Earlier this year BlackBerry announced its BlackBerry 10 operating system and the Q10 and Z10 smartphones. These new BB10 phones came on the heels of Microsoft’s Windows Phone launch in early 2012, and the subsequent release the Windows Phone—powered Lumia smartphone lineup from Nokia. These phones—and the operating systems that powered them—were seen as critical, last-ditch efforts by Blackberry and Microsoft to stay relevant in a smartphone market increasingly dominated by just two manufacture/OS platforms: Apple/iOS and Samsung/Android. “We have a clear shot at being the number 3 platform in the market,” said Blackberry CEO Thorsten Heins last year.
Unfortunately, the failure of both Blackberry and Microsoft/Nokia to emerge as a clear bronze-medal winner was underscored by two developments this week. First, Microsoft announced that it was acquiring Nokia’s mobile phone business, throwing Nokia a lifevest and ensuring that at least one hardware manufacturer will continue to bring Windows Phone devices to market. Then Blackberry’s board announced its intention to sell the company, possibly as early as November, largely because of the disappointing sales of its new BB10 phones.
What happened here? As we’ve said many times in the past, online shopper interest is the perfect leading indicator of future sales, and by early spring it was clear that online shoppers simply were not considering either of these alternative smartphone platforms. The chart below shows the distribution of online smartphone shopper traffic, by OS, to nearly 5,000 phone product pages on carrier and retailer websites. As expected, Android and iOS received the lion’s share of shopper traffic, and despite some modestly positive momentum in March and April, Blackberry & Windows Phone ended the first half of 2013 with virtually the same market share as the start of year. This first half performance is even more disappointing when one considers the collective marketing resources and creative energy that Blackberry, Microsoft and Nokia put behind these new products, including celebrity endorsers with fancy job titles and plenty of high-profile and outrageous television commercials.
Nokia’s acquisition by Microsoft may very well be the final blow to Blackberry in its race for third place. Nokia will benefit from Microsoft’s deep pockets, retail footprint, and by being part of a broader portfolio (including Bing, X-Box, Skype and Office productivity tools) necessary to compete with the app-rich ecosystems of Android and iOS. Blackberry has to fight Apple, Samsung and now Microsoft/Nokia alone, with no retail direct channel, and with no similar ecosystem. And even worse, shopper interest in the marquee Z10 is fading fast, at exactly the same time the company needs it to be picking up steam. The chart below measures shopper interest in the BlackBerry Z10 relative to the Nokia Lumia 920 series (920, 925, and 928) and a third Windows Phone, the HTC 8x, for comparison purposes. We can see how even among these market laggards, the Z10 has failed to capture and sustain a meaningful share of shopper interest.
While some of the volatility in the below data is a function of staggered device availability (The Z10 saw a spike in shopper interest share after its late March launch, while Lumia 920 series sees a spike following the launch of the 928 in May), aggregate shopper activity yields almost identical shopper interest share across the three OEMs. But advertising spend during this time was anything but identical: according to data from Kantar Media Strategy, during this time BlackBerry outspent Nokia and HTC more than 20:1 on online display advertising.
The race for third still isn’t over—it remains to be seen how Motorola’s new Moto X and a likely lower-cost iPhone will disrupt existing Android & iOS market dynamics, and there are lots of skeptics questioning the Microsoft/Nokia deal—but a few things are coming into focus. First, our bronze medal winner will be the smartphone brand that can most effectively convert advertising dollars into online shopper consideration through optimized social, display and search campaigns. And second, the third place finisher must just as effectively convert that online interest in into buyers, through integrated online & offline retailing and precise coordination with carrier and retailer partners. This week’s announcements are a reminder that BlackBerry—or it is new owner – must make major improvements in both areas if it wishes to remain in the race for third.
This blog post was published with the help and contributions of Sam Jordan. Sam Jordan is a data analyst intern in the Technology & Entertainment vertical at Millward Brown Digital. He is a rising senior at the University of Massachusetts, Amherst, where he is working towards a degree in economics, with a minor is computer science. Connect with him on LinkedIn or Google+.
Chris Collins leads the Technology & Entertainment Practice for Millward Brown Digital. In this role, Chris provides data-driven insights and strategic guidance to leading retailers, telecommunications carriers, consumer electronics manufacturers, and their marketing partners. Prior to Compete, Chris was a senior member of the Consumer Wireless team at Yankee Group Research and worked as a management consultant for Monitor Group and IBM Business Services. Connect with Chris on LinkedIn.