BlackBerry May Go Android Too: Seven Charts on How the Company That Defined a Market Got Here

The last smartphone that looked nothing like the iPhone is about to disappear.

Reuters reported earlier that BlackBerry plans to make a phone running Android. BlackBerry denied it, insisting that its own BlackBerry system has no equal in efficiency or security.

This week brought more leaks: BlackBerry is said to be co-developing an Android phone with a slide-out physical keyboard with Samsung, and a BlackBerry Passport running Android 5.1 has surfaced.

But whether BlackBerry makes an Android phone hardly matters anymore. BlackBerry 10 already runs Android apps, and developers long ago stopped having any reason to build apps for BlackBerry.

According to Gartner, BlackBerry's market share is now below 1%. Five years ago, at its peak, BlackBerry held 20% of the smartphone market, more than the iPhone.

Look back over BlackBerry's history and you will find that this Canadian company's rise was as remarkable as its fall.

Smart devices that began with pagers

In 1984 the company was called RIM (Research In Motion), not BlackBerry. Nor was it a phone maker. Its main products were wireless networking accessories built for the communications technology of the day.

In the early 1990s RIM launched several two-way pagers, and with them BlackBerry's life as a mobile-device company began. Starting with the RIM 900 in 1995 and the RIM 950 a year later, RIM caught the market's attention with portable pagers that had full keyboards. It went on to build relationships with large companies such as IBM, AT&T and Cingular. The keys looked like blackberries, which is where the name BlackBerry came from.

An early BlackBerry device

RIM got its start with a line of pagers that could send and receive text messages. But at a time when mobile phones could only make calls and send texts, BlackBerry was already developing portable digital communication devices, what were then called personal digital assistants (PDAs).

By 2000, pagers were being pushed out of the market. Looking ahead, RIM launched two products, the RIM 857 and 957. They still looked a bit like pagers and could not make calls, but they had bigger screens and more keys, and they could send, receive and read email. On their black-and-white screens, users could even browse some web pages. These were, in effect, the ancestors of the BlackBerry phone.

The PDAs made by Microsoft, Palm and others at the time all used touchscreens. Touchscreens then were poor, so these devices were better for reading than for typing. RIM had no touchscreen, but its keyboard was a far better input tool. A few years later even Palm licensed RIM's keyboard patents and released PDAs and smartphones with the same keyboard design.

Another big difference: to get email and other online material onto a Microsoft or Palm PDA, users had to sync it with a computer by Bluetooth or cable. Nothing arrived in real time. A BlackBerry was already a truly standalone device. It was always online and no longer a computer accessory.

As RIM added a cellular module, a color screen and a backlit keyboard, it gained a phone business of its own. Together with the reliability and security of its data service, this made the company better and better known.

BlackBerry then took off. It became famous after the September 11 attacks in 2001, when RIM's email service kept working.

Integrating hardware and software, it set the course of the early smartphone market

In its early years RIM aimed almost entirely at corporate users, who happened to be the first smartphone users. To win them, BlackBerry tuned everything for them: hardware, software and internet services.

A BlackBerry phone built for efficiency in every way

From the feature-phone era through the early days of smartphones, for example, numeric keypads were the norm, since they made dialing easy.

RIM chose to serve a different need. It offered a QWERTY keyboard for typing fast, so users could write at length, and it patented the design. For business people, this plainly made handling email easier.

Nor did RIM limit itself to hardware. It had a solid base in software services too, and the integrated experience was its killer feature.

First, beginning with its email service, RIM kept expanding its well-known enterprise offering, called BES (BlackBerry Enterprise Server). If you have seen an American film in which a company lays someone off and, instead of taking back the phone, remotely wipes the data on the employee's BlackBerry, that is RIM at work.

BES let companies manage every employee's phone email, contacts, apps and even specific functions such as the camera. That security and convenience put RIM at the front of the enterprise market.

RIM was also a pioneer of "push." As early as 2001 it put forward the idea of keeping employees permanently online, sending and receiving email at any moment.

This may sound unremarkable to you today, but work used to happen only when you sat at an office computer. With BlackBerry's push email and full keyboard, employees had to deal with work even away from their desks.

