Harsha Vardhan Reddy Tamatam

harsha.tamatam@global.t-bird.edu

Introduction:
Industry: Smart Phones for United States Market. Company: Research in Motion (RIM) Product: Blackberry Smart Phones Proposed Strategy: Redefine the smartphone experience by designing and implementing gesture recognition and augmented reality technology into the smartphone. Current Situation: Research in Motion, once a leader in the smartphone industry is now competing for a share in the pie with other companies such as Apple, Nokia, Motorola and Samsung. Its market share fell from 43% two year ago to a single digit figure. Traditionally RIM tied up with large corporations for the business smart phone sales. The shift in the corporate business model, which now allows employees to choose the phone of their choice, has resulted in employees opting for phones that serve both business and personal needs. Blackberrys market share fall can be attributed to companies that offer exciting applications, touchscreens and other aesthetic elements. Blackberrys outdated operating system and non-customizable Application Programming Interfaces (API) aggravated its injury. To propose a disruptive technology for the companys revival, Firstly the influence of the five compelling forces on the company is analyzed followed by the identification of the most dominant ones. Later the blue ocean strategy is proposed by discerning the line between Red and Blue Ocean. Finally the disruptive technology is suggested by defining the target customer base.

Influence of Porters Five Forces on the industry and company:

The following forces play an important role in determining the profitability of any industry. An analysis of the influence these forces have on the smart phone industry and Blackberry in particular is provided below. The strongest of these forces is identified to propose the Blue Ocean strategy. y Rivalry among existing competitors: The prevailing threat from existing competitors is very high and is the most dominating force of the five. RIM is currently competing with LG, Motorola, Nokia, Sony Ericson, Apple, and Samsung in the smart phone market and is currently placed third in the list of top smart phone platforms. y The power of suppliers: The key components required for manufacturing a smart phone are Flash Memory, ARM-based Microprocessor, and Cellular Baseband Processor. Even though phone designers like to diversify the suppliers to avoid shortages and improve bargaining power, in realty many manufacturers will have one supplier for a specific part through the course of its lifecycle. Nevertheless the power of suppliers can be considered medium due to the fact that alternative sources of component supply are easily available. y The power of buyers: Smart phones are generally sold in conjunction with Mobile Carrier Providers such as AT&T, Verizon, Sprint and T-Mobile. These major buyers in addition to changing behaviors of the end users influence Manufacturers profit margins. y The threat of substitutes: The nearest substitute for a smart phone is a non-smart phone, which is available at lower prices .Other devices that can be considered substitutes to smart phones are tablets and laptops. With more people inclined towards purchasing smart phones the threat of substitutes would diminish. y The barriers for entry: The barriers to entry into the smart phone industry are not high as the manufacturing components are easily available from various vendors. Of all the forces, Rivalry among the existing competitors is the most dominant one. Identifying a disruptive technology will create a blue ocean of opportunities and implementing this strategy will counter the power of the existing competition by shifting the market to no or negligible competition zone.

Blue Ocean Strategy:

Blackberrys current consumer base constitutes primarily of professional and young technology users. The blue ocean for Blackberry comprises of non-smart phone users (60% of the mobile users) and nonmobile users. The proposed strategy addresses most of the imperatives of a Blue Ocean Strategy. Firstly this strategy focuses on creating a new demand in the market place for the gesture recognition and

Harsha Vardhan Reddy Tamatam

harsha.tamatam@global.t-bird.edu

augmented reality based smart phones. The strategy defined can turn into a blue ocean strategy only if the strategy succeeds in creating a new uncontested market space where new demand is captured thereby making competition irrelevant and breaking the value/cost trade-off. There are no competitors at this juncture for this kind of augmented reality based smart phones. The technology is not new and prototypes are readily available. The product wearable gestural interface created by Mr. Pranav Mistry, a PHD student at MIT, can be used a prototype to design the next generation smart phone. The current cost of manufacturing this device alone is about $300 and considering the rate at which the technological costs are reducing it would not be quite long before this technology is commercialized. Even though the demand for such a technology is unclear, an early foray into this market will give Blackberry a strategic advantage over its competitors and can capitalize on the demand when the situation is ripe.

Disruptive Technology:
As proposed in the Blue Ocean Strategy section, RIM should come up with a Smart Phone that espouses gesture recognition and augmented reality technology. A smart phone that can project movies, books, news, maps and allows customer interaction through hand gestures calls for an aha moment. The current non-smart phone users, most of who belong to non-internet savvy customer league will be intrigued by other day to day life usage features provided by this new generation smart phone and will be attracted to embrace the new phone. The non-mobile users who generally are kids under 14 years of age will find this new toy (with or without mobile connection) instrumental in their academic learning. This gesture recognition and augmented reality technology coupled with Near Field communication (NFC) technology will foster an environment for interactive shopping without need for physical cash. Designing the phone in the form of a watch or shades will be a good enhancement to be tested in the market. The following diagram illustrates the key concepts that are used in proposing the disruptive technology.
Relative Power of the Five Forces Chinese Manufacturers

New Entrants
Blackberry

Supplier Power

Nvidia, SanDisk, Google, Qualcomm

Non-Smart Phones, Tablets

Substitutes

Buyer Power

AT&T, Verizon, Sprint, T-Mobile

Competition

Apple, Motorola, Samsung, Nokia

Non-Smart Phone Users (155 Millions)

Disruptive Technology Smart Phone based on Gesture Recognition Technology.

Smart Phone Users (87 Millions)

Red/Blue Ocean

Non-Mobile Users (63 Million - Majority <14 years)