Lazaridis and Balsillie: The two RIM hosers that destroyed the BlackBerry empire

Okay, so let's talk about the two hosers that built a smartphone empire and effectively flushed it down a toilet, shall we?

Mike Lazaridis and Jim Balsillie were once guys that had vision. In the early 1990s, Lazaridis, along with Balsillie's help, formed one of the earliest two-way wireless data communications companies whose efforts would eventually result in the creation of the first true smartphone, the BlackBerry 6200 series in 2004 (the original BlackBerry, released in 1999, was merely a two-way alphanumeric pager.)

There was literally nothing else like the BlackBerry 6200 series when it was released. It had the ability to send and receive secure email, do web browsing, integrated personal information management with desktop calendar synchronization and it could also run apps.

All of these things we take for granted in smartphones today.

Indeed, there were other players that did pioneering work in smartphones, but they were never able to achieve the traction or the product loyalty of RIM.

Companies like Microsoft and Palm attempted to keep up with RIM and the BlackBerry during those early years of the smartphone industry with their Palm OS and Windows CE/Windows Mobile products, but their efforts failed.

RIM practically had an iron grip on the corporate customer, and their dominance of the mobile messaging industry seemed practically impenetrable.

One of the reasons why RIM was able to succeed and the others were unable to thrive is that Lazaridis and Balsillie were able to see the huge value corporations as well as government agencies would put in running their devices on a secure private communications network.

With BlackBerry Enterprise Server and Research in Motion's global network operation center in Waterloo by which all messaging was "pushed" to and from handsets, the BlackBerry established itself as the de-facto mobile data device for corporations and government.

There was literally nothing else in the early to mid-2000's that could possibly threaten the company's business.

All of this changed in 2007.

In 2007, two landmark products were launched. The first being Apple's iPhone, and the second the introduction of Google's Open Source and Linux/Java-based Android operating system, which resulted in a first-generation handset product, the T-Mobile G1, that was launched in 2008.

Both of these products demonstrated technology that was clearly superior in capability to the BlackBerry OS 4 on RIM handsets. This should have been a warning sign for the company, but it was ignored. Arrogantly.

In July of 2008, after a phenomenal year of sales after its initial product launch, Apple launched the iPhone SDK, and their App Store, which caused massive disruption in the smartphone industry generating yet again an entirely new industry of mobile app development.

In October of 2009, Verizon wireless introduced the first Android 2.0 handset, the Motorola Droid, which began a chain reaction of Android handset growth on multiple wireless carriers.

Like the iPhone's App Store, the Motorola Droid launched with the Android Market, which allowed for 1-click smartphone application installations via the Cloud.

RIM would not follow suit with its own application ecosystem/App Store, the BlackBerry App World, until April of 2009, nine months after Apple's own App Store launch.

Despite Google's inability to control the OS's fragmentation, Android has become a wild success, and now occupies approximately 45 percent of the global smartphone market.

[Next: Ignoring the signs and portents of iPhone and Android]»

During this two year period between 2007 and 2009, RIM decided to ignore its competition and simply incrementally refine the technology they already had in BlackBerry OS. OS 4 transitioned to OS 5, only small improvements.

In 2007, after being involved in an $250M stock option accounting screw-up, Balsillie (an accountant by trade) stepped down from his board position as Chairman, while retaining his CEO and Director title. Maybe he should have been paying more attention to the operations of his company than his obsession with buying sports teams.

It was at this point that both of these men should have probably called it quits and allowed more pragmatic management to move in.

But it was not to be.

The BlackBerry's OS needed a complete architectural overhaul. But Lazaridis and Balsillie were completely blind to this, despite internal pleas from the company's engineering staff.

Additionally during 2008 and 2009, the RIM network operations center suffered a number of highly publicized outages that raised serious questions about whether or not the network was able to scale or was as resilient as everyone thought it was.

RIM's answers to the iPhone and Android phones were the BlackBerry Bold, and BlackBerry Pearl. Both of which were solid designs, but were technologically inferior to their competition.

