Analyzing the competitive environment of the Blackberry
Oct 28th, 2010 by monicamoran
The Blackberry is taking the cell phone industry by storm. It has attracted not only business men but also young teens that are drawn by its instant online access and free instant messaging to anyone around the world. Despite its increasing popularity, there is still increasing competition within the cell phone market. Using Porter’s 5 forces – mainly the treat of new entrants, substitutes and intensity of rivalry – let’s analyze the competitive environment of the Blackberry:
Threat of New Entrants
There are always possible threat of new entrants in the Phone industry, not necessarily a threat of a new phone company but of new products from established companies. With the launch of the I-phone 4, the competition is high for Blackberry. They did launch the Blackbery Torch around the same time, which makes Apple one of the biggest rivalry for Blackberry for this particular product. Both are new and innovative products.
Threat of Substitutes
The Blackberry can be relatively expensive as it is a Smart phone, and during and an unstable economy, demand for normal phones may be higher. However, it is also important to note, that the demand for Smart phones is high for teenagers and college students due to its instant access to the internet. Therefore, in the long run, there is not any significant threat of substitutes.
Intensity of Rivalry
What sets the Blackberry apart from other Smart phones is their development of the Blackberry messenger, which no other smart phone has. It allows users to message people with blackberry across the world without a charge, which is why it is attracting young customers. This innovation has given them a competitive advantage in the phone industry. Secondly, ever since the launch of the Blackberry Torch, they have done intense advertising to advertise their product. In Canada for example, network distributors such as Rogers, Fido and Tellus, highly advertise smart phones including the Blackberry. Therefore, these strategies that the Blackberry utilizes allows the company to survive in such a competitive environment and as stated before, gives them a commercial advantage in the phone industry. In addition, they have a a very diverse product portfolio, which helps reduces the intensity of rivalry for the company.
Based on Porter’s 5 forces, the competitive environment of the Blackberry is intense due to the launch of new products from already well-known and established brands. However, based on the increasing demand of the Blackberry and its intuitive appeal to young adults gives them a “boost” in the phone market and helps them sustain their high standing in the industry.