Editor's note: With the now-renamed BlackBerry back in the news for all the wrong reasons, from large layoffs to an investment deal that has a new CEO stepping in, now's a good time to revisit our take on the smartphone pioneer's rise and fall. Published in early 2012, this story covers the company's history right up to the launch of its latest, long-awaited operating system.
Research In Motion, whose BlackBerry phones pioneered wireless email, no longer holds the commanding heights in the smartphone market. With Android, iOS, and even Windows Phone gaining market share, the Waterloo, Ontario, company finds itself in a battle for relevancy. The past year has been especially hard on the once-innovative RIM, but it may be at a turning point. Or the beginning of the end.
Last April, Mike Lazaridis sat in a BBC studio, holding his company's future in his hands: a svelte seven-inch tablet, black, with the word "BlackBerry" emblazoned across its front. The PlayBook.
The company was Research In Motion, the Canadian firm whose BlackBerry virtually created the smartphone market. Success had come almost naturally to the company, until five years ago, when Apple released the first iPhone and upended RIM's long-held strategy of appealing primarily to email-addicted professionals. Apple expanded the market by building a smartphone not just for business people, but for the great mass of well-heeled, tech-hungry consumers. Apple's success opened the door for another large, deep-pocketed competitor: Google, with the acquisition and development of Android. The mobile landscape shifted dramatically — new players, new customers, and new alliances — and RIM made costly missteps scrambling to adjust.
Reckoning in Waterloo
Apple's iPad similarly re-defined the market for tablet computers, and then dominated it, a host of Android-powered competitors following in its wake. Apple had already released the iPad 2 by the time RIM offered its response, the tablet Lazaridis held in his hands. It represented a bold transition for the company, replacing its aging OS with one based on QNX, which it had acquired in 2010. With the declaration "amateur hour is over," it promised to bring enterprise-level functionality to what had previously been a consumer market. Apple had made the smartphone a consumer device; RIM decided it would make the tablet an enterprise device. That was the hope, anyway. Surrounded by a lackluster selection of new BlackBerrys and despite being hampered by delays, the PlayBook offered one glimmer of excitement in the company's portfolio.
So there was Mike Lazaridis, four years post-iPhone, sitting with BBC technology correspondent Rory Cellan-Jones for a quickie interview and product demo. Stout and gray-haired, glasses perched on his nose, and wearing a grey BlackBerry polo shirt, Lazaridis pitched the tablet as delivering "an uncompromised experience in enterprise." He continued in the same vein, gamely batting away questions about the iPad's dominance. Though not a terribly compelling presenter, Lazaridis delivered his bullet points competently, if somewhat disjointedly.
Then the interview turned.
"Please. You can't use that, Rory. That's just not fair."
"Can I move on to the problems you've had in terms of security," asked Cellan-Jones, "your various arguments with the Indian government and, uh, a number of governments in the Middle East. Is that anywhere near being sorted out?"
At the word "security," Lazaridis briefly furrowed his brow. He tilted his head and shifted in his chair. He blinked a half-dozen times, tightened and set his jaw, looked from the interviewer to the camera. As the question finished, he looked down and away. An off-screen voice said, "I'm sorry, Rory" as Lazaridis shook his head, saying, "That's just not fair, Rory."
As the off-screen PR voice asked if there was one more question, Lazaridis spoke up, his voice tight and deliberate. "‘Cause first of all, it's not a sec — we have no security problems. We've got the most secure platform — "
"Why's that not a fair question to ask?"
"Because you said — you implied that we have a security problem. We don't have a security problem," Lazaridis said.
"Well, you have an issue..."
Lazaridis again shook his head and looked down. "No, we don't." He blinked slowly and shrugged his shoulders. "We've just been singled out, because we're so successful around the world. It's an iconic product. It's used by business, it's used by leaders, it's used by celebrities, it's used by consumers, it's used by teenagers. I mean, we're just singled out," he said. "You know," he shrugged again, still grasping the Playbook with both hands, "just because of our success."
"Is that sorted out now? That issue is being dealt with?"
"We're dealing with a lot of issues. And I think that we're doing our best to deal with the kind of expectations that we're under," Lazaridis said.
"And you're confident that — we've got a lot of listeners and viewers in the Middle East and in India — you can confidently tell them that they're going to have no problems with being able to use their BlackBerrys, and you being able to give them assurance that everything is, uhm, secure?"
As the question concluded, Lazaridis looked down. At the word "secure" he glanced off-camera, shook his head, and said, "So, it's over. Interview's over." The PR voice said, "We're up on time." He looked back to his interviewer, still shaking his head. He looked down. "Please. You can't use that, Rory. That's just not fair." Again, quieter: "That's just not fair."
Then he looked up, his voice rising, "Sorry, it's not fair. We've dealt with this. Come on, this is a national security issue." He pointed to the camera and said, "Turn that off." Interview over.
Arguably, Lazaridis had a point, at least about the phrasing of the question. The interviewer wanted to ask about the Indian government's threat to shut down BlackBerry operations in the country unless RIM provided surveillance access to BlackBerry Messenger and email. The stand-off had become increasingly heated, and while Lazaridis may not have expected questions about it at what was ostensibly a product demo, the topic shouldn't have been out of bounds.
Timeline: The PlayBook
Early to Mid-2010: Despite a declaration by Mike Lazaridis that the market and use-case for a tablet is "a difficult one to judge," rumors circulate that the company has something in the works. In June, The Wall Street Journal reports that RIM is working on a tablet, "in the early stages of development," that could ship as early as the end of the year. In the months that follow, more details leak out, including a pair of possible names, "BlackPad" and "SurfBook."
Fall 2010: The company continues to tease details, including price and specs — under $500 and faster than the iPad. It offers a series of short demos, saying the now-named PlayBook will ship in the first quarter of 2011.
October 25, 2010: Alongside Adobe CTO Kevin Lynch at the Adobe MAX 2010 conference, Lazaridis shows off the PlayBook’s integration of AIR and its Flash capability. Lazaridis says, "We’re not trying to dumb down the internet for a small, mobile device. What we’re trying to do is bring up the performance and capability of the mobile device to the internet."
December 7, 2010: Lazaridis appears with Kara Swisher and Walt Mossberg to demo the PlayBook. Asked when the new OS will appear in phones, he demurs, citing the need for a multi-core chipset. Backstage, according to a source who was present, Lazaridis is confronted by Jonathan Rubinstein, former CEO of Palm, Inc. Rubinstein takes out his Palm Pre and compares its card-based multi-tasking to the PlayBook's. Lazaridis, according to this source, appeared embarrassed. HP’s webOS team went a step further in March 2011, with director of product marketing Jon Oakes seeing "some uncanny similarities" between its TouchPad UI and the BlackBerry Playbook.
