How the rise and fall of Blackberry serves as a warning to Ireland

Not long ago, the BlackBerry was the premier mobile gadget on the planet. The device, with its traditional QWERTY keyboard, had blown the doors off texting and emailing.

For tech-savvy business executives and politicians, it was superior and faster than any of its rivals, including the initial iteration of the iPhone, whose touch-screen technology was considered clunky.

Former US president Barack Obama used “a specially modified, highly secure BlackBerry” after refusing to surrender his device as per the security protocols for an incoming president. “I’m still clinging to my BlackBerry. They’re going to have to pry it out of my hands,” he joked in 2008. Kim Kardashian apparently had three of them.

Blackberry seemed to have carved out an unassailable niche in the market. In 2009, it accounted for a fifth of all smartphone sales globally, the same market share Apple’s iPhone now commands. (According to the International Data Corporation, Apple shipped 234.6 million iPhones in 2023, capturing a 20.1 per cent market share).

A decade on and Blackberry’s revolution is kaput, cast into the annals of tech history.

In January 2022, after 10 years of plummeting sales and a near total wipeout of its share value, the company switched off services supplied to the phone, placing the once must-have accessory alongside the Commodore 64 and the Sony Walkman as a quaint relic of yesteryear.

There’s no single item that generates more tax wealth for the Irish Government than the iPhone. Apple channels profits generated from global (non US) sales through its Cork-based subsidiary Apple O

The Canadian company now makes cybersecurity software for business customers.

The Blackberry chapter is of course recounted as a parable of business hubris, corporate miscalculation. The company failed to keep up with Apple and Google for a variety of reasons, according to tech commentators.

It didn’t anticipate that ordinary users, not just corporate high fliers, would drive the smartphone market; it was blindsided by rapid take-off of the app economy; it failed to realise that smartphones would evolve beyond communication devices and into personal entertainment hubs.

All plausible explanations for the company’s crash and burn.

But there’s a separate lesson in there for Ireland. We tend to see the concentration risk at the heart of the Irish economy through the lens of sectors like IT and pharma and the windfall tax receipts that flow in from the big players in these sectors.

Boiled down, however, the concentration risk stems more from the devices, services and blockbuster drugs these companies produce, which the world is currently hooked on.

There’s no single item that generates more tax wealth for the Irish Government than the iPhone. Apple channels profits generated from global (non US) sales through its Cork-based subsidiary Apple Operations International Limited.

The latter generated pre-tax profits of €66 billion for its most recent financial year. The corporate tax paid on this was not disclosed but the same subsidiary paid a tax charge to Revenue here of €2.3 billion in the 2020.

Search engine Google’s main Irish subsidiary Google Ireland has a similar arrangement. Google moved $75 billion (€70 billion) in profits through Ireland in 2019. Along with Apple, Google is understood to be among the top three corporate taxpayers here.

Pfizer, the New York-based pharma giant which has several big Irish operations, perhaps demonstrates the inherent volatility in global trade.

The company’s coronavirus vaccine Comirnaty generated almost $38 billion (€35.4 billion) in revenue for the company in 2022, a quantum that has fallen away since for obvious reasons. But Pfizer isn’t a one-trick pony, it has stable of drugs that underscore its position as one of the dominant players in the sector.

It’s not only possible but probable that the popularity of these products and services will one day fade and maybe even go the way of Blackberry. The world turns in ways we can’t predict. Consumer tastes change. Patents lapse. Newer technologies cannabalise older ones.

Ireland’s tax coffers are currently loaded because the big companies that came here – many to avail of the country’s low tax rate – have prospered.

In a recent report, the Department of Finance highlighted what it described as the “inter-dependence between a small country’s GDP (gross domestic product) and large superstar firms”. It used Nokia and Finland as an example, noting the phonemaker at one point accounted for 4 per cent of Finnish GDP and was responsible for half the entire country’s GDP growth in 2000.

Nokia was once an unstoppable force. Its “brick” phones commanded 40 per cent of global phone sales back in the 1990s. The company is still big in telecoms infrastructure but a fringe player at best in the phone market.

The department’s report, which also refers to Blackberry’s rise and fall, cautions that “the ever-evolving nature of technological development inevitably means that some technologies (and hence some firms) are unlikely to be around in a few years’ time (and replaced by others).”

Ireland’s tax coffers are currently loaded because the big companies that came here – many to avail of the country’s low tax rate – have prospered.

The new minimum global tax rate now makes it a more level playing field in terms of attracting foreign direct investment (FDI) but the real point is that no-one knows where these companies and where Ireland will land after the next wave of invention and innovation.