Big Firms Are Hardly Invincible. Just Ask Blackberry
Sometimes a company can seem so large that its position in the market appears unassailable. However, history teaches us that even a seeming behemoth can quickly be brought down by new competition. The sudden decline of the smartphone giant Blackberry illustrates how big does not mean invincible and reveals how allowing companies to compete and innovate is often more beneficial to consumers than excessive regulation.
While not in the smartphone market today, Blackberry’s name used to be synonymous with smartphones. In 2009, Blackberry controlled 20 percent of the global smartphone market, and half of the U.S. market. Blackberry phones were the first premium smartphones and introduced key features that consumers have come to expect, such as internet access and messaging.
Blackberry’s place as a status symbol was cemented through several celebrity endorsements in the early 2000s and its use by prominent figures in politics like Barack Obama. With its substantial market share and strong name recognition, Blackberry was the premier smartphone producer of its time.
Fast forward to 2024, and Blackberry no longer even makes smartphones. Instead, it focuses on cybersecurity. The reason for this shift is that Blackberry failed to adequately adapt to changes in the market. As a result, it gradually lost ground to emerging market players like Apple.
Blackberry’s primary clientele used the phones for business purposes. The company made the mistake of believing that Apple’s iPhone did not represent a competitive threat because of the seemingly different focus.
Apple designed the original iPhone with convenience and accessibility in mind. This not only attracted the attention of business users but also made iPhones more accessible to the general public, both taking Blackberry’s market and vastly expanding Apple’s potential customer base.
Blackberry also fell behind when it came to adapting innovations for smartphones, such as developing an app store with a wide variety of apps as Apple had. By 2013, Blackberry was nearing total collapse with little hope of being able to restore its place in the smartphone market it helped create.
Blackberry’s case is hardly unique. Tech companies that were once giants have been brought down by competition many times throughout history, for instance when Google displaced Yahoo after developing its search engine.
In an industry that changes as quickly and as often as technology, today’s startups can be tomorrow’s giants. Things are not always as they appear. Failure to adapt to changing times can quickly leave a company in the dustbin of history, with new industry players quickly displacing the old by offering consumers better products and services.
Despite this history of once-dominant companies being overtaken by innovative startups, some voices in government have opted to use the state as a tool to reign in companies they deem too big. Unfortunately, such actions will hurt the end-user experience. Companies would have to divert resources to comply with new regulations that serve more to satisfy bureaucrats than improving their product, with consumers losing the innovations or product improvements they could have enjoyed in the absence of this distraction. Seeing as free competition can and has brought down seemingly unstoppable giants, the opportunity cost from increased government interference is simply not worth it.
The fact is Blackberry was supplanted by a phone that was more accessible and advanced, benefiting consumers. In general, history shows that competition can bring down seemingly untouchable giants and provide a better product for the consumer without the need for excessive regulation which may very well degrade, rather than improve, the product.
Additional Reading:
How the Free Market Handles Monopoly by Peter Jacobsen
Antitrust Myths and the Fall of Sears by Walter Olson
Good and Bad Monopoly by Leonard E. Read
Content syndicated from Fee.org (FEE) under Creative Commons license.
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