What happened to BlackBerry? | Startup Stories and Mistakes

Bernardo Montes de Oca
December 12, 2019
  |  

What happened to BlackBerry? | Startup Stories and Mistakes

Bernardo Montes de Oca
December 12, 2019
  |  

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Let me just say it: BlackBerry was huge.  Celebrities loved them. Kim Kardashian, Katy Perry, Justin Timberlake. Even Barack Obama used one for most of his two presidencies, as it was considered safer than other smartphones.

From its QWERTY keyboard to real time emails, the BlackBerry was, for many years, the smartphone by choice. The company sold millions and they were riding high. BlackBerry did a lot of things right.  But… they did A LOT of things wrong. And now, they’ve disappeared.

And the reasons why BlackBerry failed aren’t exclusive to them. So, when one of the biggest phone companies plummets to oblivion, it’s worth analyzing. We’ll cover:

  • The birth of BlackBerry
  • Its fast growth and expansion
  • Their tipping point
  • And finally, their demise

How the Blackberry was Born:  

BlackBerry was originally known as Research in Motion (RIM) and has been around since 1984. RIM was the brainchild of Canadians Mike Lazaridis and Douglas Fregin. From the start, RIM’s obsession was wireless, and their vision paid off early. They were the first in many things: protocol conversion, mobile point-of-sale, just to name a few.

To help with growth, RIM hired Jim Balsillie in 1992, who eventually became co-CEO with Lazaridis. Remember him. He was critical in BlackBerry’s success. And its demise as well.

But back to RIM. By 1995, they drew enough attention from investors to fund their first wireless two-way paging system. Wireless paging. The idea was very enticing, as Adam Adamou, one of the main investors at the time, recalled.  

“The idea of a wireless device to send and receive email was revolutionary. It was like looking into the future and knowing that this idea just made too much sense for it not to happen.”

And he was right. Prior to the IPO, RIM raised 30 million Canadian dollars for the Inter@ctive Pager, a pager and wireless network system, which was released in 1996. One year later, Wireless for the Corporate User magazine named it the top product of the year.

RIM came up with the BlackBerry 850 Pager and a complimentary server called the BlackBerry Enterprise Server, which was a genius idea. The server was exclusive to BlackBerrys so it could push emails fast. Instantaneously fast.

Now, there was no need to wait while your computer downloaded all your emails. Communication was instant and businesses loved it. RIM aimed at the corporate world. And this was a good idea. A great idea.

Then, they launched the BlackBerry 957, RIM’s first true BlackBerry, though not a smartphone yet, as it couldn’t make calls. But it did have the now iconic QWERTY keyboard and famous User Interface.  

Through improvements, in 2003, they released the BlackBerry 7230, and hit it BIG. It had all the technology that made BlackBerry successful, and now, it could make calls. So much so, that people consider this moment, the birth of the BlackBerry smartphone, pivotal in communications.

One of RIM’s strongest selling points was safety. With promises of tougher encryption processes, they garnered the attention of major businesses and governments, alike. During the next six years, BlackBerry grasped the corporate world and didn’t let go.

In fact, the devices were so addicting, they were called CrackBerries. Because corporations are healthy and wholesome. And, hold on to this idea of corporations for later. By the way, the name BlackBerry comes from how the QWERTY keyboard resembled the fruit. So, now you know, for whenever there’s an awkward silence.

As the years passed, BlackBerrys became more advanced. They had cameras and new multimedia capabilities, which made them appealing to a bigger audience. And a lot of people bought them.

Growth and Expansion

The early 2000s might’ve been unkind to fashion, but they were great for RIM. Assets grew 8X, users went from 534 000 in 2003 to 4.9 million in 2006; damn, and sales grew 10x. Back then, everybody in the corporate world had a BlackBerry. But not only them. Teenagers too.

You see, combined with newer, better cameras, the BlackBerry Messaging service (BBM) was perfect for adolescents. It could send images, voice notes, pictures, locations, create group chats and, of course, text. Does it sound familiar? That’s right. They made WhatsApp before WhatsApp was cool. That’s how on point they were, and they could have carried on with their greatness.

At its peak, the BlackBerry brand sold around 50 million devices per year, with annual sales of almost $20B. Its stock rocketed from $2.15 per share to $150 per share. Celebrities craved BlackBerry. Kim Kardashian had three just in case one of them broke down. Pitbull rapped about his BBM blowing with messages. And before he joined Samsung, Jay-z was bragging about the BlackBerry and its connectivity overseas.

But this is Startup Forensics. So, not everything was fun and games. Though most of their models worked very well, such as the Pearl and the Curve, promising products like the Storm never delivered.

The Storm was their first model with a full touchscreen and no keyboard. But, since the OS was designed to work with a keyboard, it didn’t grasp touchscreens well. It was sluggish and unresponsive, and users hated it.  Still, even if their newest phone failing, sales piled up. So, there was no reason to be worried, even when, in 2007, Apple came up with a little device called the iPhone.

At first, like most companies, RIM wasn’t afraid of the iPhone. Why would they be? Remember Steve Balmer’s reaction? Yeah. Words can bite back.

