How RIM found itself on the wrong side of history

How RIM found itself on the wrong side of history

Summary: The BlackBerry maker has little hope of a turnaround now — its revenue is dropping and people aren't buying its devices. So what pushed the smartphone once-leader into a corner?

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Research In Motion's revenues are down by one-third over last year. People are simply not buying its devices.

Even those who remain committed to its platform will have been holding off making any new purchases while they await BlackBerry 10 — but now that OS won't come until next year. The Canadian company lost more than half-a-billion dollars in the last quarter alone. Its stock price dropped 70 percent in the last year.

In other words, RIM is losing money and it has no way of fixing that, not even by sacking thousands more people. It's not broke, but its current trajectory can only end up taking it to that level. There are options — full sale, partial sale, asset-stripping — but there's not really anything of serious value to a buyer other than the network and maybe the intellectual property. Whatever happens, RIM as we know it is gone.

It feels cruel to do, especially to a company that has made many genuine innovations over the years and still employs almost 12,000 people: but it really is now time for the post-mortem.

Let's remember where the BlackBerry was before Apple's iPhone came along: near-essential as a corporate tool, sturdy as a network and unassailable as a secure smartphone. What went wrong? Everything. These below are the trends that have all but killed RIM.

Touch

It almost goes without saying that Apple's smartphone was the poisoned arrow in RIM's leg. One of the main reasons people liked BlackBerrys was the excellent physical keyboard — it even helped make the handsets a hit among consumers as well as enterprises. Who knew they would turn their back on the concept in droves? But they did, and down went Windows Mobile, Nokia/Symbian and eventually the BlackBerry.

Whereas all those other platforms struggled to adapt to a touch-first world, the iPhone was there from the start. I remember when RIM brought out its first touchscreen phone, the Storm, in 2008. To its credit, the company tried to do something different, by making it a clickable touchscreen that gave tactile feedback that (they must have hoped) would remind the faithful of a physical keyboard.

But it didn't work very well — to make it clickable they introduced a slightly convex screen and, on the unit I was shown, I recall being able to see the innards of the phone through a small gap that existed between the frame and the screen. Not great for dust and moisture. They dropped that idea in the second Storm.

As it turned out, most people were fine with having little to no feedback from their typing, and in the end there was nothing RIM to do to differentiate itself there.

BYOD

When the iPhone launched, it was a pure consumer play. That ceased to be the case long ago. Now both the iPhone and Android are perceived as very secure indeed, and therefore suitable for high-level corporate and governmental use.

That means there is no longer any meaningful distinction (for all but the most security-conscious organisations) between the user's 'home' and 'work' devices. The bring-your-own-device trend — or, as it used to be called, 'consumerisation' — is user-led, but for the most part unstoppable. Why? Because people don't like having to carry around multiple devices that, to their minds, do the same thing.

In the cases of RIM and Nokia, the companies tried to fight back with work-life 'balance' functionality for their handsets. That's a feature that IT departments may love, but it doesn't stop people from bringing in their own devices, which were neither BlackBerry nor Symbian. Again, not enough to turn the tide.

Ecosystems

Yes, the iPhone again. RIM has of course had a developer ecosystem for a long time, but it stayed very enterprise-focused even after most of the BlackBerrys RIM was selling were to consumers. Apple, then Android, encouraged a developer free-for-all. There were winners and there were losers, but the end result was the evolution of services that often have both enterprise and consumer appeal.

The start-ups that come up with these line-blurring services usually have limited resources. Most simply can't address every OS — they struggle to keep up with two main platforms, especially with all the fragmentation that comes with Android. RIM has really enthusiastic developer outreach; but was anyone in that ecosystem not addressing iOS, then Android, then BlackBerry? Or even worse: then Windows Phone and then BlackBerry?

The only RIM-only software that could really impress the enterprise and consumer was BlackBerry Messenger (BBM), due to its security and ease of use. But authorities such as those in India have put pressure on RIM to breach its own walls in the name of national security, and iOS and Android now have several alternatives that are just as easy to use. Again, almost no differentiation remains.

Pride

Mike Lazaridis and (to a lesser extent) Jim Balsillie have a lot to be proud of, both from a technical and business standpoint. But they hung on too long. It was obvious for years before they finally left that the company was fighting a losing battle. RIM needed to change course a long time ago, and the former co-chief executives were incapable of doing that.

