BlackBerry – The Rise and Fall

Sometimes, your words can come back to haunt you, and right now, they must surely be haunting Mike Lazaridis, co-founder of BlackBerry (formerly RIM), the company whose eponymously named smartphone dominated the enterprise market for so long, writes George Cole. 

Back in 2007, when Apple launched its first iPhone, Lazaridis brazenly dismissed the product, adding that it wasn’t a threat to his company. At the time, BlackBerry smartphones were riding high, but just as Nokia would also later discover, you can be on top of the mountain one day, and start slowly rolling down it the next. Now, as sales of BlackBerry devices collapse, along with the company share price, BlackBerry is contemplating a $4.7bn (£2.9bn) sale to a consortium, but the question is whether Blackberry can emerge from the carnage.

BlackBerry was founded in 1984 by two Canadian engineering students, Mike Lazaridis and Jim Balsillie, who originally called their company Research in Motion (RIM) – both would become joint CEOs in the company. They moved from consultancy work into wireless data transfer and then pager technology.

 The RIM 900 Inter@ctive Pager,a two-way pager launched in 1996, was followed up with the RIM 950 Wireless Handheld in 1998, the first BlackBerry product, with a specially designed QWERTY keyboard that made it easy to type with two thumbs.

The RIM 950 was well-received and the BlackBerry Enterprise Server (BES) formed the link between enterprise mail services and mobile devices. Businesses loved the BlackBerry – the technology was secure, reliable and easy to manage. In the same year, RIM went public.

Enterprise market

In 2000, the first BlackBerry smartphone, the BlackBerry 957 arrived, and the company forged strong links with the enterprise market. In 2006, the arrival of the BlackBerry Pearl series saw the company branching out into the consumer market, with smartphones that included features such as a camera and media player. In the same year, there were almost 5m BlackBerry subscribers.

Things were looking good for the company, and BlackBerry devices were being used extensively by businesses and governments. Later on, an assortment of pop stars and even President Obama would become known as big BlackBerry fans. The phrase “crackberry” was coined to describe the addictive behaviour of BlackBerry owners, who constantly checked their devices for new emails, wherever their location.

The arrival of Apple’s iPhone in 2007 raised little concern to the Canadian company at the time. At the time, Lazaridis told reporters: “Try typing a web key on a touch screen on an iPhone, thats a real challenge. You cannot see what you type.” He added, “The iPhone has severe limitations when it comes to effortless typing. Of course you have more screen space, with more artistic interactions, but thats not enough. Weve seen this before when Palm tried virtual keyboards. When they launched the Treo, they licensed our keyboard.”

But in reality, the iPhone was a disruptive technology; a game-changer that would ultimately re-define the smartphone market and leave many players behind. Despite the firm’s initial dismissal of touch-screen technology, 2008 saw the launch of the first BlackBerry touch-screen handset, the BlackBerry Storm. But its clunky interface led one reviewer to describe the product as: “More a squall than a storm.”

The Storm flopped, but things were still looking up for BlackBerry. Its stock price was $144 (the company was worth $83bn), it had 14m subscribers, and profits were almost $1.3bn. In 2009, the company launched its first app store, and was rated by Fortune as the world’s fastest growing company – sales had grown 77 per cent  over the previous three years; for Apple, the figure over the same period was 27 per cent. 

But there were signs that Apple was beginning to lead the agenda. The launch and subsequent worldwide success of the iPad in 2010 saw many other companies scrambling to launch me-too products. RIM’s answer – the PlayBook tablet – flopped. As Apple and Android handsets gained a bigger foothold in the market, RIM began to feel the heat, and revenues fell. In July 2011, the company announced that it was cutting 2000 jobs from its 17,000 workforce. That summer, the company also gained publicity it would rather have avoided, when it emerged, that some of those involved in the riots across England had used the BlackBerry Messenger (BBM) service to organise some of the disruption.


Service outage

But the company garnered even more unfavourable publicity in October 2011, when a worldwide service outage saw around 70m BlackBerry subscribers unable to access texts, the internet or email for several days. The company was slow to explain or apologise, and its offer of free apps as compensation did not go down well with its customers.

Things came to a head in January 2012, when the share price fell below $16, and Lazaridis and Balsillie were forced to step down as CEOs. In July, the company announced that another 5,000 jobs were to go, as sales and revenues continued to fall. A new BlackBerry 10 handset, expected to arrive for the Christmas market, was delayed until early 2013.

In 2013, the company officially changed its name to BlackBerry and finally launched its BlackBerry 10 phones. Some observed that the design of the first handset, the touch-screen Z10, was very much inspired by the iPhone. But things continued to look bleak for the company.

Last month, it revealed that it was considering a number of options, including a sale. Earlier this month, BlackBerry was reported to have $1bn of unsold phones, and the company announced that it planned to cut 4,500 more jobs (amounting to 40 per cent of its remaining workforce), and abandon the consumer market. Much anticipated BBM apps for iOS and Android handsets were delayed.

The sales figures didn’t help to lighten the gloom either. In its latest quarter, 3.7m BlackBerry handsets were sold, compared to Apple, which sold 9m of its latest iPhone models in the first three days after their launch. According to IDC BlackBerry’s share of the smartphone market is now less than 3 per cent.

Then came yesterday’s announcement that BlackBerry had agreed to a sale to a consortium of investors led by Fairfax Financial Holdings. Fairfax specialises in property and insurance, but also has stakes in a number of technology companies, including Intel, Dell and Level 3. And its existing10 per cent stake in BlackBerry’s already made it the firm’s largest shareholder. The deal has yet to be ratified, however, and BlackBerry has six weeks to try and secure a better offer from an alternative buyer.

So why did BlackBerry fail? A combination of lack of vision, lack of leadership, fast-moving technology and complacency probably all contributed. But so did changing trends. BlackBerry fell victim to what’s being called the consumerisation of enterprise products. In the past, many people had a phone for work and another for leisure. But more and more companies are allowing employees to select their handsets and they are increasingly opting for Apple and Android products. The growth of Bring Your Own Device (BOYD) has definitely contributed significantly to BlackBerry’s demise. 

So what is the future for BlackBerry? At best, it might become a niche player in the enterprise market. But it could well become another technology company whose name is consigned to that high-tech scrapheap in the sky.