CEO of BlackBerry Disagrees With the Future of Apple

Alexander is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The CEO of BlackBerry (NASDAQ: BBRY) kicked up a storm last Friday. Thorsten Heins argued that tablets will be obsolete in five years. BlackBerry's hasn't done that great of a job at predicting the future in the past, which is why the company was so unprepared for the Tablet, touchscreen-enabled smartphone, and with mobile applications. In summary, the company wasn’t prepared whatsoever for the Apple (NASDAQ: AAPL) ecosystem of products, services, and software. The three combined is what dismantled BlackBerry, not just the new gizmo gadgets themselves!

Case against BlackBerry

I believe that the CEO already acknowledges that he has no significant edge in tablets because a tablet device is not meant to be a standalone device. The device has to be united with an ecosystem of products. Apple makes it extremely easy for consumers to interchangeably share data between devices with iCloud making it not only possible, but feasible for users to upgrade to the next device or transition from one device to the other without the loss of user experience.

In fact, Apple understands the consumer so well, it leaves me scratching my head. Apple’s success in iPad was driven more by Apple’s unique edge in both products and services. Part of the reason for why I am so reluctant to upgrade my own Laptop is that I find it extremely difficult to move all the files from my Windows computer, and programs to the next computer. In fact, it would probably take a whole day, including a technician. The reason is that a lot of the programs I have installed on my computer have to be uninstalled and reinstalled back onto the computer. Apple circumnavigates this problem.

One of the things that put Apple ahead of other competitors is that your computer is literally cloned through every single one of your Apple devices. All your documents are digitally stored onto the internet. Applications are synchronized between all the devices, and better yet the content library of iTunes is seamlessly connected together.

For anyone to transition from their desktop computer to a tablet like the Samsung, or BlackBerry’s, would require the user to customize the experience of using that device. This means sitting down for a whole day and figuring out useful applications to download, figuring out a way to bring music files from the computer onto the Android device, etc. So basically, the iCloud is Apple’s best weapon against securing market share for itself against its competitors. Apple can seamlessly integrate new devices into the users experience without the loss of the same user-experience from one Apple device to the other.

So the reason why the Apple iPad was so successful had a lot to do with the iCloud.

BlackBerry is losing

 

Source: IDC

So of, course BlackBerry would complain about tablets, it falls into the “other” category at 31.5% market share. I believe that BlackBerry’s CEO’s prediction over tablets non-existence was due to BlackBerry’s inability to gain any traction in the marketplace. So because of that, the CEO had to downplay the future potential of tablet computing.

Earlier in the day, I visited the Best Buy store, and I couldn't even find the BlackBerry device. In short the BlackBerry tablet isn't given any floor space because Best Buy's management team believes that the product cannot even recoup the cost of placing it on the sales floor. In fact, Best Buy wouldn't give up the floor space used on legacy desktop components like sound cards for BlackBerry Playbook devices. If the largest technology retail company isn't willing to support BlackBerry devices in a standard retail channel, what does that say about BlackBerry?

I'll elaborate even further. If you look on Amazon.com, the BlackBerry Playbook has its price slashed by 67%. In classical economic theory, a lower price would increase demand, but in BlackBerry's case, even with a 67% price cut, the product is still in stock. G4 rated the BlackBerry Playbook a 3/5 stars upon release. In short, BlackBerry was a product flop. You cannot compete in the technology space with everyday low prices or discounts, especially not in fully industrialized markets like the United States and Europe.

Why does Apple do so well?

The user experience of an Apple product is superior to that of Microsoft, Android, BlackBerry devices. It’s impossible to fight with the artistic perfection of simplicity.

I owned an Apple iPad, and I gave it to my mom. I'll be honest. She doesn't speak very good English, but she downloaded a Korean language app onto the iPad. After installing the Korean language onto the device, she finds the iPad the easiest technological device she has ever used. Apple has won my mom, and my mom hated technology, now she loves technology.

She is a baby-boomer. I knew that by giving my mom an Apple device she would more easily grasp the use of a computer. That's exactly why I gave it to her.

When I look at Amazon.com I see that the Apple iPad has the highest rating at 4.5 stars. Following that in close second is the Microsoft Surface with 4 starts. BlackBerry Playbook gets 4 stars, and Samsung Galaxy Tab comes in at 3.5 stars. After using the Galaxy Tab and the Microsoft Surface tablet, I can honestly say that the Windows tablet has a stronger user interface and is easier to use than the Samsung Galaxy Tab. With the Microsoft tablet, you spend less time figuring out the device, and more time using the device.


Microsoft retail strategy

Now, I took the liberty to walk into a Microsoft (NASDAQ: MSFT) store. I literally drove out 30 minutes to Scottsdale Fashion Square (it is a 2 million square foot mall property owned by Macerich). Now, I have to admit the Microsoft store is pretty cool. You can indisputably tell that Microsoft literally copied and pasted the Apple store concept and slapped it onto its own store. Except, the only difference between the Apple store and Microsoft store was that the Microsoft store was almost empty, and the Apple store I frequent at Chandler Fashion Center (1.5 million square foot mall property also owned by Macerich) is always loaded with customers. You will always see people in an Apple store, any time of the year.

Microsoft has some weaknesses it still has not been able to address that Apple has been able to. First, buying a new Microsoft device isn’t that easy. For me, I can’t imagine myself upgrading my Laptop computer because transferring over files and programs is so complicated. Not to mention, Microsoft’s profit motive keeps it from offering the Microsoft suite through online applications on the web. Microsoft’s current business model is aimed at maximizing profits from its services and software rather than improving the overall customer experience. This is why Apple sells its software for cheap and hardware at an expensive rate. Because selling software at a cheaper price reduces the conflict of interest between user-experience and profitability. This is why Apple was better able to adapt to the cloud environment and generated the profits from the hardware side and sold the software for cheap! It is for this reason that customers are able to run through faster product cycles with Apple because even if a consumer doesn’t need an upgrade, at least it is easier to upgrade the computer. I plan on sticking with this Laptop until it dies, or I might replace it, but it would cost me a substantial amount of money as I would have to hire a geek squad technician to transfer over all my files, and programs. Owning Apple would save the frustration and headache of being a windows guy.

Conclusion

Apple is well ahead of the competition. The success of the tablet was driven by the ease of being able to transition files and programs from one Apple device to another. This allows for faster upgrade cycles and better user-experiences. Apple products are not intimidating when it comes to transitioning which is what gives Apple such a strong market position compared to its other competitors. Overall, I am extremely optimistic of Apple’s future, and I remain a skeptic of Blackberry.

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Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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