The company they led moved too slowly because Lazaridis and Balsillie were arrogant. Again, I recall interviewing Lazaridis in 2009 — a point where RIM's problems were more than obvious — and he would not deviate from the 'RIM is the best' line. RIM was not the best — he knew that, I knew that, and nobody was talking about fixing things.

Great leaders don't have to be leaders forever — they have to know when to pull out, which is usually when the world has changed around them.

Lazaridis and Balsillie didn't just hold off on a needed change of course; they also made several active decisions that turned out to be lousy. None of these calls was more emblematic of the problems at the top than the initial version of the PlayBook software. Only someone sorely lacking humility could possibly think it was a good idea to try to sell enterprises a tablet that couldn't do email without a paired BlackBerry smartphone. Faced with ever simplifying competition, why would anyone push complexity?

And for the sake of my blood pressure and yours, I'll only mention in passing Lazaridis's infuriatingly tardy response to last year's catastrophic BlackBerry outage.

RIP RIM

I feel very sorry for Thorsten Heins. It seems very unlikely that the recently appointed CEO can pull RIM out of this mess. Just look at his assertion in January that RIM needs to focus on consumers rather than the enterprise, and its sequel: the call in March for RIM to focus on the enterprise instead of consumers. He doesn't know which way to go, and how could he? There seems to be no way but down.

As I said above, it feels cruel to be writing about RIM this way. It's a company that has a lot of good people working for it, and that's done a lot for the creation and evolution of the smartphone — really, those who think Apple invented it all need to reappraise the importance of the BlackBerry, Windows Mobile and Palm. But, ultimately, history is not on RIM's side.

Topics: Smartphones, BlackBerry, Tech Industry

David Meyer

About David Meyer

David Meyer is a freelance technology journalist. He fell into journalism when he realised his musical career wouldn't pay the bills. David's main focus is on communications, as well as internet technologies, regulation and mobile devices.

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26 comments
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  • Rim can live on.

    Actually RIM could attempt to survive by shrinking to 4-5,000 workers and cater to a loyal base of 50 million subscribers. They need to immediately shrink much faster to a much lower level ASAP to find a way to make a profit. They can still sell a Windows BB phone and Andriod BB phone to stay alive too. But Heins and the Board are full steam ahead into the iceberg. That is fatal. They can stay alive only if they shrink to live and cater to the base customers.
    jopocop
    • It's all about the Apps

      "...RIM could attempt to survive by shrinking to 4-5,000 workers and cater to a loyal base of 50 million subscribers."-jopocop

      No they couldn't. Smart phones today are all about Apps. The smaller you make the base, the less developers you attract, the less developers you attract, the less apps you have, the less apps you have, the fewer sales you make, the fewer sales you make, the smaller your base becomes and so on and so forth in and ever downward spiral.

      A few loyal BlackBerry followers are not going to save RIM anymore than a few loyal webOS users could have saved Palm.
      Falkirk
      • HTML may change that

        All App developers are moving to HTML 5 as it reduces the cost to make Apps. Right now RIM has the most robust HTML rendering support (BB10).

        Apple seemed to last years on a few loyal supporters before the iPod blew up. I question if Apple is even a computer company anymore. Ironically RIM is growing their user base, whats crazy is the past quarter they still sold 7.8 million devices.
        MobileAdmin
        • BB10?

          What good does it do RIM to have "the most robust HTML rendering support" when the underlying OS won't even come out until 2013?

          The difference between RIM and pre-Jobs II Apple is that Apple had major structural issues with their distribution channels, production efficiencies, and their ill-fated OS licensing program -- all of which decimated their profit margins. RIM's difficulties are more market-driven, which makes them far more difficult to remedy.

          When Jobs reclaimed control in the late-90s, his first actions included eliminating most of Apple's product lines, revamping the supply chain, and canceling the OS licensing program. In actuality, Mac sales went down, but profitability was restored and set the table for their resurgence. In RIM's current predicament, their unit sales have increased while profits have gone negative.
          Woochifer
    • Turning into a "me too" OEM

      Will not save RIM. RIM needs to leverage their knowledge, and the OS they currently have is worlds better than Windows Mobile 7 (WP 7). It's more stable and more scalable. I can't comment on WP 8, because it does not yet exist in a testable form. Nokia should probably switch to Android, in an effort to stop taking on water. As the iceberg already ripped a hole in their "burning platform".
      Jumpin Jack Flash
      • LOL! Of course

        You use any article as a reason to critisize MS, so why should we be surprised that you whent off topic once again?

        I guess that's party of the disease - make up what you need to continue to function.
        William Farrel
        • Off topic?