In the early days mobile data was expensive, and phones were usually set to connect and check email at intervals, so messages did not arrive instantly. Through its deals with carriers, BlackBerry made the phone fetch a message the moment it reached the mailbox. For a long time push email was BlackBerry's selling point. The iPhone did not support push until the iPhone 3G in 2008.

Later, to reach consumers, RIM launched BIS (BlackBerry Internet Service). It helped users manage personal data on the phone and supported RIM's instant messaging app, BBM.

Most important of all, neither BES nor BIS was free.

Remember Xiaomi executives' favorite line, "selling the phone is not the end"? RIM was doing this more than a decade ago. To get normal internet access on its phones and use these features, you had to subscribe to BIS or BES through a carrier, and even the cheapest personal plan cost upwards of $10 a month. RIM split that revenue with the carriers.

In the years before the iPhone, RIM's main rivals were still office-focused brands such as Palm and Microsoft. As RIM refined its software and hardware, BlackBerry's share grew steadily and peaked in 2009.

In the business phone market, BlackBerry successfully took on Microsoft, Palm and Nokia, then the giant of the industry. By 2006 its main competitors had all launched keyboard smartphones of a similar shape.

Held back by its own success in the move to touchscreens

At the 2007 iPhone launch, Steve Jobs put the full keyboards of BlackBerry, Microsoft, Palm and Nokia up on the big screen and mocked them, arguing that the iPhone's virtual keyboard was the better design.

BlackBerry CEO Mike Lazaridis later hit back: "Pressing a button on the Apple iPhone's touchscreen is a real challenge, because you can't see what you're pressing." Executives at the other companies said much the same, yet all of them began seriously reworking their products in response to Apple.

In 2009 the Palm Pre became the first phone after the iPhone with a smooth, finger-driven touch interface. That same year Nokia, another fading giant accused of moving too slowly, brought out Maemo 5, a fully touchscreen system built on Linux, and in 2011 it launched a new system and new hardware built from scratch.

Microsoft, for its part, killed off its old Windows Mobile system in 2010 and launched the redesigned Windows Phone 7.

The transition was just as hard for Android, which debuted in 2008. Early Android was also designed around a keyboard. Google did not add an on-screen keyboard until mid-2009, and Android phones did not start selling well until 2010.

How Nokia and BlackBerry phones changed shape after the iPhone appeared

In 2008 BlackBerry launched the touchscreen Storm series to take on the iPhone. Like the other companies' transitional products, it failed. It sold only about one million units that year, and quality problems led many customers to return it. Even its carrier partner Verizon demanded that RIM compensate it for its losses.

Lazaridis, the co-founder devoted to the physical keyboard, concluded that touchscreens were a step backward, full stop. RIM went back to keyboards and stubbornly held its ground.

The risks of changing course were huge. Palm and Nokia declined one after the other, and Microsoft's phone business has not done well either. The only platform that changed its design successfully and ended up leading the market was Android.

Mobile operating system market share, 2006-2014

But if the other makers' transitions were a desperate gamble, RIM, clinging to the keyboard, was plainly headed for certain death.

Even so, RIM's slowness let it slip into the gap its competitors left while they retooled, and it grew nicely from 2008 to 2010.

Only in 2010 did RIM finally see its mistake. It bought QNX to build BB10, its next-generation touchscreen operating system. Phones running it would not reach the market until 2013.

In 2011 a former RIM executive wrote in an open letter: "We missed the chance to respond boldly to the iPhone threat. We should have acted when we saw it that January four years ago. Instead we laughed and said they could never fit a computer into a phone. A shift like QNX was delayed by three or four years. It is a painful fact and a serious strategic mistake, and we all know who is responsible."

BlackBerry's transition timeline

In 2011 RIM launched the PlayBook tablet on QNX, its first product designed entirely for touch. But the PlayBook was badly unfinished. Because a security module had not been added in time, it could not even send email without being tethered to a BlackBerry phone. Predictably, it became another failure that wasted time, materials and effort. It was the first and last BlackBerry tablet.