February 2011: RIM announces upcoming connectivity options for the PlayBook, including Wi-Fi, LTE, HSPA, and WiMax varieties. Partnering with Sprint, the company says a WiMax PlayBook will be on sale by summer, with AT&T and Verizon models to come later in the year.
April 2011: The PlayBook goes on sale in the US and Canada; the company promises an email client within the next 60 days.
June 2011: RIM says it’s shipped 500,000 PlayBooks. Over the next two quarters, they will claim to ship 200,000 and 150,000, respectively. The company does not release sales numbers.
August 2011: Sprint cancels plans for a WiMax PlayBook. RIM says it will focus on LTE development, but AT&T and Verizon remain uncommitted; an LTE PlayBook has yet to ship.
October 2011: RIM demos Android apps running on the PlayBook; announces PlayBook OS 2.0 for February 2012.
November 2011: The PlayBook gets marked down to $199 for a "limited time," and later down to $99 for employees. Customers upgrading to Enterprise Server 5.0 can receive a free PlayBook. Later, the DingleBerry tool arrives, allowing users to root their devices.
December 2011: RIM takes a $485 million write-down of its existing PlayBook inventory, admitting it’s worth less than previously assumed. A truck in Indiana is stolen,along with the estimated 5,000 PlayBooks inside.
January 2012: The Wall Street Journal reports that RIM is hard at work on a PlayBook update, possibly a hardware revamp.
February 2012: RIM begins giving free PlayBooks to Android developers. On February 21st, the company releases PlayBook OS 2.0, including native email, calendar, and contact applications.
But asking about vaguely defined "security issues" struck at a fundamental attribute of the BlackBerry brand, comparable to asking Apple about "usability issues" or Microsoft about "ubiquity issues." Lazaridis reacted to the word "security" as though someone had questioned his life's work — making a secure, portable email device. He, the perfectionist, the born engineer, had done it, and at the questions he looked hurt, confused, and angry. A more restrained (or less invested) CEO would have redirected the question and filibustered with talking points; instead, Lazaridis walked out.
He, the perfectionist, the born engineer, had done it, and at the questions he looked hurt, confused, and angry
Regardless of whether he had a legitimate complaint, Lazaridis's failure to regain control of the interview made him look petulant. The video also fed a narrative gaining ground among the technology press, RIM shareholders, and even the company's employees. Research In Motion had lost its will (or worse, its capacity) for innovation, the story went; it was a provincial fiefdom reigned over by two out-of-touch CEOs, Lazaridis and his long-term partner, Jim Balsillie. They'd built something great once, and seen it succeed beyond anyone's wildest expectations. But they'd been caught flatfooted by change. Rather than admit they needed help, they dug in, making themselves oblivious to the new, undeniable realities. They had Founder's Syndrome: they were too close to the work, too enmeshed in an outdated paradigm, where smartphones were souped-up pagers rather than handheld computers. It was not a story that promised a happy ending.
In the months after Lazaridis halted the BBC interview, his company suffered a series of blows.
Reviews declared the PlayBook largely disappointing. Despite a solid hardware design, its software lacked the polish of its competitors — surprising given its long gestation. Even more astounding, it shipped without a calendar, contacts, or native email. A promised update would provide those functions, but for Research In Motion to ship a product without its signature feature — email — seemed unthinkable. In its defense, RIM claimed customers wanted a "free" way to link to their BlackBerrys. Balsillie told Bloomberg that complaints about the missing email client were "overplaying one aspect that really isn't a core element that we've seen from our enterprise customers or webmail people," and that users should "stay tuned" for updates. Still, initial sales proved underwhelming, with only late-year discounts of $300 spurring consumers; admitting a lack of demand, the company took a $485 million write-down on its PlayBook stock. In a final insult, the tablet promising RIM's robust security was rooted, thanks to a tool ignominiously named "Dingleberry." The hack allowed users to modify secure areas of the device — areas RIM had to lock down again, only to have to see them re-hacked. The cat-and-mouse had begun.
Coincident with the product woes, employee morale took a hit in July, when the company announced layoffs of 2,000 employees, 10.5 percent of the total workforce: a "cost optimization program." Hiring had been so fast and furious that the move returned RIM to roughly the size it'd been earlier in the year; the company noted that its rapid growth meant "the workforce had nearly quadrupled in the last five years alone." Not only were the layoffs an ominous sign, but digging deeper, it was obvious RIM had brought on thousands of new employees only to lay off an equal number months later. That didn't cast a positive light on its long-term strategies.
An executive exodus had begun as well. Chief marketing officer Keith Pardy had left in March. COO Don Morrison retired in July after a lengthy medical leave. (This left Thorsten Heins, one of two COOs, to take on more responsibilities and eventually become CEO.) Brian Wallace, who'd been vice president of digital marketing and media, went to Samsung Mobile. Ryan Bidan, senior product manager for the PlayBook, soon joined him there. Mike Kirkup, head of developer relations, left in August; Tyler Lessard, vice president for global alliances and developer relations, was gone by the next month.
Despite the floundering PlayBook, layoffs, and departing executives, the company could still point to rock-solid service. Until October, when BlackBerry servers suffered a four-day, worldwide outage. For the first two days, RIM's public response was virtual silence, as it left crisis management to the carriers. Outraged users took to Twitter, turning #DearBlackBerry into a trending topic. Only on the third day did Lazaridis offer a video apology. The outage, its cause never fully explained to customers, cost over $50 million in revenue. On the same earnings call it announced that number, RIM revealed that phones running its long-awaited BlackBerry 10 OS (the name grudgingly changed after the initially-announced "BBX" trademark turned out to belong to someone else) would not arrive until late 2012. And while the company claimed it was waiting for an upcoming chipset to power its "superphones," the recent delays and setbacks made it easy to speculate that the phones simply weren't ready. In December, Lazaridis and Balsillie cut their salaries to $1 "to further demonstrate our passion, alignment and commitment to RIM's long-term success."
By the end of 2011, RIM stock had lost nearly 75 percent of its value. It hit a seven-year low, even dipping below book value, or the total value of the company's assets. RIM, the market was saying, would be worth more sold for scrap – buildings, patents, unsold PlayBooks – than it was as a functioning company. Many shareholders demanded a change in management. The Canadian mutual-fund company Northwest & Ethical Investments wanted to split the co-CEO roles, and planned to take its proposal directly to investors, an obvious and embarrassing vote of no-confidence. In response, RIM appointed a committee to consider the question; it would issue a recommendation by the end of January 2012. Toronto's Jaguar Financial went even further, grabbing headlines with demands for a new board of directors willing to sell all or part of the company. The stock ticked upward briefly on rumors that suitors as various as Amazon, Microsoft (with partner Nokia), HTC, and Samsung had expressed interest. But none of the rumored interest translated into action; RIM, in fact, rebuffed an offer by Amazon.