          Excuse me, I just look like a fool.

          So I need you to explain to me, being a fool, how talking about another competitor in the mobile industry on an article about the phone industry is going off topic?
          Bozzer
          • Because William "toddbottom3" Farrel

            Can't stand it when anyone questions his religion. By pointing out that WM 7 (WP 7) was a crap update, it lessens his ability to say it's the "best thing since sliced bread"
            Jumpin Jack Flash
        • Again how is responding to someone saying...

          Maybe RIM should go with WM 7, when that's not the answer, off topic? Your typical [b]ad hominem[/b] attacks show just how afraid of the truth you really are.
          Jumpin Jack Flash
  • To late for them.

    I have read that the Blackberry 10 will be late, even after the Windows Phone 8 release.
    And since that got much business features:
    http://wmpoweruser.com/windows-phone-8-business-features-enumerated/

    I iPhone 5 coming, Android 4.1 and so on..
    So I am afraid it's to late for RIM/Blackberry at this point.
    Even if they would go for Windows 8 or Android they will be behind of the other carriers.
    johnh3
  • Going to be a long year or so

    What will these tech blogs write when the next bad quarter comes around and RIM is still hanging around this time next year? A number of things can happen. Blackberry is selling outside of the US and while this quarter was bad (and the next couple will likely be worse) they are still a cash positive company. They are doing everything to cut costs so they don't burn their cash. They can also take a credit line as they have no debt.

    I do believe RIM is actively looking for a buyer either outright or partner. It will be difficult to seperate the hardware from the network as they are tightly tied together. There is room for other companies in this vertical. Do we want a Apple / Google mobile world only?

    Android is not secure. Once rooted one can get full access to the device. There is also very limited API to control Android. Go check any MDM solution what can be managed. I applaud Apple's continued API support. iOS can be secured to a high degree. What's funny is the whole "users don't want to carry two device" statement is bunk. We secure iOS as close as we can to match what we managed on Blackberry and now see users with a corporate iPhone and their own personal device. This brings us to my favorite topoc BYOD.

    BYOD is going to peak and then crash. It's a measure to shift costs and ownership to employees. The problem is it has limited appeal to employees due to not having shared costs between company and employee as well the huge reason they want to BYOD in the first place - they do not want their device secured / managed and they want privacy to do whatever they want. BYOD has serious issues with security and compliance. We've had a BYOD program for over a year now and to date have 2% of employees enrolled. What will happen with the larger bulk that still use the corporate Blackberry if they have no desire to use their personal mobile device as the Blackberry meets their (and our) needs? This assumes employees have a smartphone to begin with - many do not as there is significant costs. Last I checked the economy wasn't doing too well.

    A huge point glossed over about RIM is the whole BYOD effort got steam as IT budgets were flat / reduced the past 3 years. Upgrading Blackberry devices to current ones, let alone procuring iPhone wasn't in the budget. So you had employees with very outdated mobile device (Old curves, 8800 etc) They still performed the functions they were bought for - phone, email & PIM. But seriously lack in the current App/EcoSystem world. They also are basically useless for web browsing, which was a major draw for iPhone.

    We just upgraded our Blackberry fleet (2,000) of Blackberry to the 9900 series. It's a solid Blackberry and allows many functions the old Blackberry didn't. It was also minimal costs to do this upgrade. RIM has a TON of companies that are in the same position. Some may move to full BYOD, some could switch to iOS, Android and if it's ever ready Windows Phone. We looked at iPhone a long time and it simply doesn't scale well. iTune accounts are still a major corporate issue. Deployment and management are still cumbersome. The lack of a file system makes corporate usage limited. You also discount Blackberry keyboard which has appeal. a touchscreen has limitations in some verticals.

    No doubt RIM is in a tough spot, we'll see how the rest of the year shakes out. If Q1 means Jan / Feb and BB10 is solid - RIM has a chance, if Q1 means March - thats a tough spot.
    MobileAdmin
    • Denial and flawed logic will not save RIM

      "What will these tech blogs write when the next bad quarter comes around and RIM is still hanging around this time next year?"-MobileAdmin

      It's more likely that the "Rapture" will occur in the next 12 months than it is that RIM will pull out of this death spiral.

      "(RIM) can also take a credit line as they have no debt."-MobileAdmin

      You're delusional. No one is going to lend any money to RIM.

      "Do we want a Apple / Google mobile world only?"

      How is that relevant? RIM has to survive on it's own merits. It will not survive just because it is an (inferior) alternative to Apple and Google.

