Everyone loves an underdog, and Research In Motion — maker of the BlackBerry — is as underdog as it gets. Much of the media, both Canadian and international, have already dismissed the Waterloo, Ontario, tech company as another has-been crushed by the almighty iPhone. On January 30, however, the corporation that once sat on top of the world will make one final gasp at relevancy with the following question: Will the BlackBerry 10 make consumers fall in love again?
In 1984, Mike Lazaridis founded Research In Motion (RIM) with his colleague, Douglas Fregin. Like many of the storied titans of Silicon Valley, Lazaridis dropped out of his engineering studies at the University of Waterloo to begin the company whose first product allowed wireless texting to electronic signs. It wasn’t until 1992 that Jim Balsillie was hired as co-CEO to focus on the marketing and sales, so that Lazaridis could spend time on his passion: product design. The yin-and-yang dynamic of the consummate engineer and the business-minded marketing guy formed a powerful unit — a unit that would eventually dominate the industry.
In 1996, RIM released the Inter@ctive Pager, the first two-way pager and a precursor to what would become the focus of the company just a few years later. In 1999, during the height of the tech boom, the company launched its iconic product: the RIM 850 Wireless Handheld. It wasn’t until 2001 that RIM asked Lexicon branding to come up with a new name for their flagship device. Quickly, it was decided that the term “email” should be avoided, as it could be a stress trigger. Someone eventually pointed out that the keys on the device looked like seeds. This viewpoint led to a discussion of different kinds of fruits. Ultimately, blackberries emerged on top.
Research In Motion’s BlackBerry quickly became a must-have device in corporate boardrooms. After the September 11 terrorist attacks, the U.S. Congress invested millions in the device, undoubtedly crystallizing its image as the newest status symbol of the up-and-comer. For several years after, BlackBerry devices had no real competition in the commercial realm. They allowed continuous multitasking, and their reputation for security was unmatched. These qualities held an obvious appeal to the political and corporate elite.
Fast forward to June 2007. BlackBerry’s steady improvements led to a $70 a share price and seemingly bright future. At the same time, Apple, which had been resuscitated from irrelevancy with the launch of the iPod, launched a new product called the iPhone.
While the technology and marketing behind the launch were dazzling, many early observers — RIM included — assumed it would be a fad product, more toy than practical device. The iPhone garnered a lot of buzz for its slick appearance and touch screen interface, and for a while it seemed as though there was enough room in the market for both Apple and RIM to thrive. Blackberry devices continued to sell more briskly over the next year, leading to an all-time high of Research In Motion stock at $148 a share on June 20th, 2008 — just under a year after the iPhone launched. At the time, no one could have imagined that over the next three years the stock would fall 80% and the company would be battling for its life.
So, what went so catastrophically wrong? It would take much more than a single article to touch on all the elements that contributed to RIM’s fall from grace, but I would argue the following three were the most detrimental:
1) RIM’s success blinded it to the rapidly changing landscape in consumer tastes. Rather than embrace a complete redesign of their flagship product, RIM concentrated on incremental change and tweaks in each successive generation of model. RIM stuck with its iconic physical keyboard long after Apple and other competitors had moved on to touchscreens. When RIM finally released its first touchscreen phone, the Storm, in 2008, it seemed to be more an afterthought than a fully conceived product.
2) RIM, like many around it, was hit hard by a swift and brutal recession that disproportionately impacted large corporate firms, which were much of its customer base. The immediate cutting of technology budgets, coupled with no major product changes to stimulate sales, led to increasingly delayed upgrades from consumers while more and more executives began to envy the ease of use provided by Apple’s miraculous line of phones.
3) A spectacular series of mishaps, delays, and disappointments over the last couple years, largely attributable to poor management decisions, led to a loss of trust in the company by both investors and consumers. Balsillie seemed more occupied with bringing an NHL team to Hamilton than rescuing his flailing company. Rapidly decreasing sales, service outages and missed deadlines (especially of the much vaunted BlackBerry 10) led some to believe that the company would be more valuable if sold for parts than as a whole.
However, at the start of 2012, Research In Motion made a major change. The co-CEO structure that had served the company for many years was finally abandoned, as Thorsten Heins, former COO, took over as CEO. Over the next year, a series of painful layoffs and further delays notwithstanding, it appeared that the company was getting back on its feet, much like Apple did after the return of Steve Jobs.
Buzz around the new BlackBerry 10 from those who have seen the product firsthand, as well as several recent information leaks, have created anticipation. In the last couple of months, RIM’s stock has started to rise as excitement grows over the January 30 launch — a launch that comes amid recent reports that Apple’s meteoric rise may at last be running into some difficulties.
So, will Research In Motion once more become king of the mobile market? Will they be able to make an unlikely comeback? The odds certainly seem long. While Apple has been the frontrunner for the last few years, the increasing prevalence and sophistication of Android, Google’s open-source and widely used mobile operating system, has led to the recent success of companies such as Samsung and HTC. Furthermore, with the increasing importance of applications, both Apple and Google’s momentum and ecosystems outside of the mobile space make them formidable adversaries. And, of course, no one knows what startup company might launch a totally new technology that will force everyone to adapt yet again.
As we draw closer to the latest BlackBerry launch date, I find myself full of cautious optimism. I’ve been disappointed before. But perhaps one of Canada’s great companies can once again make the world stop and take notice.
CORRECTION: The article originally stated that RIM’s first touchscreen phone was the Torch in 2010. RIM’s first touchscreen phone was 2008′s Storm, and the article has been altered accordingly.
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Ben Wagler has a BA in English Literature and an MA in Financial Management. He currently lives in Calgary, where he works in the banking industry. He enjoys current events — particularly politics and economics — and periodically writing for his blog, Occasional Ideas.