How Microsoft, and not Apple killed Blackberry

So we can see on the news that Blackberry is on its last legs, management has hired a bunch of bankers to "explore its options" and odds are, Blackberry will no longer be an independent company in a few months.

When explaining blackberry's demise, people always point to the iPhone or Droid and say it was smartphones like these that destroyed Blackberry. In fact, the tech media seems to say that it was the transition to touch screen that killed blackberry (add in a few buzzwords like "synergy", "ecosystem", etc and you get a pretty interesting story). Blackberry will soon join the ranks of the vanquished, but while it was it was the iOS and Android armies that won the hard fought campaign, it was Microsoft's hidden coup that really disposed of Blackberry.

Interestingly, Apple and Google are the ones with the smoking gun in their hand, and when you see the bullet holes on Blackberry's corpse, you automatically assume Apple and Google were the killers. But, when you autopsy the corpse, you will find Microsoft's poison in Blackberry's veins, slowly crippling it to the point where Blackberry can no longer react.

I am a huge sabermetrics fan, I analyze people who smack balls with wooden sticks all day. When a ballplayer performs much worse this season than last season, the common reaction is, "look, he got worse!". But when we sit down and analyze a player's career performance, what we often find is that a lot of players who suddenly 'got worse' didn't really get worst, he just got lucky had a fluke season last season. He just figured out a trick that others didn't, and even when others caught on, he stuck to it until he can no longer compete.

Blackberry is best described as a bench player who, due to events out of his control, suddenly got better and became an all star. When the external situation changes, these players often regress back to their previous performance, and promptly implode due to the expectations and pressure levied on them.

Blackberry's success is better attributed to the incompetence of others, rather than their own success. This kind of fluke luck is simply impossible to sustain over long periods of time. Their success was completely built on their one core technology, and when their competitors caught up, Blackberry was a good as dead.

Blackberry was actually a relative latecomer to cellphones. They did not have a hundred year legacy in telecommunications like Ericsson had, They did not have a long history in radios like Motorola did. They were not around to create the standards like Nokia or Qualcomm. They did not have a long history in mobile computing like Apple or Palm, not did they have much experience in creating consumer electronics like Sony, Samsung, and LG. Blackberry (nee RIM) started off as a Pager company, and as pagers slowly died out, people thought that RIM would end up as a foot note in tech history, just like US Robotics and the modem industry.

Anybody can see Blackberry's pager roots when they played with the early Blackberry phones. Compared to other phones at the time, like the Nokia 3310, the early Blackberries didn't even look like phones. Many of us thought the (now) iconic Blackberry design was a one off thing, like the fish-taco, sidetalkin N-gage. We thought that RIM would soon come to their senses and release phones that looked like proper phones.

But alas, RIM released the right product at the right time. The Blackberry arrived just as the mobile industry was undergoing an unprecedented upheaval. Text based commincation (which at the time meant sms) was making headways into the mobile industry, and arguably, replacing voice communications in many cases.

Blackberry's first foray into the cellphone world changed the mobile world forever. Its success was built on two factors, the keyboard was really the best method of text input at the time, easily dwarfing the T9 system used by Nokia, and the handwriting recognition system used by Palm. The other major factor was push mail, a system that changed email forever.

So what is push mail? Remember how years ago we talked about "checking" our mail? Phones before the blackberry relied on "checking" mail, where you had to manually go check your email, or if it was a slightly more advanced device, the phone would pull in messages every X minutes and display them to you. The blackberry changed all that. Emails were sent to the phone as soon as the mail server got the mail, and you would get them instantly, with a ringtone to remind you. This completely changed email forever, as now, people will always "get" their email, even if they are away from their computer, and even if they forget to check.

Blackberry's "secret sauce" was its BES server. It was a server that took your email messages when they arrived on your mail server, and than "pushed" the email to your blackberry. BES was a revolutionary product for its time, and back in the day, every damned it department in the world was scurrying to install BES. BES was the secret sauce that power blackberry, it was what allowed blackberry to work, and slowly, when new features rolled out, they too, were tied to BES.

