Those of us following the business news may find it hard to stay away from the daily headlines about Tesla, and its wild stock swing. Reading yet another article about Tesla and its market cap topping $158 billion (double that of GM and Ford combined) made me think of Blackberry, another hi-tech company that made similar headlines nearly a decade ago.
Here is a recent chart of Blackberry’s stock (BB) with the right side grayed out to highlight the decade long downturn. The left-hand side of the chart looks like that of Tesla’s (TSLA) after the recent run-up of its stock.
A stock chart by no means tells the story of a company or its performance. However, there are a few distinct similarities between the former tech darling and the EV giant:
- Product that defines an industry segment – Although the term ‘smartphone’ wasn’t coined during its heyday, Blackberry with its phone, keyboard, email and PDA capability was the quintessential ‘smartphone’ for business users. Similarly, Tesla isn’t the first Electric Vehicle (EV) maker, but is almost synonymous with innovative marketing of consumer EVs.
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Product with a cult like following – during its heyday, Blackberry was affectionately known as Crackberry and enjoyed a cult-like following. This is almost like the cult-like Tesla Owner Club nurtured by the automaker “a community of owners and enthusiasts committed to advancing Tesla’s mission to accelerate the world’s transition to sustainable energy.”
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Celebrity fans – After being elected to his first term, President Barak Obama fought his advisers and Secret Service to keep his BlackBerry, earning his right to be ‘the nation’s first e-mailing president’ (NYT: Obama Keeps His Blackberry in a Hard-Fought E-Victory), Similarly, Tesla is a favorite among celebrities who ‘prioritize the environment’ and gladly provide free endorsement to the EV maker (33 Celebrities Who Drive Teslas – Ranker)
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Highly polarizing stock – Analysts either loved or loved to hate Blackberry, which during its peak was also ranked among the most shorted shares. Perhaps the same holds true of Tesla that is now among the most shorted shares (Bloomberg: Tesla Is Once Again the Most Shorted American Stock)
Not just similarities
While there are a few similarities between the stories of two products, there are distinct dissimilarities too. Blackberry being subsumed by the iPhone, the charismatic Steve Jobs’ brainchild and its eventual decline is well chronicled and studied by legions of marketing analysts and in B-School case studies. It is a story of a business productivity tool being bumped off by a product envisioned by a passionate, charismatic leader. Blackberry’s downfall wasn’t the product of poor design or usability – after all corporate users swore by its keyboard and industrial grade security. The consumer allure for the cool iPhones and relentless push for BYOD was its downfall.
If a passionate, charismatic leader alone could define and hold on to a market segment, one can bet that Mr. Elon Musk won’t leave a stone unturned in crushing competition.
There is another key difference in these stories – there doesn’t seem to be a ‘cooler’ EV in the market that can outdo Tesla; at least not in the near-term horizon. And there isn’t another EV maker or automotive giant with a charismatic leader like Mr. Musk.
To be fair, most automotive companies have been making bets on EV with a car or two in their stables while some seem to be hedging further with hybrid gasoline+EV vehicles.
The Black Swan ?
With all the hype behind it, Tesla sold only 367,500 cars in 2019 (CNN). If one reverses the Blackberry story – consumer cool-factor killing a cool corporate tool – is not hard to imagine a few scenarios
- An automotive underdog goes after a corporate or Government contract in a big way and manages to shape the market.
- The US federal government owns or leases 254,059 vehicles, excluding the military and Postal Service. (link)
- FedEx runs about 85 thousand trucks in its fleet. (link).
- The China factor – Around 45% of electric cars on the road in 2018 were in China – a total of 2.3 million vehicles. (IEA link). And according to WSJ, Tesla sold 16,360 imported models in China last year, which is just a drop in the Chinese bucket. Is it likely that a local Automotive giant aided by the Chinese government steps up to corner the market?
Footnote – A decade ago, I too passionate about my corporate blackberry and I burnt my fingers investing in BB during its decline. Since then, I have been sitting on the fence when it comes to Tesla.
Author : Guest post by Mohan K. The author is a technology executive and Enterprise Architect. He regularly contributes to myDigitalStartup.org