“It's okay—we'll be fine”. As Steve Jobs stood on a stage on a cool January day in 2007, unveiling the very first iPhone ever, Mike Lazaridis, founder and vice chairman of Blackberry was worried. He saw the AT&T-owned Cingular Wireless offer a multi year contract to iPhone users. Think of all the videos and music that people will download!
He rushed to his co-CEO Jim Balsillie and told him "Jim, I want you to watch this," he said, pointing to a webcast of the iPhone unveiling. “They put a full Web browser on that thing. The carriers aren’t letting us put a full browser on our products. These guys are really, really good. This is different.”
“It's okay,” said Balsillie. “We'll be fine.”
Little did the two know that this exchange, that was probably a way to soothe both their nerves in the face of tough competition, would be the beginning of the end of Blackberry.
For those who owned smartphones in the 2000s and 2010s, the company represented a mouthwatering prospect of a device that was not just connected, but also chic and exclusive. So, whatever happened to Blackberry? How did the company go from being the pinnacle of business phones to shutting shop in 2022?
Hi, I'm Nishtha and this is the Sketchnote Startup Podcast. Here's where we talk to you about the world of startups, productivity tools, personal developments, stories and a lot more. You've probably already guessed what today's episode's about. We're tracking how Blackberry went from being the IT phone, to completely dying in about 22 years. Let's get into it!
Funnily enough, Blackberry's origins can be traced back to the pager. Remember pagers? The handheld devices also called beepers, were meant to mainly receive alphanumeric messages or voice ones. Blackberry 850, in the year 1999, was one of the few two-way pagers that could both send and receive messages. It had an impressive little QWERTY keyboard with keys shaped in tiny ovals. Interestingly, the shape of these keys resembling the fruit so much was the name Blackberry was coined. The company was earlier, popularly, known as RIM or Research in Motion. There's more to the Blackberry keyboard, but I'll save it for later. Let me tell you more about how the company rose through the ranks and became THE definitive smartphone brand.
Obviously, the era of pagers was fading and some really quick pivoting needed to be done. Remember Lazaridis? The founder of Blackberry, back in 1990s had expected this day to come soon enough. He imagined a world where wireless handhelds and PDAs would converge with mobile phones. And with the emergence of 2G and subsequently GPRS (or General Packet Radio Service) he saw his chance.
It's rather hard to imagine the rudimentary nature of it now, what with fast-speed Internet being the norm, cell phones being used for virtually everything. But this was a eureka moment for Lazaridis. GPRS ensured any device was always on, always connected to the Internet, and carriers could charge users based on the packets they consumed.
Enter Blackberry 5810! The phone was launched in early 2002 and marketed as a convergence of email, phone, SMS, browser and organizer features. It was an all-in-one device that corporate America was dying for. All work was being done on emails, but you needed quick access to your calendar schedules, the ability to fire off SMSes quickly and talk to people on the go. All of this was possible with a sleek, handheld device that just cost about $499. Oh, and this little beauty came with the Blackberry branding as opposed to the RIM one.
But there was one fundamental issue with this model. And it's inconceivable today. But there was no inbuilt microphone and speaker in it. You had to hook up your earphone and use it. Pretty inconvenient. It did teach a thing or two to Blackberry. And not just about devices.
Blackberry realized it had a way with emails. And that led to the advancement of the Blackberry Connect a proprietary software (and later app) that allowed you to access your emails on other non-blackberry, palm based devices.
The 5810 had been rushed to market quite quickly. But in the subsequent years, Blackberry put all their lessons learnt from the launch into making new products.
They replaced the monochrome display with color ones, added Bluetooth to their devices, and even up to 16MB of storage space!
The 7000 series, that began in 2004 also experiments with a keyboard layout called SureType. It combined the classic QWERTY style with the non-standard way of inputing onto cell phones. Navigation was also a little awkward with the scroll wheel on the right side of the device. Not that this made any difference to the popularity of these delicious new devices that became a must for high flying executives, who needed to access their work on the go. It also became a hit favorite with celebrities across the world. The 7000 series was aggressively pushed to early adopters via lifestyle channels, making them a staple as a desirable device.