Even good news could turn bad. As RIM's North American market share had declined, it still had strong positions worldwide. Jakarta, Indonesia, was the global launch of the BlackBerry Bold 9790 Bellagio. The event promised half-price phones to the first 1,000 customers, attracting an eager crowd. Unfortunately, when the phones sold out, the crowd stampeded, injuring several people. Jakarta police planned to charge several employees with negligence, though they haven't yet done so.
The Jakarta stampede was a PR black eye, but at least it showed someone wanted BlackBerry phones. The year's final bit of bad news proved nothing, but its outlandishness invited all manner of darkly metaphorical readings. Two drunken RIM executives boarded an Air Canada flight in Toronto, bound for Beijing. They became belligerent. Asked to calm down, they became defensive. Finally the flight crew subdued them physically, but safety precautions forced them to turn the plane around. As it descended, the two men succeeded at chewing through their restraints. They were arrested on the ground and charged with mischief, eventually receiving probation and paying $35,382 each in restitution.
How did it come to this? How did Research In Motion — once one of the most respected, innovative tech companies in the world, the company that virtually invented the smartphone — become the embattled underdog? And what, if anything, can turn its fortunes around?
OUTRAGED USERS TOOK TO TWITTER, TURNING #DEARBLACKBERRY INTO A TRENDING TOPIC
Present at the Creation
"The kiss of death is when you allow marketing to dumb down innovation."
Mike Lazaridis still thinks of his company as an upstart, a small Canadian firm taking on the established players. Its unassuming offices are scattered only a few blocks from the University of Waterloo, his alma mater, to which he's donated $123 million to support science and math. He'd come there in 1979, a blue-collar boy from Windsor, Ontario, his mother a seamstress and journalist, his father running a retail store. When he began studying for an electrical engineering degree, he sold the $600 quiz-show buzzers he'd designed in high school to help pay his tuition.
University was a heady time for Laziridis, providing him the resources for engineering projects he dreamed of since he was young. As a four year-old he'd turned a pile of LEGO bricks into a model phonograph; by eight he'd built a pendulum clock that kept actual time. He absorbed knowledge, especially when it came to physics and electronics. Science fiction, which he read voraciously, provided continual inspiration, as did Star Trek, starring fellow Canuck William Shatner. The show's wireless communicators especially stuck with him, and his high school shop teacher, Mr. Micsinszki, had warned him, "Be careful not to get too involved in computers. In the future, electronics, computers, and wireless are all going to combine, and that's going to be the next big thing."
In UW's well-regarded engineering department he found kindred spirits and an environment in which he'd thrive, where academic learning combined with practical co-op training. When he enrolled, much of the department's excitement centered on the burgeoning computer industry. A young company named Microsoft had begun to hire away Waterloo's promising students, but mainframe computing still largely defined the industry. A well-known supercomputing company, Control Data Corporation (CDC), became Lazaridis's first co-op, where he studied automatic data detection and correction.
There he developed a business philosophy that became RIM's defining ethos, foreshadowing both its meteoric rise and later difficulties. A number of Japanese competitors had emerged to challenge CDC, putting the company on the defensive. By trying to chase customers, as Lazaridis saw it, the marketing department had hamstrung its engineers. Rather than doing cutting-edge work, those best and brightest had to simplify their products for the perceived needs of consumers. The frustrated engineers soon began decamping for the sunnier prospects of Silicon Valley, further dulling CDC's competitive edge. It was a mistake Lazaridis told himself he'd never make: his company would nurture engineers, giving them the time and space in which to build the future. "The kiss of death," he later said, "is when you allow marketing to dumb down innovations."
All through university he worked on his own innovations. In high school he'd gotten into wireless communications, using ham radio to broadcast text to televisions. At UW he refined his work, and by 1984, his final year, he'd developed a similar system. He'd engineered his way into a business opportunity. As he imagined it, retailers could use his wireless, programmable displays to replace printed advertising. Though he admitted having almost no business experience, his economics professor convinced him of the idea's viability. With his childhood friend and fellow engineer Doug Fregin, he decided to take the risk. The 23-year-old Lazaridis had his company; after running through a few names, he dubbed it Research In Motion.
The early days were that of a typical startup: a cramped office on the top floor of a strip mall, late nights of building and coding, and days spent scrambling for every contract within reach. They had modest success, enough to keep the lights on, but no real breakout product. An early $600,000 deal with GM augured a bright future. But the LED signs RIM developed fared poorly, shipping fewer than 100 units. The company sold its rights in order to earn some income, then moved on to other projects.
One such project was the DigiSync Film Barcode Reader, which eased the pain film editors and negative cutters felt dealing with time and frame calculations. It came out in 1990, and by 1994 it had garnered an Emmy Award, followed four years later by an Academy Award for technical achievement. Lazaridis accepted the award (alas, not an Oscar statuette) from Anne Heche.
The accolades were nice, but the DigiSync ran parallel to Lazaridis's deeper interests. For him, and thus for RIM, it all came back to wireless data. In the late 1980's he began working with Mobitex, an emerging wireless network technology designed by Ericsson. Cantel, the Canadian wireless company owned by Ted Rogers, had begun building out a Mobitext network, though with only a vague sense of the potential market. It would be North America's first public wireless datacom network, and its idea was groundbreaking — even if the appeal for customers remained cloudy.
Cantel hired Lazaridis and RIM to consult on the project, developing Mobitex-compatible modems and, later, a programming toolkit. Sadly, when Cantel's network launched in 1990, it bombed. Impressive as it was, few even within the industry could fathom how they'd use it. The email era hadn't yet dawned (let alone wireless email), nor had the idea of two-way paging. Cantel scaled back its investment, moving employees to other projects.
That same year, RAM Mobile Data (with later became Bell South Mobile) began building its own Mobitex system. It hired RIM. The company thus got more experience with the network, and Lazaridis began thinking about better uses for it. Balsillie later called it "RIM's sandbox." For the next decade it developed modems, point-of-sale systems, and other components for the network.
In late 1990, RAM Mobile Data wanted a two-way pager. The pager had been around for over 30 years, in one form or another, but had always been a one-way device. With Mobitex deployed, there was now a way to change that. RIM began work on the pager, but already Lazaridis was looking ahead to the next idea: a wireless PDA.