The Tipping Point

But let’s give RIM some credit. Even after the introduction of the iPhone and up until 2011, sales of the Blackberry increased so, they had reason to be confident. It was just that Apple had a different strategy and, along with RIM’s mistakes, it would prove deadly for the BlackBerry. Let’s go over those mistakes.

Remember how Blackberry was great for companies and teens alike? Companies loved connectivity and safety. Teens loved chatting with their friends. But, when was the last time you heard somebody, anybody, say: I’m looking for the most secure phone in the world?

The average user didn’t really focus on safety. So, while RIM had the corporate market to itself, they didn’t have much else.  Read this lethal quote by Journalist Vlad Savov.

“Focusing on the tens of millions of customers it already had, BlackBerry missed out on the Billions that were to come”.

Ouch. By the way, who were the billions that were to come? Well, everybody else.

Companies were finite and kids would get bored. Perhaps, they might start using, I don’t know, the iPhone? And this was the second big mistake: not listening to the market.

Yes, Apple wasn’t the only company competing with them. But they had a great idea, and it was completely opposite to what RIM preached. You see, BlackBerrys worked great for working people. Their batteries lasted long hours, their data consumption was low, their bandwidth consumption too. Boring but efficient apps were the norm.

Apple said fuck that. Their apps consumed loads of memory. Their phones hogged up all the bandwidth and the first batteries lasted a day, tops. But their navigator, Safari, was easy to use. Apps were visually astounding and plentiful, and the device looked great.

So, people who weren’t in business or didn’t care about efficiency now had another option. Which leads us to the third mistake.

Blackberry was OBSESSED with the QWERTY keyboard. Yes, it’s great for emails. But not much else. And they didn’t venture into a full touchscreen until it was too late.  But it’s not just about keyboards. It’s about…everything.

Lazaridis focused on limits. Size, portability, bandwidth, battery. Everything had to be limited for efficiency. Well, it was too limited. The OS was too restrictive for app developers, so the market was limited. In fact, most apps were stripped-down versions of Android or iOS apps and didn’t work properly.

The OS itself was also hard to update. But, ironically, updating it to make it more open to the market, meaning possibly losing some of the valued corporate customers because of safety. RIM took pride in safety. Until BBM crashed for four days straight and RIM didn’t say a word about it until the third day.

And there was that unauthorized spyware infection to 145 000 BlackBerry users in the United Arab Emirates (UAE).  And other scandals.

So, BlackBerrys were losing their identity. And still, Lazaridis and Balsillie rejected switching to Android or iOs, hell, even Windows phone (say, what?). Nor did they open BBM to competing for OS when they had the chance. Until WhatsApp appeared and killed it.

By the way, WhatsApp sold for $19B. So, yeah. It’s clear that their mindset was another reason for the shortcomings. Though they were co-CEOs, Balsillie and Lazaridis sometimes didn’t see eye-to-eye.  Many blame this dynamic as the reason for their latest OS, BlackBerry 10’s delayed launch, so much so that it was no longer competitive.

RIM had the chance to innovate. They had great ideas, and all they had to do was break away from the suit and tie. But they didn’t. They were too confident and too conservative. A deadly combination in the tech world. Just read this quote from Balsielle and you’ll understand. Ouch. Again.

"We're a very poorly diversified portfolio. It either goes to the moon or it crashes to earth. But it's making it to the moon pretty well, so we'll stick with it."

The Demise and Turnaround

People didn’t want BlackBerrys anymore and it hit sales hard. They went from $20B in 2011, to just half of that, in two years, and didn’t stop falling.

Apple and Android stormed the scene. Manufacturers, such as HTC, Samsung and Motorola, were willing to provide devices for them, yet no one wanted to work with BlackBerry. Or, perhaps, it was the other way around.

It was evident change had to happen. So, in 2012, after three decades, both CEOs stepped down and Thorsten Heins took over. But, guess what he said?

We believe that BlackBerry cannot succeed if we tried to be everybody's darling and all things to all people. Therefore, we plan to build on our strength.

A strength that was…the business world. Hadn’t they learned anything? Plus, it’s not like their efforts were enough. New phones like the Z30 were…okay. Their long-awaited BlackBerry OS was…okay. But nothing amazed us like it did in the past. So, just one year later, Heins was gone.

Then came John Chen: he was a realist. The Priv was their last effort. It was Android-based, sleek and very safe. But it failed and after this failure, Chen decided BlackBerry would stop making phones and sold the manufacturing licenses to other companies.

Massive layoffs ensued. The company’s value plummeted, with stock now around $5. And the BlackBerry logo survives only in a handful of devices sold mostly in Asia. BlackBerry, as we knew it, was dead. So, is that it? Well. No.

Chen embraces BlackBerry’s safety obsession. But now as a software company. And, with this new direction, revenue has slowly increased in the past two years. So, perhaps they make it.

For now, all we can say is BlackBerry was the boss. But technology evolves every day, and they weren’t willing to go with the flow. Which forced them to the bottom, where now, they must fight their way back up.

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