One of my fascinations has always been how seemingly “too big to fail” companies actually fail. I’m not referring to collateral damage caused some bursting bubble as happened to so many tech companies at the turn of the century. It’s more of the rapid and (almost) unexpected plunge that occurred with such companies as Myspace, Groupon or Viddy—all once entrenched in the very psyche of popular culture but quickly left behind by the public as nothing more than mammoth fossils (and still making some money, mind you).
Research in Motion (RIM, but now BlackBerry Limited), the Canadian maker of the BlackBerry, is such an example, as equally poignant and absorbing as the rest of the mammoth fossils. Yet its tragic tale might be more intriguing because there might be a resurrection from the tech graves into something close to its former glory.
It’s a captivating narrative in a society that loves comebacks and second chances as much as giddy schadenfreude.
Once upon a time, not even a decade ago, BlackBerry was the prime smartphone in the market. The phone was a well-built gadget known for its patented visible keyboard, with the ability to peer-to-peer message, fax and email. The device seemed to appear in the hands of seemingly every CEO and world leader; and that was part of RIM’s marketing: making influencers support its product. President Obama famously refused to give his BlackBerry up when he took office. At one point, RIM was valued at $55 billion. In 2007, it was the most valuable company on the Toronto Stock Exchange.
In those days, RIM was rapidly expanding beyond the business sector, as an article TechRadar explained:
Initially popular with the business community, by 2006 RIM was attracting major mass market attention. The 7100 “Charm” series marked a new focus on consumers and more features followed in the “Electron” and “Pearl” releases, including cameras, navigation, and chat features.
The sky was the limit for the “CrackBerry” (as it was dubbed). What could possibly go wrong?
Apple was what went wrong.
The release of the iPhone in 2007 was a watershed moment for mobile devices, and it quickly drowned the BlackBerry. It’s almost that simple. Since 2011, RIM has laid off 10,000 employees, more than half of its workforce. These days it only occupies three percent of the smartphone market.
What happened? Was Apple (and later Samsung and Google) that good? Was the public that fickle?
The answers have to do with, as always, faulty market research.
It’s all detailed in Losing the Signal, written by Jacquie McNish and Sean Silcoff. This new book explains several of the missteps the brass at RIM committed when the iPhone came into existence. Some of these erroneous assumptions included:
– That phone providers like AT&T would not be able to handle the network power the iPhone demanded.
– Consumers would eventually reject the iPhone because of its rapid battery drain.
– The iPhone would only resonate with those interested in YouTube, social media, and shallow web browsing—not true professionals.
– Blackberry offered better security and a more stable network.
Consumers shrugged these issues off. In the first three months of its release, a million iPhones were sold. Put simply, Apple understood that the Internet Age was shifting to a more epicurean state. Consumers were ready for style over functionality. Look-conscious millennials—tech savvy and vociferous over social media—carried as much influence as drab businesspeople. It was just time for the World Wide Web and all of its fruits to start looking good.
Thus, the public embraced the iPhone and later smartphones for really the reason one RIM executive admitted: “Beauty matters.”
In all fairness, RIM wasn’t the only who underestimated the iPhone. Nokia, Palm and other mobile phone giants dismissed Apple’s foray into mobile technology.
RIM (at the time the world’s largest smartphone maker) attempted to counter the iPhone with its own version of beauty. It resurrected an old prototype called Storm. Like the iPhone, Storm featured a glass screen. Unlike Apple’s phone, its screen was movable. Users could activate the phone’s digital keyboard by pressing the screen down, replicating the click and tactile pleasure that made BlackBerry’s physical keyboard so well-liked.
But RIM rushed the product, and that proved to be another terrible mistake. Storm wasn’t ready, but RIM was under tremendous pressure to answer Apple. The new smartphone was released late in 2008, with strong sales at first, but with so many flaws it flat-lined soon after. Adding insult to injury, RIM’s hallowed reputation of quality products took a hit, which later affected many of its other releases.
As one article explained:
The Storm was a watershed moment, not only hurting RIM financially but wrecking public opinion and its partnership with Verizon. The company then had no idea of which path it needed to take. “We’re grappling with who we are because we can’t be who we used to be anymore, which sucked…It’s not clear what the hell to do,” said one of the company’s former CEOs, Jim Balsille.
Apple owned the image of producing superior products (which it didn’t in the early days of the iPhone) and controlled the narrative of “style over functionality.”
That should have been the end of the BlackBerry, and the fossilizing of RIM.
But the story doesn’t end there.
RIM (now called BlackBerry Limited) went back to basics, just last year, to what worked for it in the beginning, and improved on it. As an article in Advertising Age explained:
The campaign, “Work Wide,” launched in September and cast BlackBerry as a serious business tool, offering security, mobility, and connectivity through the internet of things. In one video, which showed consumers using handheld devices to play games, competitive smartphones were portrayed as toys, not serious business tools. In the first week of the launch, BlackBerry sold over 200,000 Passport devices.
In an era of rising hacking and security threats, it seems consumers are ready to return to functionality. BlackBerry has capitalized on this for added success. As one analyst joked about the resurged popularity of BlackBerry smartphones: “Snowden takes over for Alicia Keys.”
In addition, BlackBerry is willing to make sensible risks, for there are hints it may adopt an Android platform on its new devices.
From losing $1.2 Billion a quarter, BlackBerry is now officially profitable. This doesn’t mean the company will ever truly play with Apple or the other smartphone giants, or even return to its former glory. Nevertheless, it is on the right track, unlike the other companies mentioned at the beginning of the article.
Besides, it should be mentioned that not too many years before the release of the first iPhone, many experts contended that Apple was already a mammoth fossil. The rest is a history of beauty.