Two important elements helped make RIM successful in the 1990s. The first was Lazaridis's relentless pursuit of innovation in wireless data communications. Where other, larger companies had tried and failed (or, more often, been blind to opportunities), he saw possibilities. He and his engineers then worked like mad to realize them.
The second was the hiring of Jim Balsillie in 1992. Balsillie, the self-declared "quant jock" with a Harvard MBA, gave RIM a new business-savvy. Before he arrived, the company had excelled at engineering, but its lack of experience navigating the high-stakes world of contracts and partnerships made it seem rudderless. Balsillie brought discipline, and he knew his role: keeping the coffers full so Lazaridis had the freedom to innovate. Or, as he put it later, "My job is to raise money, Mike's is to spend it." Some of that money was Balsillie's own; he'd gone all-in, taking a 60 percent pay cut, mortgaging his house, and putting $250,000 of his life savings into company stock.
Balsillie, the self-declared "quant jock" with a Harvard MBA, gave RIM a new business-savvy
By the time Balsillie came onboard, RIM was fully dedicated to wireless. It pushed forward with the two-way pager design even as Lazaridis had moved past it, to envisioning a wireless PDA. In July 1992, Apple's John Sculley, the CEO who ousted Steve Jobs, gave a CES keynote on the theme of digital convergence. He coined the term "personal digital assistants" to describe the small, handheld computers he believed would become commonplace. He offered the now-famous Knowledge Navigator video as Apple's vision for the future. By 2011, this "very sophisticated PDA" would be connected to all the world's knowledge; it would respond to voice commands much like Siri. That was the dream, but Sculley had more concrete ideas in mind, too. Though he never mentioned it by name, he'd previewed the Newton platform that debuted soon after.
Lazaridis accepted the Academy Award, alas, not an Oscar statuette, from Anne Heche
1984: RIM founded.
1985: First contract: $600,000 from General Motors for networked displays.
1987: Lazaridis sees wireless data technology, decides on company’s future.
1988: Ted Rogers licenses Mobitex, first nation-wide public wireless data technology in North America.
1989: Lazaridis begins consulting on Mobitex technology.
1990: RIM introduces its DigiSync Film KeyKode Reader.
1992: Balsillie joins the company; sales revenue exceeds $1 million.
1994: RIM introduces the first wireless point of sale terminal, using Mobitex.
1996: The Inter@ctive Pager, the first two-way messaging pager, debuts.
1998: The RIM 950 Wireless Handheld debuts, later known as the BlackBerry.
1999: BlackBerry 850 Wireless Handheld PDA launches.
2001: NTP patent lawsuit begins.
2002: Judge rules in favor of NTP, declares RIM responsible for damages of $23.1 million.
2003: Court injunction bans BlackBerry sales in US; ruling stayed pending RIM’s legal appeal.
2004: BlackBerry has over 2 million subscribers. Appeals court upholds infringement ruling.
2005: BlackBerry subscribers pass 4 million. Patent lawsuit denied hearing by US Supreme Court.
2006: RIM and NTP settle patent lawsuit for $612.5 million. BlackBerry has over 5 million subscribers.
2007: Securities regulators investigate stock option grants. Apple debuts iPhone. BlackBerry subscribers pass 12 million.
2008: Bold, Pearl Flip, and Storm phones launch. RIM and Motorola embroiled in patent dispute.
2009: BlackBerry App World launches. Subscriber base reaches 36 million.
2010: PlayBook unveiled. Subscriber base reaches 55 million.
2011: PlayBook debuts to mixed reviews. Subscribers reach 75 million. Worldwide service outage in October.
2012: Lazaridis and Balsillie step down as CEOs, appointing Thorsten Heins sole Chief Executive Officer.
Lazaridis was unimpressed. The whole point of a PDA, he believed, was constant connectivity. The Newton required syncing with another computer, making it more a peripheral than a stand-alone device. To its credit, Apple saw the Newton as just a starting point; Sculley and his engineers conceived of it as a platform that would, in time, integrate wireless connectivity.
But like most of the other big hitters working on PDA tech — a list that included Motorola, Bell South, AT&T, and Palm — Apple didn't believe the wireless version was feasible. At least not yet. "From a conceptual point of view, John [Sculley] was absolutely right," former Newton Systems Group chief Gaston Bastiens told PenComputing in 1998. "The infrastructure for two-way wireless at the time was not there; we all knew it was a couple of years away, but it was always part of our platform strategy." The company spent five years and $100 million on the Newton, before Steve Jobs returned and killed it.
Where skeptics of the day, including Intel chairman Andy Grove, saw technical impossibilities, Lazaridis saw an engineering challenge. If current electronics devoured too much power for the batteries of the day, well, he'd optimize them. He believed he could make wireless work, and take it farther than anyone else.
The ampersat in Inter@ctive Pager only hinted at what they considered the device's killer feature, email
So his company went forward with the Mobitex products. In fall 1996, it unveiled the RIM 900 Inter@ctive Pager, a pocket-sized clamshell device with a diminutive keyboard. It cost $675, but along with the two-way paging, it provided peer-to-peer messaging (complete with delivery and read receipts), the ability to send faxes and text-to-speech messages, and an Internet gateway for email. It was glitchy and a little too heavy, not exactly a stunning success for the company, but it showed what could be done. RIM went forward with its successor, the 950.
Lazaridis had recently hit on the idea of a thumb-typing keyboard, and the patented concept got worked into the 950. That meant faster typing, but another advance proved even more important: always-on email. With wireless connectivity and a superior keyboard, it was the first device that could replace a PC or laptop. And it could go three weeks on a single AA battery, quieting the power-problem skeptics. The rave reviews earned RIM lucrative contracts with, among others, Bell South, IBM, and Panasonic.
But the legions of new fans were using it in the old way: like a pager. Given the name, this was understandable, but Lazaridis and his engineers knew it was more than that. The ampersat in Inter@ctive Pager only hinted at what they considered the device's killer feature, email. In a rare moment of going to the market, rather than waiting for it to come to him, Lazaridis realized the problem. They had the technology. And they were used to talking to people who understood its intricacies, who worked with it every day: engineers and IT heads. But to really take off, their work had to go beyond that community. It needed to be understandable to consumers. In short, it needed marketing.
RIM brought in Lexicon Branding, the marketing shop behind the Apple PowerBook and Intel Pentium brands. Lexicon set out to establish a unique brand, one that would replace the blandly descriptive 950 Inter@ctive Pager with something more dynamic. Pagers were a dime a dozen; this was something different. What was different about it? The keyboard. The keyboard made it more than a pager: it made it a true, professional messaging device. How to draw attention to the keyboard and everything it symbolized?
It kind of looks like a strawberry. The buttons are like little seeds.