      "BYOD is going to peak and then crash."

      One day I'll deconstruct your quixotic anti-BYOD campaign. For today, I'll just say that it's another totally irrelevant argument. The supposed crash of BYOD would do absolutely nothing to save RIM from its current predicament.

      "We just upgraded our Blackberry fleet (2,000) of Blackberry to the 9900 series."

      Way to buy state rooms on the Titanic. And way to rationalize your failed decision making.

      RIM will lose it's independence soon. And if your comment is, in any way, indicative of the way your mind constructs logical arguments, then you're not long for the corporate world either.
      Falkirk
      • Not quite

        If something is going to happen with RIM it will happen before fall. What happens is a good guess and you need to consider the long term plays for those that wish to compete in the mobile vertical. What will happen to Android once Google lines up with Motorola. Considering only Samsung is making money with Android you have a lot of OEM's that might want to control their own destiny and a partnership / purchase of RIM can put something right in the middle of the pack. No one is knocking QNX as it's a nice OS. RIM cannot execute hardware and providing an ecosystem (content, apps etc).

        My how the Apple faithful forget the 90's. Microsoft loaned Apple much needed funds to keep the doors open. The same could happen. ASYMCO is Pro Apple and is full of pompous Apple fans who seem to only care about their stock price. At some point that bubble will burst.

        It's very relevant as Apple NEEDS BYOD to take hold. There are not many companies that will swing to corporate liable iOS as Apple doesn't want anything to do with being an enterprise solution. They prefer being the trojan horse and users bring them in. That is only going to get them so far. If they want to really be on the short list they need to beef up corporate support and sales. Like I said their doing great API stuff but thats becoming a mess of MDM solutions all trying to be RIM's BES. The issue is unless you control the hardware and software you're limited.

        But Agree - BYOD success or not is not going to help RIM. The days of 5,000+ Blackberry deployments are over. RIM needs to appeal to consumers to want the device. Right now they are badly failing in this regard.

        With 15+ years in enterprise IT and over 10 of them dedicate to mobile technologies I'll be around to ride this through. If it's RIM, Apple, Microsoft etc I'll find the means to manage and secure it.
        MobileAdmin
        • "...I'll be around to ride this through."

          Maybe...maybe not.

          If it was YOUR decision to purchase 2000 new Blackberries...then your CEO/CFO/CIO should seriously consider your future with your organization.

          It if was someone else's decision...YOU should seriously consider your future with your organization.
          IT_Fella
          • Seperate Need vs. Want

            A key thing that gets lost is Blackberry meets the needs for many companies if all they care about is voice and mobile email / PIN.

            So upgrading the the 9900 for no cost makes a lot of sense vs. $199 per iPhone plus the increase in data costs.

            Unfortunately there are things called budgets and the past 3-4 years have been razor thin. So yes while I'd love to give everyone an iPhone, they don't need an iPhone for our current mobile usage.

            Thus far there has been very positive feedback for users on the 9900, it's a huge jump as most were coming from 8300 series. (Curve)
            MobileAdmin
          • MobileAdmin

            Very solid argument. $0 upgrade is good. Can't throw the baby out with the bath water as there are more important things in an IT department to spend shrinking budget money on. In IT, you can't can't get emotional about technology and you are correct, Have and Need are two different things when spending money. Spoken like a person that has been around IT and has kept their cool.
            msh9475
          • You don't mean...

            that buying RIM phones instead of toy phones could bring down the whole organisation do you? Nooooooooooooo!
            12312332123
        • Utter Bull crap!

          "My how the Apple faithful forget the 90's. Microsoft loaned Apple much needed funds to keep the doors open."

          Just a little FYI: Microsoft bought $150 million in [b]non-voting stock[/b] as part of a [b]settlement for stealing Apple's IP[/b]. While you fanboys complain about hoe "bad" QuickTime is, you forget that Microsoft used the source code to create Windows Media player. Microsoft has also crafted many of the security problems with QuickTime on Windows, in an effort to make their product look better. But Nice try at changing the facts...
          Jumpin Jack Flash
          • Really?

            Talk about turning a sows ear into a silk purse then - Quicktime is STILL garbage
            12312332123
      • If they have an

        Investment in BB servers, etc., then buying updated hardware is prudent. It's no worse than buying a recent Nokia phone. The phone will still work, even though Nokia will not support them once WP 8 comes out. WP 7 was just something Micrsoft threw out there to freeze the market while they were working on the update.
        Jumpin Jack Flash