The first touchscreen BlackBerry, the Storm, was an absolute train wreck. The Storm was launched exclusively on Verizon in 2008, was deemed a complete failure because the OS was never really intended for touch and the actual touchscreen mechanism itself was an awkward kludge.

The second version of the Storm, which I had an opportunity to review, wasn't much better.

By 2010 the BlackBerry OS was really showing its age, as was the the Blackberry messaging secure network itself, which continued to have long and intermittent outages.

The first OS 6 device, the Torch,introduced in August of 2010, was a minor improvement in that it was the first BlackBerry OS phone to incorporate a modern WebKit-based web browser which other smartphone platforms were already enjoying.

Still, it was tremendously underpowered compared to other products on the market, and its web browsing experience, while improved from previous versions, was not up to par with either iPhone or Android. And compared to the App ecosystem that both the iPhone and Android platforms had, it was an absolute joke.

Quarter by quarter, the company's smartphone market share erodes substantially and eventually falls into a distant third place to Android and iOS by Q4 of 2011.

All of these things leading up to the end of 2010 should have been key warning signs for Research in Motion and its two Co-CEOs. But again, all of these were ignored.

And then January of 2010 came. iPad.

We all know what happened when the iPad was released -- it was the creation of the modern tablet industry.

Lazaridis and Balsillie were completely blindsided by this. Apple now had a breakthrough product that was selling like hotcakes, which was tied into an application ecosystem running on an operating system that was light years ahead of what was running on their handsets, so they couldn't just take the OS they had and throw it on a tablet.

The Storm had already proved that it wouldn't work on a touchscreen smartphone platform, let alone a tablet.

They ignored Apple and also Google for three years. They had nothing in which to fight back with.

In desperation, three months after the launch of the iPad, they went and bought a solution, QNX Software Systems, a Canadian firm that sold a specialized OS for vertical real-time mulititasking applications.

While the foundations of the QNX OS were solid, it was missing many of the pieces that were needed to form the basis for RIM's next-generation handsets and also the tablet that it needed to launch to compete with the iPad.

Also Read:

• BlackBerry PlayBook vs. HP TouchPad, a Tale of Two Failures
• Alas, Poor RIM and BlackBerry, We Knew Them Well
• RIM's Survival means all business for BlackBerry
• What is the end-game for RIM and BlackBerry?

I've already told the story about why the PlayBook's launch disaster was essentially the result of management failure. The chain of screw ups and missteps was vast.

One could say that this was a collective effort on the part of RIM, but at the end of the day, the Co-CEOs, Lazaridis and Balsillie made the ultimate decision to launch the product in an unfinished form which was unable to function on their messaging network without a tethered smartphone.

To add insult to industry, the PlayBook also shipped without a solid developer set of toolsets and APIs ready to go to build compelling applications to distinguish it from its competition.

And this was a single catastrophic error among a long chain of management stubbornness and inability to innovate that probably cost them their leadership.

While the PlayBook is due for a 2.0 update in Feburary that will have Android application compatibility as well as the integrated email and PIM capabilities that were nowhere to be seen the device in the product's March 2011 launch, and the product finally has a native SDK to produce high-performance C++ applications, it's probably too late for the platform to make any significant headway against either Apple's iPad or even Android.

And what of the BBX-based phones that will purportedly save the company from irrelevance? Those aren't due until Q4 2012, just in time for the Mayan Apocalypse.

One would hope that the company would make some drastic changes in order to improve its outlook, but it appears that the newly appointed CEO, Thorsten Heins, is content to follow in the footsteps of his predecessors, which rather than bowing out of the company entirely, have decided to stay on as independent directors and board members.

Heim's comments about staying the course doesn't inspire confidence that RIM is on the mend and on its way towards re-establishing its leadership in the industry. Two McKenzie Brothers at Research in Motion is certainly bad enough, let alone three.

Will Mike Lazaridis and Jim Balsillie go down in history as innovators or hosers? Talk Back and Let Me Know.