Not every user ran their own BES server. Big companies would have their IT department run BES servers, whereas for individuals, Blackberry partnered up with carriers, for them to run BES. This is why you need a "blackberry internet plan" to use a pre BB10 device. BES and BIS (blackberry internet service) was required to use email on a blackberry, and email was the main reason why people bought blackberries in the first place.

This is where Microsoft comes into the story. There is a popular perception that Microsoft only has like 3 people working on their mobile software. Hell, even the folk at Windows Phone Central cannot resist cracking this joke. Its true, Microsoft's mobile division is slow and arguably incompetent. But it wasn't really the mobile division that killed blackberry. It was microsoft's mighty Server and Tools division.

Before blackberries became cellphones, they were PDAs with mobile data and push mail. Obviously, as the creators of Windows Mobile, Microsoft felt threatened about Blackberry's PDAs. Unlike Palm, whose software only competed with Windows Mobile on quality, Blackberry had a "killer app". Push email was something that windows mobile devices just can't do.

Of course, Microsoft being, well Microsoft. They understood this threat and quickly threw a mountain of programmers to combat this new threat. (Notice that it was Microsoft's server division that was trying to combat blackberry, if it was up to Microsoft's mobile people, blackberry would have taken over the world).

The end result of this almost knee-jerk reaction was Exchange ActiveSync. ActiveSync 1.0 was a clumsy hack, it wasn't even proper "push" mail, your phone just "pulled" for messages more often! 2.0 was barely any better, sure it was "push" mail now, but it was achieved through the Exchange server SMSing your phone to tell it that you just got a new email!

Up until 2005-2006, Exchange ActiveSync was a "cheap knockoff" of the real thing, BES. Cellphone companies knew it, and instead of implementing ActiveSync, they simply paid off RIM for them to create a Blackberry Mail client for their phones, something that RIM was very glad to do. Nokia was one of the big licensees, and that was why the Nokia communicator line and their e-series was one of the few respectable competitors against blackberry from 2002 - 2006.

After plugging at it for a few years, Microsoft finally nailed down exchange. I mean, they are Microsoft after all, a giant in the server space. Microsoft was able to successfully create something that was "just as good" if not better than what blackberry had. Interestingly, Nokia had their own clone Ovi Mail (interestingly, Ovi means doors, a riff on the windows name?). Ovi mail is getting phased out, and did not have much long lasting effects, but for those few critical years, it helped Microsoft deliver the killing blow.

Now Exchange delivered push mail service that was just as good as BES. Exchange servers were already used in a lot of places as an email server to begin with. This allowed IT departments around the world to "cut out the middle man" so to speak, and simply rely on exchange alone, without the need for BES.

This development should have sounded alarm bells throughout RIM. But they ignored it. After all, people LIKED blackberry phones. Up until 7000 generation, blackberries were somewhat competitive with other devices, and they could have made up their deficiencies with that amazing keyboard.

Exchange ActiveSync "democratized" the smartphone. There used to be a time when if you wanted a phone that did email properly, you got a blackberry. Yet with Exchange, any phone can do email. Palm's Treo line, Samsung's blackjack line, HTC's Touch series and Nokia's symbians all became credible competition against the Blackberry with Exchange. Since Blackberry no longer has a "killer feature" they were forced to compete against others on design, features, or price.

It was the 8000 generation that blackberry truly lost their direction. You had 3 stupifyingly stupid choices, the 8300 with camera but not GPS or wifi, the 8800 with no camera but GPS, or the 8820 with no camera but wifi. Compared to the groundbreaking Nokia n95, blackberry's designs looked stupidly bad. For the prices they were charging, a blackberry should include everything, even like the kitchen sink. Yet RIM forced us to compromise between 3 of arguably the most important features on a phone.