No, not strawberry. Straw is a slow syllable, explained Lexicon's resident linguist. This is fast, zippy. "Berry" is good, but we need a different prefix.
Even the skeptical Lazaridis loved the name. In January 1999, RIM launched its BlackBerry wireless email service across North America, operating on the Mobitex networks run by its partners, Rogers Cantel and BellSouth. It offered a handheld device with a suite of PDA functions (calendar, address book, task list), and encrypted email that synchronized with your existing address. It integrated with company networks, making it easy for IT departments to implement.
And it was a hit from the very beginning. Balsillie knew he could hook anyone who tried the service, so he flooded Wall Street and Capitol Hill with BlackBerry devices. That got the professionals, the lawyers and politicians and journalists. He went after early adopters, too, providing tech conferences with free units. Seen in the hands of the powerful and influential, it became not just an email reader, but a status symbol. It signaled the user's importance, as did the viral-friendly tagline: Sent via BlackBerry. Soon everyone from Oprah to Madonna would be confessing their devotion to the BlackBerry.
BlackBerry became a massive revenue stream. RIM earned huge margins on the hardware (35 percent-plus) and the service it provided the telcos (65 percent-plus); RIM's sales increased 80 percent, to $85 million, in the BlackBerry's first year. The next year, sales went up another 160 percent, hitting $221 million. Users numbered 164,000 in North America alone, and all of them were paying. The original BlackBerry relay server, located under a software developer's desk, soon became a warehouse-sized server farm.
In 1999, the company went public, raising $255 million. A second offering in November 2000 netted another $900 million. RIM was an analyst darling as Balsillie set about conquering as many markets as possible. Rapid growth wasn't a fluke; it was a plan.
There were few setbacks along the way. The carrier partners who sold its BlackBerrys to consumers often had trouble selling the high-end devices fast enough. Used to selling direct, RIM suddenly had less influence over its revenue stream. That in part led to "The 10% Purge" of 2002, when the company cut staff and expenses in an effort to refocus.
And there was the patent lawsuit. In 2000, a Virginia patent holding company named NTP contacted RIM offering to license certain patents, including those related to a wireless email system. NTP believed it owned the intellectual property underlying the BlackBerry products, and when Lazaridis's company didn't respond, it filed suit.
RIM was no stranger to patent suits, as both a plaintiff and a defendant. It considered NTP's filing a nuisance, another example of patent trolling by a non-practicing company. (Ironically, NTP's legal action had begun partly because of RIM's own lawsuit against Glenayre Electronics over a patent on integrated electronic mailboxes.) It responded with a press release declaring the complaint "unsubstantiated," and that "the only documentation accompanying the letter was a collection of seemingly random marketing materials printed from RIM's web site."
When the case went to trial — surprising for patent litigation — RIM argued that NTP's patents should be declared invalid due to prior art. The lawyers demonstrated a working wireless email technology from 1988. However, after studying the software, NTP's lawyers claimed it was actually from 1993. Feeling he'd been duped, the judge reprimanded RIM's attorneys. He then ruled against the company: the final verdict was "willful" infringement, with $23 million in damages. Research In Motion vowed to appeal.
When phone systems failed in New York and DC on 9/11, it was RIM's network that provided backup communication
The appeals process dragged on for five years, becoming a sinkhole of money and attention for RIM. The price to settle kept growing. Worse was the possibility of an injunction that would shut down BlackBerry service in the US. Finally, in 2006, the two companies reached an agreement that netted NTP $612.5 million.
Throughout the legal wrangling, BlackBerry had only grown larger in the public mind. It was synonymous with constant connectivity, and with the "CrackBerry" addiction. It was still the sign of the well-connected and ambitious. And when phone systems failed in New York and DC on 9/11, it was the BlackBerry network that provided backup communication. That earned the company powerful friends: during the NTP suit, the US Department of Justice voiced its opposition to a network shutdown.
Meanwhile, the devices had changed slowly, incrementally, just as Lazaridis wanted. (Balsillie called it "managed evolutions.") He and his team had already cracked the hardest engineering problems; successive phones offered refinements and improvements. This iterative process let the company respond to carrier demands for distinguishing features, even minor ones. And a slow development process gave customers a feeling of familiarity: they weren't being bombarded with new and confusing features. The strategy was simple: keep the current users happy, and let the BlackBerry name do the rest. It had cachet a marketer couldn't even hope to buy.
Rapid growth wasn't a fluke; it was a plan
A new competitor waited on the horizon, one that would redefine the smartphone industry
That approach earned RIM nine million subscribers by mid-2007, adding another million every three months, and partnering with 300 carriers in 120 countries. It was worth $42 billion, coming off a quarter in which its sales had increased 76 percent, topping $1 billion. And the market for corporate email would only grow.
The previous fall, RIM had begun to target consumers. But Lazaridis believed consumers would come to RIM; there was no need for a radical redesign. That philosophy led to the Pearl, the first BlackBerry with a camera and media player. Though many smartphones — from Motorola, Palm, and Samsung — had better cameras and media playback, RIM wanted to increase its appeal without alienating its base. The Pearl was a "prosumer" smartphone: BlackBerry's professional communications capabilities alongside basic multimedia. It launched well, and RIM delivered a steady stream of new versions.
As RIM made its first tentative appeals to consumers, a new competitor waited on the horizon, one that would redefine the smartphone industry.
On January 9, 2007, with his customary dramatic flair, Steve Jobs introduced the iPhone by saying, "every once in a while, a revolutionary product comes along that changes everything." He sprinkled his demo with words like "magic" and "cool," but also lamented the current crop of smartphones, for everything from needless complexity to mobile web browsing: "Boy, it's bad out there."
He lined up four current smartphones, Motorola's Moto Q, a Palm Treo, the Nokia E62, and BlackBerry's Pearl. The problem with them, he said, is in the bottom 40; the screen cut to show their keyboards. "They all have these keyboards that are there whether you need them or not. They all have these control buttons that are fixed in plastic and are the same for every application," he said, "What we're gonna do is get rid of all these buttons, and just make a giant screen." Apple had turned the keyboard into a piece of software.
Jobs declared the iPhone software five years ahead of its time. Indeed, one apocryphal story describes an all-hands meeting, days after the Jobs keynote, where RIM executives deemed the "Jesus phone" technically impossible. True or not, it fits with Lazaridis's contrasting focus on hardware. He didn't dispute the elegance of iOS; Lazaridis had long respected Apple's design acumen. But, he said,"Not everyone can type on a piece of glass. Every laptop and virtually every other phone has a tactile keyboard. I think our design gives us an advantage." Superior hardware would win out, he believed.
