomm Snapdragon S4 Plus
Qualcomm Snapdragon S4 Plus
Adreno 225
Adreno 225
Liquid Crystal Display (LCD)
Liquid Crystal Display (LCD)
1 GB
2 GB
LTE/4G/3G/2G/GPRS, WiFi,
Bluetooth 3.0 & NFC
LTE/4G/3G/2G/GPRS, WiFi,
Bluetooth 4.0 & NFC
32 GB
16 GB, up to 64GB expandable

Android and iOS are top two operating systems.
Competing for 3rd place is Blackberry 10 and Windows Phone 8.
Two firms have very similar specifications; strong competition/rivalry
Microsoft has a net worth of over $81B, while Blackberry has just under $10B. Regardless, these amounts are unimaginably large, and to clear out (or exit) such business would run into a lot of barriers such as liquidation.
Since this industry is very profitable, there are a lot of competitors, with a lot of them being equally balanced, whether at the top or at the bottom
Inter-Firm Rivalry

Most direct substitute is Tablet
Lack of mobility, and convenience
Overall, not a very suitable substitute (Smartphones are all-in-one solution)
Everyone needs phones even with tablets anyways.
Therefore, switching costs will turn out higher
The tablet industry is growing, but not as substitutes for the Smartphones but rather as add-ons. Both markets are rapidly growing along with the demands. Smartphone markets are growing even faster.
Threat of Substitutes
Founded in 1984
Specializes in telecommunication and wireless equipment
Built the first smartphone
Important role in Canada's technology
industry


The End

Thank you
Full transcript