And than came the iPhone. Sure, the iPhone didn't really get "good" untill the 3GS or the 4, but the iPhone represented a new breed of devices, devices that were easy and enjoyable to use. It was devices like the iPhone that captured the imaginations of the "casual" user, and mounted a threat against Blackberry in the mainstream.

Blackberry always lagged behind their competitors when it came to things like "design" and "software". They were the last major OEM to adopt features like color screens, mp3 playing capabilities, cellphone camera, and wifi. But before Exchange ActiveSync, it didn't really matter, Blackberry had push Email, and that single feature was enough to attract customers.

The fact that email was no longer the huge draw it was forced blackberry to actually deliver a bleeding edge phone, something that they have never done before.

They released the Blackberry Storm. The Storm disappointed everyone. The casual users didn't like it (iphone was easier to use), the feature lovers didn't like it (the phone lacked critical features like Wifi), the enterprise didn't like it (the clicky screen was actually horrible for fast typers), and the phone's poor stability and build quality made everyone hate the device.

In the few critical years of 2007-2009, it seems like Blackberry has lost its luster and mainstream appeal. But their sales were still going very strong, since after all, a BES server is a major investment, and when most of your company is satisfied with their blackberries, you might as well make the rest of them use blackberries too.

2010 was the turning point. Blackberry's mainstream appeal pretty much collapsed. People finally got sick of their poor design and software. A significant amount of people would rather prefer a different phone instead. Enough people would rather have a different phone an investment into the BES platform looked like a poor idea.

Now at this point, blackberry was in a poor condition, but in no way were they in a critical condition. They could have easily retreated from the mainstream and became a niche company. Hey, if Psion (of symbian fame) can do ok selling rugged windows mobile devices to niche users, and panasonic is doing fine selling toughbooks. Why can't blackberry do the same, just give up on the mainstream and take over the profitable niche of high security devices?

Their dependence on BES/BIS made it impossible for them to survive in a niche. Remember how if you wanted to use a blackberry, your carrier had to offer blackberry internet plans? And your mail server had to be hooked up to a BES server? Well it got to the point where it was no longer worth it to run a BES server. Which company would run BES when only 3 employees actually preferred blackberries while everyone else wanted something else? Hell, carriers even stopped offering blackberry plans, because demand was so low, it wasn't even worth offering.

So this is where blackberry truly screwed up. Their phones needed BES to run, but in order for companies and carriers to support blackberries, they need a significant marketshare. Blackberry was scrambling for mainstream acceptance, and they did so through selling really cheap phones (they lose money on the phone, but make with back with the blackberry internet plan), trying (and failing) to make their phones seem cool, and by releasing the playbook (hell, the tablet originally was worthless by itself, it was just a ploy to sell you more phones!).

RIM could not increase their market share no matter how hard they tried. With decreasing marketshare, you see carriers becoming less likely to offer blackberry plans, and companies less willing to deploy BES. This cycle continues, and RIM will see marketshare slowly slip away.

At the critical time in 2012, Blackberry should have realized that they are not going to retake the mainstream, and they should have focused on completely taking over the niche of secure communications. But than, the whole BES requirement really hindered blackberry's success in that niche. It has become impossible to use blackberries even for the people that actually wanted it, because carriers like China Mobile and Docomo stopped offering blackberry service.

Finally, with Blackberry 10 RIM smartened up and made BES and blackberry plans optional. They finally made Blackberry play well with Exchange. But by than, it was really too little, too late. People have moved on, and have become entrenched into other ecosystems.

It was Exchange that allowed other cellphones to credibly compete with the Blackberry, and it was Blackberry's failure to embrace exchange that doomed them. Sure, Apple, Google and Nokia pushed blackberry out of the mainstream, but they could have comfortably survived as a niche company. Now the company is in crisis, because their failure to embrace exchange earlier and make BES optional earlier, has seriously damaged Blackberry's odds of succeeding as even a niche company. Without exchange activesync, Apple and Google wouldn't even be able to credibly compete with Blackberry, and although iOS might have weakened blackberry, it was blackberry's failure to embrace Exchange that really killed them.