Market Segments, John Chen, and Handset Specs

specs 1
Look at these awesome specs!!! (sarcasm- no idea what this is)

I am not the most informed contributor at UTB. I do not go out and visit the other mobile tech sites and review their posts or scroll around in their forums because frankly, all they do is aggravate and incense me. Like many of you, I came to UTB as a haven from other sites where being a BBRY fan was frowned upon or even derided outright. However, I know there is talk at many sites of specifications of devices and there are those that are keen on these specs and place a lot of value on them and can be very vocal about their judgments about a device based singularly on the device specs. I thought I would offer some comments about specs and see what you all had to say. BTW- I think we (UTB) have some of the sharpest readers of mobile tech content and the best comments.

dewalt

Many of you are familiar with the DeWalt brand of hand/power tools. They’re black and yellow and can be found in Home Depot and Lowes type stores, are often cordless and have sponsored stock car racers in the past. Black & Decker was headquartered near me in Baltimore, MD until recently when they were acquired by Stanley. In the mid 90’s while an employee at IBM, I had the chance to get a closer look into B&D’s business and came away with a lesson on the power of branding and market segments, how significant product development is, and how important it can be to bring a product to market fast. At the time, B&D considered themselves a “consumer products” company and had a handful of divisions, including Black & Decker tools and Price Pfister kitchen and bathroom faucets and hardware. B&D had made tools for the consumer for years and had some goodwill and brand recognition developed when they decided to add a line for contractors they called B&D Professional. This line of tools was significantly overbuilt compared to the consumer line, but unfortunately, contractors saw B&D as a “consumer products” brand and would not buy them.

Sometime in the early 90’s B&D changed the name of their overbuilt line of tools to DeWalt and changed the colors to black and yellow. They also modified the handles just a bit. “Fit and feel” was a phrase that was embedded into many B&D employee’s heads. They knew that the fit and feel of their products was a big part of what drove the buying decisions of their customers, particularly the contractors, so they changed the handles a little as well. The “new” tool line sold like crazy. It was essentially the exact same line of tools as before; the branding had just changed. B&D was going after a different market segment that had different expectations for reliability and intensity of purpose and B&D had to re-brand their line to get these people to consider it.

market segments
An example of market segments…

So what the heck does this have to do with BBRY and mobile device specifications…? I have no idea. (Just kidding.) I brought it up in part, to try and make the point that BBRY has identified different market segments of the overall mobile phone market, based on their usage requirements and how they make buying decisions. This is all reasoned speculation since I have no inroads at BBRY, but I’ll bet they know that some users are primarily business/productivity oriented whereas others are primarily lifestyle oriented. The former sees their device as a “tool” and the latter sees it as a “smartphone,” even though they may use the same terminology (smartphone) to describe it. These groups have different usage patterns, value different things in mobile devices and make their buying decisions based on different things. But these are only two ways the overall mobile device market could be segmented. There are clearly other segments, which will be mentioned later.

back to schoo professor

Have you ever seen the movie “Back to School” with Rodney Dangerfield? Remember that hilarious scene where the pompous economics professor was talking about starting a fictional business and with every point he made Rodney would hit him upside the head with some reality? Finally, the professor said, “where shall we build our fictional plant?” and Rodney said, “how about fantasy land?” So funny! The point is, there is NO SUCH THING as “money is no object.” Money is ALWAYS an object. So when BBRY designs a phone, they must take money and price point into account; this is another factor they consider.

tech geek
Let’s put him in charge of product development…

What I am trying to get to is BBRY does NOT have people sitting in some product design department, searching for the fastest chip and the way to fit the most RAM on a motherboard (or whatever they call it in mobile phones), or people looking for the highest pixel density camera or screen — making decisions about how to design BBRY products! They have marketing people making these decisions. Of all the CEOs BBRY has had, Chen seems to understand markets and customers the best. BBRY’s product strategy is rightly designed to follow the needs of the marketplace, NOT to impress some teenage blogger, sitting in his mom’s basement, eating chicken nuggets while he evaluates and mouths-off about the specs of phones. The user experience is what BBRY is shooting for, not the best spec sheet. IF BBRY determined that their strengths were different than they are (e.g. not security, messaging, productivity, MDM, etc.), AND they determined that there was a large market for REPEAT sales of devices that simply offered the best specs in all categories, AND that these people were WILLING TO PAY for these specs and/or willing to tolerate cost cutting on build materials, MAYBE they would enthusiastically join the “spec wars.” However, I don’t see that happening as it’s not BBRY’s bailiwick.

In BBRY’s handset business, they are trying to 1) design devices that appeal to users, 2) get them into the hands of these users, and 3) get the users to enjoy/trust them so they will develop an affinity for the BBRY brand and 4) buy more devices in the future.

The factors BBRY must consider throughout this process are 1) BBRY’s inherent strengths/weaknesses, 2) the strengths/weaknesses of the competition, 3) what segments of the market are asking for (design features, fit and feel, etc.) today or would use if it was available, 4) the price these segments are willing to pay, and 5) how to approach these segments from a marketing perspective.

blackberrys
This pic doesn’t include many of the newer devices…

So in looking at the BBRY lineup, you see devices that vary in price point and in functionality. The Z3 sells at about $200 US and the Passport may be as high as $750 US, off-contract. There are all-touch devices and physical keyboard devices, and there are also devices designed for a more targeted market, like maybe the Passport and the Classic. The point is, these devices aren’t a bunch of specs thrown together, they are a response to perceived need in the marketplace and none of them have the best possible specs available in the industry. Why is this? Because the target market segment has a price point they are willing to pay. Don’t forget about the Porsche design series.

BlackBerry-Porsche-Design-P9983
Wow. this looks awesome…

The new Porsche Q10 is forthcoming and I have seen pics of it and man does it look awesome. Think about the market segment that phone is designed for; it’s gonna be priced at $2,000 USD. Obviously whomever buys this device is acutely concerned about the status and prestige of the Porsche moniker and design, and the “fit and feel” of the premium materials and is willing/able to pay for this. Have you noticed that the Porsche design phones have a special BBM PIN? Do you think this is an accident or insignificant? No! This is because BBRY knows (or believes) a person who would buy this device likes to “show off” a little. I’ll bet the average person who owns one of these doesn’t put a case on it either, cause they like the BBRY and Porsche monikers visible, and the materials and design is so aesthetically pleasing, why would you cover it up anyway? The point is, this is a specific, albeit small, market segment.

john-chen-700x466
Don’t mess with Chen!!!

I guess, my bottom line is, specs may be important, but they are not the whole picture, not even half of it. Chen knows what he’s doing. If he’s not the expert, he has one working for him; our devices were not designed by accident. The end game for the handset business is to sell handsets over time and specs support an overall product strategy that is more complex than pixels or bytes or hertz’s.

james pisano

RIM/BB fan since 2009. Wouldn't consider entrusting my career, life or privacy to another platform. Foremost, I am a student of life. Some likes: longboarding, nature, Baltimore Orioles, technology, driving, music, reading and Taoism. Politically independent.

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