Publicly, RIM displayed a cavalier attitude toward the iPhone, dismissing it as another in a long line of supposed BlackBerry killers. Balsillie said, "It's kind of one more entrant into an already very busy space with lots of choice for consumers … But in terms of a sort of a sea-change for BlackBerry, I would think that's overstating it." Meanwhile, it began engineering a response.
RIM was a victim of its own success: It couldn't simply abandon its customer base, nor could it easily update its aging operating system
Apple, having dropped the "Computer" from its name the same day it released the iPhone, plotted a different trajectory. If RIM wanted to focus on business users, but let consumers ride along, Apple would woo those same consumers with easy-to-use, visually appealing hardware and software — and later, almost inevitably, it would move its way into the business world. A strong web browser and growing app ecosystem left Apple better prepared for always-connected consumers who wanted more than just email.
The differences went deeper than just strategy. Apple was at its core a consumer electronics company headed by a non-engineer; RIM a wireless technology company founded by an electrical engineer. Lazaridis believed in quantification, in the rational world of numbers and formulae. "One of the things that we've really internalized here at RIM," he often explained, "is the belief in the numbers, belief in mathematics, belief in the limits imposed by physics, and the general understanding of physics. If you don't understand the limitations you can't design something that works well within those limitations."
So in thinking about smartphone design, Lazaridis and his company thought about limits. There was the size limit: the phone had to be small enough to be portable, but large enough to be usable. There was the battery life limit: a dead device is a useless device. And finally, there was the bandwidth limit: Lazaridis believed in conserving bandwidth to enable networks to scale. Too many bandwidth-hogging devices would bog down the network — as AT&T came to realize as the iPhone grew in popularity.
RIM designed its phones within limits, and its conservative designs had their appeal. Size and battery life appealed to road warrior professionals using the devices; low bandwidth usage appealed to the people who managed the devices, and to the telecom carriers. Apple ignored RIM's self-imposed limitations, producing an iPhone with less than stellar battery life that (eventually) gobbled up bandwidth. Network utilization was the carriers' problem, not Apple's, and it bet customers would tolerate a short battery life because the phone could do so much.
"Right now we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year."
In retrospect, Apple's strategy seems obvious, and obviously winning. But Steve Ballmer epitomized the prevailing wisdom among many competitors when he exclaimed,
$500? Fully subsidized? With a plan? That is the most expensive phone in the world, and it doesn't appeal to business customers because it doesn't have a keyboard, which makes it not a very good email machine. It may sell very well or not… Right now we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year. In six months they'll have the most expensive phone by far, ever, in the marketplace. Let's see how the competition goes.
And indeed it went.
Even today, though, the consumer-centric model hasn't worked everywhere, as it imagines a particular kind of consumer. The iPhone and Google's Android (which used a similar approach) may dominate in North America, where RIM's market share has dropped precipitously. But even while RIM has started to lose some business and government customers — see Halliburton switching to iPhones, the National Oceanic and Atmospheric Administration moving to iOS, and the US Army field-testing Android — the company has 75 million worldwide subscribers. It touts high growth in France, South Africa, Mexico and Argentina, Indonesia, Saudi Arabia and South Africa, with 61% of its revenue coming from outside the US, UK, and Canada. Over half its hardware growth comes from outside the US. Balsillie's early efforts to spread the BlackBerry far and wide have earned RIM a strong position among heavy texters worldwide, with BBM as a selling point. In countries where carriers don't subsidize phones, price becomes an important factor, as can network usage, depending on how customers are charged. In a way, today's RIM has begun to look like yesterday's Nokia: a worldwide brand with little traction in the US.
But what happened post-iPhone? It's fair to say the iPhone blindsided RIM — as it did Nokia, Palm, and Microsoft, to name just a few. Those companies reacted by retooling their operating systems; Android, still in embryonic form, received a similar revamp. Such radical strategic shifts were necessary to remain competitive, but none of those companies had a strong business investment in their older operating systems. They either had little market share (Palm, Microsoft) or had a potential successor OS in the works (Nokia, moving from Symbian to Maemo).
It's fair to say the iPhone blindsided RIM — as it did Nokia, Palm, and Microsoft
RIM didn't have those options. It couldn't easily update its aging operating system, but switching to a new OS could mean losing customers — and it would likely take years. And why undertake such a project unless absolutely necessary? There wasn't an immediately obvious business case for changing direction. The iPhone hadn't become a BlackBerry killer. As the first iteration gave way to the iPhone 3G, BlackBerry sales hadn't suffered. In fact, they'd increased. New smartphone users lured by Apple's hype could find reasons to choose either: the more-expensive iPhone had better multimedia features and an elegant interface, but the BlackBerry was cheaper, with a physical keyboard and excellent messaging features. Apple had helped expand the market, accelerating smartphone adoption. Balsillie had predicted as much with customary glibness on the eve of the iPhone's launch. "I've said before they did us a great favour because they drove attention to the converged appliance space," he told analysts. "The attention to it has quite frankly been overwhelmingly positive for our business."
Critics of the company consider that a rose-colored view, and one that RIM took far too long to shake. Balsillie even joked in 2008, "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." That metaphor assumes gravity is the only challenge, and that no one else is aiming for the moon. Between 2006-2009, as the iPhone gained market share, Balsillie made three separate bids for professional hockey teams: first the Pittsburgh Penguins, then the Nashville Predators, and finally the Phoenix Coyotes. All the bids failed; in the case of the Coyotes, the bid went to court. In Balsillie's hockey dealings — coming at a crucial time for the company — critics see a lack of urgency. The iPhone had changed things, and RIM was too slow to respond.
The company's first true response to the iPhone was the BlackBerry Bold 9000. It launched in the US in November 2008; software issues and revisions for compatibility with AT&T's 3G network delayed the launch, originally announced for summer. The Bold garnered positive reviews for its brilliant screen and new, smoother fonts; web browsing, however, still disappointed. The BlackBerry Storm was the first keyboardless, touchscreen BlackBerry, and received decidedly mixed reviews. While delivering the expected email excellence, it lacked Wi-Fi and suffered from glitchy, slow software.
BlackBerry no longer stood for "cutting edge"
Research In Motion remained competitive: it had a respectable market share and in 2009 was named the fastest growing company in the world by Fortune magazine. But it was yoked to an aging OS that had to be compatible with a wide variety of handsets. Apple made one phone, with one OS. Android, too, had a touchscreen-native interface that visually outclassed the BlackBerry's, and it could be adapted to many phones.
