BlackBerry – the former king of smartphones failed because of false beliefs

Trust in the enterprise customer group and slow response to changes in the smartphone market has cost BlackBerry dearly.

In 1984, two Canadian engineering students Mike Lazaridis and Douglas Fregin founded Research in Motion (RIM). At that time, RIM only had a small office in the city of Waterloo (Ontario, Canada), above a bakery.

In the beginning, the company mainly worked on random projects, from LED lighting systems for GM, to in-house systems for IBM, and even a movie editing tool. A Canadian phone company called Rogers also signed a contract with RIM to create Mobitex - a system designed specifically for texting. The contract makes RIM an early expert in mobile messaging.

In 1996, they created the first 2-way pager. A few years later, RIM gradually revised the design, integrating more features such as color screen, WiFi or web browser.

Four years later, they launched the BlackBerry 957 - a device with an interface similar to RIM's later smartphones, but without the calling function. This is considered the first BlackBerry to complete support features for business people such as contacts, calendar, synchronization with computers. At the time of launch, the 957 was priced at $499.

The real BlackBerry smartphone came out in 2002, called the BlackBerry 5810. In 2003, they created the first smartphone with a color screen.

BlackBerry phones at RIM's office in Waterloo 2012. Photo: Reuters

By pioneering email into hand-held mobile devices, with its renowned QWERTY keyboard, trackball and high level of security, BlackBerry quickly won the hearts of world leaders and business executives. and many other rich and famous people. In fact, owning a BlackBerry was once considered a symbol of social status.

This phone thus attracts a large number of users. Many people become crazy fans of BlackBerry. There are even articles about "BlackBerry addiction". Some say that it was BlackBerry who created the world's first true smartphone.

Favored by governments and businesses, RIM's revenue skyrocketed from 1999 to 2001. They also continuously added features to the BlackBerry Enterprise Server (BES), a service for businesses, and the BlackBerry operating system. OS.

During its golden age from 2001 to 2007, RIM actively expanded globally and launched many new products. While succeeding in the enterprise market, RIM also made its way into individual consumers. The BlackBerry Pearl series is considered to be very successful. The Curve and Bold lines that followed were also well received.

But the popularity of Android (Google) and iOS (Apple) also gradually influenced BlackBerry. In 2007, Apple released the iPhone. At that time, RIM co-CEO Lazaridis was sitting at home watching this event, so intently that he forgot to exercise.

On stage, the late Apple CEO Steve Jobs held a small device to download music, videos and maps from the Internet. "How do they do it?" Lazaridis wondered. His curiosity quickly turned to amazement when Stanley Sigman - CEO of Cingular (under AT&T) announced an exclusive contract with Apple , to sell iPhones for many years.

The next day, Lazaridis dragged co-CEO Jim Balsillie into his office and turned on the iPhone video. "They put a full-featured web browser in this thing. The carriers don't let us do that," he said.

Balsillie's first thought at the time was that RIM was about to lose AT&T customers. He said that Apple at that time had a better deal with this carrier, and RIM was not allowed to do so. Lazaridis evaluated the iPhone as a very different product from consumers at that time. But Jim Balsillie reassured him that RIM would still stand.

The WSJ also said that in fact, BlackBerry leaders were initially quite indifferent to the iPhone. They claim that this phone is only aimed at young consumers, with entertainment features. Besides, the iPhone's low battery, operation on 2G networks and AT&T's ability to congest the network with music and video downloading features made RIM not very concerned.

"It can't threaten RIM's core business. No security, low battery, bad keyboard," said Larry Conlee, Lazaridis' top VP at the time.

BlackBerry remains focused on features like security and an easy-to-use keyboard, to dominate the enterprise market. Because of their focus on this user group, they persisted with phones with full keyboards, despite feedback from the majority of users that they preferred touch screens. BlackBerry sees its products as email phones, instead of the feature-rich mobile computers that Google and Apple aim for.

However, the iPhone then became a hit. Not only targeting individual users, the iPhone also wants to attract business leaders - BlackBerry's key market. However, at that time, BlackBerry still maintained its status as a "device for business email". People often use two phones, one BlackBerry for work and another for personal use.

2007 was also the year Google announced that it would allow smartphone companies to use its Android operating system for free. That cleared the way for companies like Samsung Electronics to lure customers away from BlackBerry with cheaper products.

In 2008, BlackBerry released the Storm - its first touchscreen phone - to compete with the iPhone. This phone is sold through Verizon. Sales quickly hit 1 million units in just the first two months. But then, complaints about this device's failure began to appear. Millions of devices were returned by users, causing Verizon to lose nearly $500 million.

This was the first time that investors, analysts and the media had begun to worry about BlackBerry's business prospects.

In 2009, RIM remained at the top of Fortune magazine's list of the world's 100 fastest-growing companies . Data from research firm Gartner shows that in 2009, BlackBerry's share of the global smartphone market was nearly 21%.

In the US, in September 2010, data provider Comscore said RIM had the largest smartphone market share, with 37.3%. By 2011, BlackBerry had sold more than 50 million smartphones worldwide. That same year, they peaked in sales at $19.9 billion.

Revenue of RIM/BlackBerry period 2004 - 2023 (unit: million USD). Graph: Statista

But the company then steadily lost market share to Apple's iOS and Google's Android devices. RIM underestimated the pace of change in the smartphone market. New devices are released every year, while RIM is slow to react and overconfident that business customers - rather than individuals - are the driving force in this market. Email service is not enough to retain customers when their needs are increasing.

By November 2012, BlackBerry only held 7.3% market share in the US. Products running the operating systems of Google and Apple hold 53.7% and 35%, respectively. That same year, Samsung Electronics became the world's leading smartphone manufacturer.

In January 2012, BlackBerry announced that two CEOs Jim Balsillie and Mike Lazaridis would step down, amid the company's capitalization and market share plummeting. The replacement was Thorsten Heins, a leader who had joined the company in 2007. But two years later, Heins still could not help the company turn the situation around.

In the first quarter of 2014, they lost $84 million. After this news was announced, BlackBerry stock fell up to 30%. In the last quarter of 2016, of more than 432 million smartphones sold globally, only 208,000 were BlackBerry.

That same year, Chinese electronics company TCL acquired the rights to use the BlackBerry brand, running the Android operating system. But only 4 years later, TCL announced to stop producing this smartphone.

In 2013, RIM changed its name to BlackBerry. In recent years, BlackBerry has gradually phased out its hardware business and shut down smartphone-related services . To date, the company is still trying to sell patents related to mobile devices. They currently focus on cybersecurity and the Internet of Things (IoT).

Last month, BlackBerry announced revenue and profit for the first quarter of the fiscal year 2024 (ending May 2023) exceeded forecasts. Revenue came in at $373 million, double the estimate of data provider Refinitiv. Cybersecurity revenue is $93 million. Revenue from licensing and other services was $235 million, mainly from patent sales. Operating profit is $35 million.

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