What’s so wrong with being a niche business?

I’ve written about Blackberry a number of times since I started this blog but not since 2012 when I wrote – I’m waving bye-bye to Blackberry. I noted the features were awful, the battery life was poor, and the two-year contract at the time was off-putting. The mobile device business has changed greatly since 2012 with data being paramount, yet battery life for most devices is still an issue. What I did not realize at the time was that Blackberry’s major advantage was in SECURITY. Research in Motion always was at or near the top when it comes to secure networks and platforms. And over the past few years Blackberry has morphed into a somewhat more nimble and niche-y company focused on offering e-mail and network security. Companies sometimes give a Blackberry to their employees in the interest of having a more secure communication environment. That’s not without good reason these days. In a recent article from CNET,

“Francois Mahieu, the chief commercial officer of BlackBerry Mobile, has high expectations for where the brand can go. Mahieu, speaking to journalists at a briefing ahead of Mobile World Congress 2018, said he hopes to capture 3 percent to 5 percent of the market for premium phones. “It doesn’t have to be a niche business,” he said. “I would not be satisfied with market share in premium (phones) that is sub-1 percent forever.”

That’s exactly where it is. Neil Shah, an analyst at Counterpoint Research, estimates that BlackBerry sold just 170,000 phones in the fourth quarter. With the total market for premium phones (defined as above $400) estimated at 320 million units last year, Shah said BlackBerry Mobile would have to sell at least 10 million units a year, or 2 to 3 million per quarter.”

Not every company can directly compete with Apple and Samsung. Not every company should try. Nokia and Blackberry had their moments in the spotlight. Both still exist today and have found their respective markets. Things may not have worked out the way that management and shareholders hoped for Blackberry, but having a defendable market position in offering one of the most secure environments.

If Blackberry doesn’t make it to 3% of market share is that reason to consider it a failure? MySpace is still around and does more than $800M annually. And Pandora, which does more than $300M. Are they niche businesses? Not quite although in comparison to Spotify and Apple Music some would beg to differ. Both are not on an upward arc that’s for sure. I think Pandora is trying to figure out its own point of differentiation from Spotify. Even though Pandora came first! Sounds familiar when you think about Blackberry and Nokia.

Being a ‘niche business’ is a term that’s sometimes used in a pejorative sense. Sure you can have a ‘nice little niche business’ but more often ‘niche business’ suggests limitations on growth and success. Personally I love the idea and position of niche businesses even if they are limited in terms of what others would consider to be substantial market success. You have to be aware of what is the ethos and what are the overall goals of the enterprise (aside from increasing shareholder value which would be the obvious one).

Would it be so terrible to have a successful niche business that could never become Apple or Amazon?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Best business practices, Devices, Mobile Communication and tagged , , , , , . Bookmark the permalink.

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