In 2010, RIM began to transition away from the BlackBerry OS. Having already bought several other software firms, that year it acquired Canadian firm QNX Software Systems for its OS and Swedish designers The Astonishing Tribe to work on the user interface. The acquisitions would enable RIM's next-generation operation system, which would power tablets and the long-promised "superphones" on which the company continued to work.
It needed to happen. RIM had begun to lose market share — worse, in the long term, it had begun to lose brand cachet. BlackBerry was increasingly seen as an also-ran, not a leader in its class, and it couldn't remain competitive without compelling software. But was new software enough? And was it already too late?
"We are no longer a company that is innovative and energetic, we are drowning in paperwork."
By many accounts, the problems at RIM go deeper than just outdated software. Things reached a crisis point in 2011, which could be known as "The Year of the Open Letter." In July, just before the company announced its layoffs, BGR published a letter attributed to a "high-level RIM executive." It described the "transition" as "chaotic," with the workforce feeling "demotivated" by a lack of leadership. The author portrayed him or herself as a frustrated company loyalist needing to tell some hard truths.
"We missed not boldly reacting to the threat of iPhone when we saw it in January over four years ago," the letter read. "We laughed and said they are trying to put a computer on a phone, that it won't work. We should have made the QNX-like transition then. We are now 3-4 years too late. That is the painful truth… it was a major strategic oversight and we know who is responsible."
Delaying the transition had made RIM's position even more difficult. Not only would it be developing an entirely new operating system, eventually dubbed BlackBerry 10, but in the meantime it would maintain the previous version, BlackBerry 7. Any BlackBerry fan considering an upgrade would have to choose between buying an already obsolete device or waiting for the much-delayed BB10. It's a situation so common that business schools have a name for it: the Osborne Effect. When you announce great new products before they're ready, you may excite your customers. But you also give them reason to hold off buying, which can have a serious effect on sales. RIM hoped to use BB7 as a stop-gap, but the company says 80 to 90 percent of its US users don't run it — there's little reason to buy a new phone for a dead-end OS, and loyal fans may be waiting for BB10.
If customers were unenthusiastic about buying a dead-end OS, it's not surprising that employees didn't want to work on one. Yet according to Maclean's, the company split off its BB10 development group, hoping to give it the feel of a cohesive, passionate startup within the larger company. Similar compartmentalizing had worked at other companies, including Apple, but in this case it proved a predictable disaster. Those not working on BB10 recognized their work on legacy code would soon be obsolete. It created competition between haves and have-nots precisely when the company needed a unified effort, leading to employee protests and declining morale.
Alastair Sweeny knows how bad morale has gotten at RIM. He's the author of BlackBerry Planet: The Story of Research In Motion and the Little Device that Took the World by Storm, from which much of this history draws. Dysfunction is not new: that four-fold increase in its workforce that the company likes to brag about has meant an increase in bureaucracy, politicking, and what Sweeny calls a population of "time servers." He says, "It's like the Soviet Union. Everyone's pretending to work." Sweeny compares it to another brand-named tech firm with a reputation, deserved or not, for hidebound bureaucracy: Microsoft. RIM, he says, has lost the fire of a startup (despite heavy-handed efforts to recapture it), but without developing into a mature company. One anonymous employee agreed, telling BGR, "We are no longer a company that is innovative and energetic, we are drowning in paperwork."
A company at the top of its game can suffer some "time servers," but in times of adversity it's often the more confident, agile workers who go elsewhere. RIM's both seen an exodus of talent and had difficulty bringing in new recruits. If you're a bright, promising engineer, why stay in Waterloo, Ontario, when you can move to Silicon Valley and work for Facebook or Twitter? Last year's layoffs appeared designed only to reduce headcount, not to cull the well-insulated "time servers." Instead, many talented employees chose to leave — or were shown the door.
"It's like the Soviet Union. Everybody's pretending to work."
Jamie Murai was a student the University of Waterloo who had considered working with RIM. Not as an employee, but as a developer. Having written apps for iOS, he thought he'd try doing so on the PlayBook. He found the process so cumbersome that he posted a blog entry, "You Win, RIM! (An Open Letter To RIM's Developer Relations)." It went viral, getting 33,000 hits on the first day, he says. Soon after, Tyler Lessard, then the VP for developer relations, met him for coffee.
Much of what he'd written about, Murai says, Lessard already knew. The shortcomings in RIM's developer platform had long frustrated his team. "When they got all this bad press from my letter," Murai says, "all of a sudden their bosses were saying, 'Ok, you have the resources now get it fixed.' So it seems it was kind of a catalyst to get some things changed."
Rather than work on PlayBook software, Murai founded his own company, Maide, and moved to iOS apps. Tyler Lessard left RIM, but the company's new VP of developer relations, Alec Saunders, sees a bright future for developers. He told The Verge that, "For the first time, the company has an evangelism team." If Saunders is any indication, RIM now understands itself as a platform company competing with Apple. It's targeted Android developers especially, offering a tool to convert their apps, as well as free PlayBooks. Saunders often cites RIM data showing that the BB App World serves over six million downloads a day, generating 40 percent more revenue for developers than the Android Market. Where once the company's focus fell mainly on hardware, building an app ecosystem means strong attention to software. It also means recruitment: turning developers themselves into evangelists.
Persuasion offers its own challenges: two app ecosystems already compete for developer attention and resources. Given RIM's market and mindshare, Saunders understands the task before him. "Yeah, we're going through a transition, and every business, especially a platform business, goes through this," Saunders says, "My challenge, when you pick up a BB10 handset, is to make sure you don't say, 'Where are the apps?'"
Irish developer Steven Troughton-Smith attended a demonstration of the PlayBook 2.0 OS at this year's BlackBerry DevCon Europe. He left impressed at the interface, and eager to see BB10 shipping on phones. "If they can get everything to the level of the demos they showed today," he says, "then it could be a very interesting operating system. And with luck people will flock to it as upgrading Blackberrys; they can see these devices are just as graphical and awesome as an iPhone or Android phone or Windows Phone." He's already ported apps from Android to the PlayBook, and found the developer framework compelling. "If they can continue to make quality stuff and if BlackBerry 10 actually ships," he says, "I don't see any reason why I wouldn't release apps for it. I mean if it's good enough."
Timeline: BlackBerry 10
April 2010: RIM announces it will acquire QNX Software Systems from Harmon International. Company press releases focus on in-car displays and embedded devices; no mention is made of a new BlackBerry OS.
August 2010: Bloomberg reports the upcoming BlackBerry tablet will sport a QNX-built OS, offering a fresh code base and separating it from BlackBerry 6.
December 2010: RIM buys Swedish UI designers The Astonishing Tribe.
May 2011: At its annual BlackBerry World conference, RIM announces BlackBerry 7. It is not compatible with older devices, nor does it incorporate the new work of the PlayBook OS.
