Goodbye, BlackBerry: Born for the Office, Killed by the Office | QDaily Business History

2002–2016: what kind of phone business did BlackBerry run?

Since announcing in late September that it would stop developing phones, BlackBerry is back where it started.

As of the most recent trading day, BlackBerry's market value had fallen to $4 billion — about where it stood in 2002, when it launched its first smartphone, the BlackBerry 5810.

You can still find new BlackBerry-branded phones in Southeast Asia; manufacturing and sales for the brand have been handed to an Indonesian company. BlackBerry clearly has little faith in the arrangement: it holds no equity in the venture and has no plans to enter major markets like China, the US, or Europe.

Nokia and Motorola, the old-guard phone giants whose fates were just as troubled, both sold off their handset businesses years ago.

BlackBerry, in the end, couldn't even sell itself for a few billion dollars. Several rounds of talks failed to produce a suitable deal, so it simply walked away from the phone business.

BlackBerry rose as fast as it fell.

When it introduced its smartphone in 2002, BlackBerry was still a small startup. Its rivals were either decades-old giants worth tens of billions of dollars, like Nokia and Motorola, or empires like Microsoft.

Five years later, BlackBerry was the world's second-largest smartphone maker, worth more than $80 billion in 2016 dollars.

Today it is worth less than a twentieth of that.

Born for the Office

BlackBerry began as a classic garage startup story.

In 1984, Steve Jobs was in San Francisco promoting the Macintosh, the computer said to be poised to beat IBM. Thousands of kilometers away in Canada, John Micsinszki, an electrical engineering instructor at the University of Waterloo, lent his basement to Mike Lazaridis, a senior undergraduate, and Lazaridis's high school classmate Doug Frein. There the two founded RIM (Research in Motion).

RIM's business was LED billboard controllers, an extension of something the two founders had invented in high school. A user typed promotional copy on a calculator-like keypad, and the controller pushed it to the billboard.

That is standard outdoor advertising today, but few advertisers were willing to risk it then. In five years RIM sold fewer than a hundred controllers; its largest order, worth $600,000, came from General Motors.

RIM found its real direction in 1990: wireless data networks for smartphones. The Cold War had not yet ended, and people did not even have cellphones, let alone smartphones.

Rogers, Canada's largest cable television company, had just started a mobile phone business. Expensive phones were still a tool for the rich, and beyond calls and texts, those customers wanted email. So Rogers bought a set of Mobitex wireless network equipment from Ericsson, planning to build a network across Canada that could send and receive email.

Rogers had no technology of its own, so it brought in a group of Canadian startups to help. RIM was one of them.

Five months later, RIM and its engineers were the only ones still working on this wireless network, which predated even 2G. Built on it, the RIM 900 launched in 1996.

This belt-clip pager already had the shape of the phones that would follow. A QWERTY keyboard, just like a computer's, let people pull it out and type anytime.

Around the need for email, BlackBerry built a complete solution, mail server included. Most companies then used Microsoft's mail service, which was still built around the PC. By 1999, BlackBerry could push email from a data center near a company straight to a user's phone.

Also in the 1990s, Jim Balsillie, a sales prodigy skilled at negotiation, joined RIM. He and Lazaridis, who ran the technical side, became co-CEOs and led the company together. Balsillie sold RIM's wireless email devices to American politicians, lawyers, entrepreneurs, analysts, and journalists.

Every email they sent carried a small line at the bottom: sent from my BlackBerry.

The 9/11 disaster in 2001 also made BlackBerry a sudden hit. Lynne Federman, a lawyer who worked near the Pentagon, recalled to The New York Times: "In one hand I had a cellphone, useless. In the other I had my BlackBerry, and it was my lifeline that day — I used it to message my family that I was safe."

The next year, BlackBerry entered the smartphone market.

It quickly changed how people imagined mobile office work.

Nokia's idea of a smartphone then came in two kinds. The 9210, aimed at the business market, looked like a Wenquxing electronic dictionary; the 7650, aimed at individual buyers, still used a 9-key numeric keypad and looked like an ordinary phone of the era.

Microsoft's idea of office work on a phone, in the same years, was poking at the screen with a stylus and jabbing the Start menu button in the upper-right corner every so often.

A few years later, every smartphone looked like a BlackBerry. In January 2005 at CES, Microsoft chairman Bill Gates held up a Palm Treo 700w, a size smaller than a BlackBerry, and said: "This is going to be my next phone."

That October, Nokia's E series of business phones switched to a full keyboard too. The same year, Google began secretly developing Android phones; the Sooner, the first handset it prepared with its partners, looked much like a BlackBerry as well.

While other makers were still learning to copy BlackBerry's hardware, BlackBerry already had a complete mobile office solution. Every email first landed on a server at BlackBerry's control center; a special network then notified the carrier, and the phone switched on its power-hungry data connection only to fetch it. That let BlackBerry send and receive email instantly without draining the battery.