In 2012 co-founder Jim Balsillie left BlackBerry. Thorsten Heins became CEO and made touchscreen phones the company's priority. Yet in 2013 the Z10, a fully touchscreen phone running the new system, still flopped. The Canadian government even set up a special committee to help find a buyer for BlackBerry, whose market share had fallen below 2%.

During this period the Canadian investment firm Fairfax Financial Holdings agreed to buy BlackBerry for US$4.7 billion. The deal fell through, and Heins was ousted.

The new CEO, John Chen, took the company back to products such as the Passport that combine a keyboard with a touchscreen. After all these reversals, neither the diehard fans nor those hoping for something new were satisfied.

What is BlackBerry doing today?

At its second-quarter earnings call in 2014, CEO John Chen announced the start of BlackBerry's "eight-quarter turnaround plan."

His first task was to cut costs and find new money. Besides sweeping cuts to unprofitable divisions and layoffs, he had to find new sources of sales growth and cash.

Chen narrowed BlackBerry to four businesses: phone hardware, enterprise software, value-added services, and BlackBerry technology solutions.

BlackBerry's four main businesses today

Hardware (phones)

Phone hardware is no longer one of BlackBerry's strengths. The company is now trimming its product line and selling fewer models to cut losses. It launched only four phones in all of 2014, and to save more money it even reduced production capacity.

BlackBerry has outsourced its low-end phones to Foxconn to ease production and inventory pressure. Before that, it made its phones in its own factories.

Phones now matter less in BlackBerry's business mix, and hardware's share of revenue keeps falling. At the end of 2014 phones brought in only 42% of total revenue; 47% came from value-added services and BlackBerry technology solutions, and the remaining 10% from enterprise software.

Enterprise services

Meanwhile, BlackBerry is turning itself into a company that sells services. In the enterprise market it is trying to win back lost ground with its enterprise platform, BES. Its strategy has two parts: opening up and cutting prices.

BES, the enterprise security system once limited to BlackBerry phones, is now open to Android and iOS.

In February this year BlackBerry also partnered with Google to bring its BES12 security service to Android for Work devices. This does nothing to help BlackBerry sell its own devices, but it lets the company make money from the growing Android world.

In March it co-developed a tablet called SecuTABLET with IBM and Samsung. Outside observers suspect that this device, designed for government and enterprise users, runs Android.

Value-added services

BlackBerry has begun opening its instant messaging service, BBM, to users on other platforms. Because the company stressed tight integration of hardware and software, BBM was originally tied to BlackBerry's own system, and it was one reason many people chose BlackBerry phones.

But now that keyboards matter less and the phones are hard to sell, BBM may still have a future on other platforms. In October 2013, after a month of public testing, BBM launched on iPhone and Android. Just 24 hours later BlackBerry announced 10 million users, though many of them still had to "wait in line" before they could register.

According to BlackBerry's own figures, BBM had 160 million registered users by last June, 85 million of them active.

But it came a little late. BBM's competition today is no longer paid text messaging. The instant messaging market already has heavyweights such as WhatsApp, Line and WeChat.

Here, too, BlackBerry is focusing on the enterprise market. At the end of last year it launched the conferencing service BBM Meetings and the money transfer service BBM Money, both built from the start to work on smartphones of every platform.

What it ultimately wants is to sell these services by subscription. BBM Meetings, for example, costs US$12.50 a month. The aim is for this revenue to offset the monthly fees lost as longtime users leave.

Selling patents

Rather than selling technology solutions, BlackBerry is really selling its 44,000 patents.

In the fall of 2014 BlackBerry set up its technology solutions division to sell Internet of Things security certification and to license patents for its prized technologies such as QNX, Certicom and Paratec.

But John Chen does not plan merely to license these patents. Before selling the company, he is also considering selling them off one by one.

Changes in BlackBerry's revenue by business; hardware's share has clearly shrunk

With these measures, John Chen slowed the decline in BlackBerry's revenue over the past year. Still, a comeback looks unlikely. Beyond a sale of the company, the market expects little from it, and all its current efforts may at best fetch it a better price.