August 2011: Bloomberg reports that the next-gen phones will support Android apps when they debut in "early" 2012. Rumors circulate about a BlackBerry device codenamed "Colt," intended to debut in the first quarter of 2012.
October 2011: RIM announces BBX, its next generation, QNX-based OS. "It'll be for phones, it'll be for tablets, and it'll be for embedded devices," says QNX founder Dan Dodge. The "whole company is aligning behind a single platform and a single vision."
November 2011: The company says its new phones will have the same resolution and aspect ratio as the PlayBook, making for easier development across devices. Todd Wood, RIM’s senior vice president of Industrial Design, tells Pocket-Lint the new phones will be "charming, whimsical and fun." Photos surface of a purported BBX device, the BlackBerry "London."
December 2011: Reacting to a trademark battle started in October, RIM changes the name of its upcoming operating system from BBX to BlackBerry 10. It also announces that, needing a "highly integrated dual-core LTE platform" that’s not yet available, BlackBerry 10 devices won’t launch until "the latter part of calendar 2012."
January 2012: News breaks that RIM has canceled the BlackBerry Colt and BlackBerry Milan, leaving it with one BlackBerry 10 handset for 2012. Company reps say the London will appear at Mobile World Congress in February, but will not launch until the third quarter.
A new era for RIM
Less than a year after he walked out of the BBC interview, Mike Lazaridis, along with Jim Balsillie, stepped down as CEO of Research In Motion, the company he'd founded 27 years earlier. The news went out on a Sunday, January 22nd, as many Americans sat engrossed with playoff football. "Jim and I approached the board and we told them that the time is now," Lazaridis said, explaining that with RIM’s strategy set — PlayBook 2.0 software shipping in February; BlackBerry 10 phones coming later in the year — the transition to a new CEO would be less disruptive.
Both men remain on the board of directors, Lazaridis as vice chairman. He's not walked away from the company, but told The Record he looks forward to spending more time with his family. The "security issue" that had provoked him was finally settled in February, with RIM agreeing to provide India's Department of Telecom access to BBM messages and email passing through BlackBerry servers.
Thorsten Heins now takes up the helm at RIM. He's 54 (four years older than Lazaridis), a native German who spent most of his working life with Siemens, Europe's largest electronics and electrical engineering company. In his four years at RIM, he's moved up from being Senior Vice President of the BlackBerry Handheld division, to COO of Product and Sales, and finally to CEO. He has a conservative view of the company's future, promising a more mature, focused approach. He's emphasized the need for strong marketing and attainable deadlines. His strategy, in a word, could be called "incremental."
Developer Jamie Murai, for one, thinks only an outsider can truly revive the company. "They need to bring on someone new," he says, "But who knows who that is? It's not like there's a list sitting around, 'These are the people you hire to turn around a multi-billion dollar company.'"
One outspoken board member disagrees about the need for new blood. Five years ago, Jim Balsillie tapped a fellow Harvard MBA, Roger Martin, to join RIM's board of directors. The company had just weathered a scandal about back-dated stock options, which had enriched employees at the expense of shareholders. Executives settled with Canadian regulators for $75 million, but the lingering public impression was that the CEOs had treated RIM like their personal piggy bank. Appointing Martin, the well-respected dean of business at University of Toronto, would help redeem RIM's image; strengthening the board would assuage shareholders worried about the co-CEOs' leadership.
"THEY JUST NEED TO STOP OVER-PROMISING AND UNDER-DELIVERING."
"So we're supposed to hand it over to children, or morons from the outside who will destroy the company?"
Yet according to Martin, Lazaridis and Balsillie tightly controlled the company's destiny, with few above or below them wielding influence. According to him, not even the board of directors, tasked with protecting shareholders interests, could have forced a change. "If we were to say to Jim and Mike, ‘Well, we're the board and you should go away now,' they would have laughed at us," Martin told The Globe and Mail.
The pair had built a $10 billion company that, in Martin's view, did not have a deep talent pool from which to draw; nor could it recruit a qualified leader from outside its ranks. "I laugh at the vast majority of critics when they say ‘Oh, you should have made this CEO transition, like, four years ago.' Yeah, right — like, to who?" he said. "So we're supposed to hand it over to children, or morons from the outside who will destroy the company? Or should we try to build our way to having succession?" (RIM stock dropped 2.7% following his comments.)
The succession plan, as he tells it, coalesced around Heins only in late 2011. Still, he says, the former co-CEOs felt no pressure to resign; they have full faith in Heins and his leadership ability. In an email to employees, Lazaridis and Balsillie describe Heins as a telecommunications veteran, a physicist, a product developer, and a people manager. They point to his experience in sales and marketing. But most importantly, he is "a passionate believer in what we do at RIM, and brings the rigor and creativity necessary to help all of you do it better and faster." (Research In Motion did not respond to repeated requests for comment about this article.)
So Heins represents continuity, not radical change. The Monday after his appointment he spoke to shareholders and described RIM as an "amazing company with a passionate and loyal global customer base" — a company undergoing a transformation, but with a strong base on which to build. "We're not just a service company," he said, "we run a network, we run services and we run devices and we can create formidable integrated solutions. This is a very unique position in the wireless landscape." Later that week he suggested the possibility of licensing the BlackBerry OS to hardware partners, but dismissed any ideas of breaking up the company. On taking the reins he said, "There’s no need for me to shake this company up or turn it upside down. We are not at a point where we try to define a strategy. That’s done."
Despite the turmoil, not everyone thinks radical change is necessary. "I don't think they need a turn-around," says BlackBerry Planet author Alastair Sweeny. "They just need to stop over-promising and under-delivering. This has been a humbling experience for them. They have to stop thinking they're the center of the universe and get back to serving their customers."
Michael Mace compares Thorsten Heins to two CEOs who did manage to turn around multi-billion dollar companies. "When you add up all those challenges, it's hard to say that RIM just needs to execute better," he says. "This feels more like a fundamental rethink, along the lines of what Jobs did when he returned to Apple or Lou Gerstner's remarkable transformation of IBM. Is Heins a Gerstner? And does he have enough support from the Board to make that sort of change? I guess we're going to find out."
A final analysis comes from the man whose company pulled the rug out from under RIM in 2007. Speaking in late 2010, he said, "They must move beyond their comfort area into the unfamiliar territory in trying to become a software platform company. I think it's going to be a challenge for them to create a competitive platform and to convince developers to create apps for yet a third platform after iOS and Android. With 300,000 apps on Apple's app store RIM has a high mountain ahead of them to climb."
That man, of course, was Steve Jobs.
Photo credit: Getty Images
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