Managing employees' phones became easier for companies than it had ever been. In Margin Call, the film starring Kevin Spacey, a Wall Street investment bank fires an analyst. The moment he learns of it, his BlackBerry is wiped — he can't even make a call.

This little device, covered in keyboard shortcuts, changed how people used a phone. A skilled BlackBerry user writing an email kept their fingers entirely on the letter keys; everyone knew R replied to a message and L copied everyone. To read a text, you pressed Alt and S together.

In an era built for efficiency, BlackBerry was the best there was.

From 2005 to 2011, BlackBerry's global revenue grew nearly 15-fold, from $1.35 billion to $19.91 billion.

When the iPhone Arrived, BlackBerry Was in the Middle of an Internal Crisis

"Whether you need it or not, they all come with a keyboard, and the same fixed plastic buttons." In January 2007, at the iPhone launch, Apple CEO Steve Jobs mocked four phones projected on the screen behind him: the Moto Q, the Palm Treo, the Nokia E62, and the BlackBerry Pearl.

The multi-touch screen changed how you dealt with a smartphone. Making calls, opening files or software, typing — all of it could now happen on one sheet of glass, and none of it needed a physical keyboard to work well.

Two months later, BlackBerry's stock fell 15% in a single week. That was not the iPhone's doing — the iPhone was still months from going on sale, and it could not handle enterprise office work anyway.

What triggered BlackBerry's crisis was an internal financial scandal.

More than 60 executives, both co-CEOs among them, had had the dates on their stock options illegally altered so the options took effect early. That handed executives an extra $250 million, equal to 10% of BlackBerry's revenue that year.

BlackBerry was then dragged into a heavily publicized lawsuit.

It damaged the two CEOs' 15-year working relationship — just when BlackBerry most needed leaders who could turn the company around decisively.

From 2007 to early 2009, Apple leapt to become the world's third-largest phone maker while BlackBerry stayed mired in the litigation from the scandal. Nokia and Microsoft, meanwhile, began work on new phone operating systems, and Google's Android was gradually maturing.

The two co-CEOs, in the middle of the scandal, were scattering their attention across a busy life outside the business.

Balsillie, who ran sales, insisted on buying a hockey team and spent two years in litigation over it. Lazaridis became fascinated with theoretical physics, spending more than $200 million over several years on a university quantum physics research program.

BlackBerry kept agonizing over whether to give up the full keyboard for a bigger screen. Even after launching the Storm, a touchscreen phone on a new operating system, in 2008, Lazaridis kept the full-keyboard and touchscreen designs running in parallel. BlackBerry changed course more slowly than Nokia did.

Killed by the Office

After that, BlackBerry's story played out like a tragedy on fast-forward.

In 2011, with phones running its next-generation system nowhere near ready to ship, BlackBerry rushed out a tablet with a flashy interface. The 7-inch PlayBook, which had to be tethered to a BlackBerry phone before it could send email, proved to be a disaster.

In 2012, founders Lazaridis and Balsillie stepped down as co-CEOs. New CEO Thorsten Heins, over Lazaridis's objections, pushed hard for the all-touchscreen Z10. It failed badly.

In 2013, Heins stepped down and John S. Chen became CEO. He brought Android apps to BlackBerry's new operating system, BlackBerry 10, trying to fix the shortage of software.

In 2014, the outsized Passport went on sale. Sales were decent, but it only caught a niche that was already vanishing.

In 2015, BlackBerry switched to Android outright. Sales still did not pick up.

What finally decided BlackBerry's failure was that office work stopped mattering so much.

From the first iPhone until now, the row of apps Apple keeps fixed at the bottom of the screen has been Phone, Mail, Browser, and Music — only one in four belongs to office work.

That is what today's smartphone is: office work is a very small part of how people use it.

In 2007 there were about 122 million smartphone users worldwide. As of June this year, China alone had 710 million mobile users, and the global total passed 3 billion.

Just as entertainment, not business programming, drew the most attention once television spread everywhere, office work stopped being the smartphone's main selling point once everyone had one.

According to the latest figures from the research firm App Annie, not one of the 100 most-downloaded apps is an office tool.

Every morning you hail a ride with a transport app; at noon you order lunch through a food-delivery app; in the evening you can watch a film in a video app.

In the end, having lost consumers, BlackBerry could not hold on to the enterprise market either.

On September 28, 2016, BlackBerry CEO John S. Chen announced the company would stop developing smartphone hardware.

The same day, Apple CEO Tim Cook announced a partnership with the consulting firm Deloitte, which would bundle the iPhone, the iPad, and office services together and sell them to businesses.

Images from Pixabay, CNET, Engadget, CrackBerry, and Wikipedia.