WASHINGTON – JANUARY 29: US President Barack Obama leaves his Blackberry on his belt as he returns to the Oval Office at the White House on January 29, 2009 in Washington, DC. Obama attended a class presentation at Sasha’s daughters’ school, Sidwell Friends School in Bethesda, Maryland. (Photo by Ron Sachs-Pool/Getty Images)
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It was a switch “most of us made years ago”. The newspaper mentioned is USA Today. The newspaper was referring to the US Senate’s announcement on July 3, 2016 of its intention to switch from BlackBerry smartphones to iPhone and Android versions.
That the federal government has been so slow to change the market requires serious thought now, and as a bipartisan collection of members of the House and Senate tries to restrict Nvidia and AMD from selling advanced chips to China. What happened with Blackberry requires Washington to adopt a more humble attitude.
This is because the buyers are more than the buyers. In fact, buyers are our eyes and ears in the marketplace, not to mention they teach us the value of our products and services based on how they use them.
Looking back on Blackberry’s demise, it is not possible to say that the federal government as a major customer contributed to its eventual decline. At the risk of stating the obvious, governments have a lot of money but lack the market touch. It was undoubtedly difficult (if not impossible) for Blackberry to turn down government operations, but it’s possible that the government as the buyer distorted Blackberry’s understanding of the market in such a way that Steve Jobs and Apple were able to drive customers to all the new needs they didn’t know they had.
This brings us back to Nvidia and AMD. Senators with last names like Warren, Ricketts, Cotton, Coons and Graham are using national security as an excuse to try to limit their sales to China. Except the limits aren’t even good for national security.
Senators conveniently forget that when producers in countries trade with each other, war becomes terribly expensive. It brings to mind Otto T. Mallery’s old line “If soldiers are not going to cross international borders, goods must.” If China and the US want to avoid the impoverishment of military conflict, the best way to do that is to keep trade routes open.
As for the Chinese Communist Party (CCP), it would prefer fewer inputs of advanced US products into China so that there is more incentive among top Chinese companies to make chips that compete with those of Nvidia and AMD. Do US Senators know they are doing the CCP’s job for this?
Which then brings us to the implications of export controls themselves. It’s not just that the top US chipmakers will lose significant market share while gaining much more substantial competition from Chinese companies, but that “export controls” are just a fancy way of saying that the US political class will pick off Nvidia and AMD’s customer bases. Which is a dangerous development. See above.
Even if we look beyond Blackberry’s gradual and sudden decline, at least in part, due to a customer base that is not sufficiently in touch with the market, we cannot ignore the importance of the customers themselves. They are personalized market insights, represent vital insights into the products being sold to them, and then their long-term success is critical to driving the companies that sell them.
That both Nvidia and AMD want a Chinese presence is a testament to the market’s importance to their long-term growth. Politicians then depriving them of the immense benefits of the Chinese market is not only bad for US national security, it deprives some of the most important and valuable US companies of the market intelligence and customer well-being necessary to thrive in the long term.