The Blackberry 7230 was spotted in the hands of the It couple of the season—David and Victoria Beckham. In England, and even in the United States for that matter, it meant a big deal that the hottest couple were seen sporting the phone of the year. One report claims that merely the celebrities being seen with the phone pushed the adoptions of the Blackberry in US, Europe in Asia from from approximately 150,000 to over 860,000 that year!
Needless to say, the company was flying high! It seems they could do no wrong. In fact, they were not even close to their peak. For the uber popular 8000 series and the Pearl series were about to take the popularity of Blackberry off the charts.
This was the first time a trackball was added to the keyboard layout, making it far easier to navigate through the color screen. Fancy? Nah, wait till you hear the rest of it. The Pearl also came equipped with a 1.3 megapixel camera, as well as the ability to add a memory card and expand storage to up to 8GB!
More importantly, with these models, Blackberry went back to the QWERTY layout.
Remember I told you we'll get to the Blackberry keyboard soon? Yep, it's time!
To tell you the short version of things—the Blackberry keyboard is iconic. A darling of corporate employees working out of the office, the keyboard allowed you to type anything that you wanted, super quick. You used both your thumbs to type. If you ever remember seeing blackberry phones of the yore, they were wide, unlike today's smartphones that are longer. This thumb keyboard style of typing originated from PDAs and made their way into smartphones. I mean Nokia, HTC, Motorala etc all used this style of keypad, but Blackberry did it the best.
So much so that it caught on with the rest of the world. It didn't matter you were using the smartphone just to send SMSes and make calls, that keyboard was a hot favorite amongst users. In later years, when Blackberry users were forced to migrate to iOS and Android devices, the ghost of Blackberry still hung around. There was a demand for Blackberry style keyboard apps to be developed, and an ingenious company even developed a slide on keyboard sleeve for your iPhone, so it felt like you were typing on a Blackberry!
There was another important development at this point—I mean, 2002 to 2007 WAS the golden period of Blackberry where they could do nothing wrong. Enter Blackberry Messenger, or BBM. When I say it had a cult following, I'm quite underplaying this.
There was no better statement of being in an exclusive club than asking each other “What's your BBM pin?” It meant you'd arrived! It was truly synonymous with being in a higher station in life, a style statement, an aspirational one. Luxury redefined.
The BBM was initially a Blackberry only app. To be able to communicate using the app, both users needed to have a Blackberry device, and had to exchange a unique pin number. What was great about this was that there was that neither party EVER needed to reveal their phone numbers to each other. Needless to say, the app itself was the source of a lot of FOMO or Fear of Missing Out for potential users. Think of iMessage but a lot more exclusive. Reports suggest that until 2013, there were over 150,000 DAILY calls being placed using BBM Voice Calls, and over 300 MILLION stickers were shared. By 2015, there were more than 190 million BBM users worldwide.
It won't be too much of a stretch to say that with BBM, Blackberry had truly transcended being a niche, business only phone, and became a mainstay with something of an appeal to any potential user in the market out to buy a smartphone.
The rule of nature is such, what goes up must come down. Some day or the other. And that conversation between Lazaridis and Balisillie about the launch of the iPhone was the beginning of the slow descent of Blackberry. At this point in 2007, RIM was riding the wave of the Blackberry mania. They'd reported a subscriber base of 10.5 million subscribers. Another report says that in that year it had made more than $3 billion in revenue. Their net income was $631 million.
The next year came the very first Blackberry Bold, following the Blackberry Curve. It took the premium feel of the phones up a notch. A leather back, soft touch, carbon fiber, metal! Luxury had never been this sexy. Heck, the lines were so popular, it also ensured that Blackberry's stock saw the highest point ever of $146!
Side note: this was also the year that the Android OS came to life.
The competition in the smartphone market was still very, very nascent. But there was one thing that bystanders noticed. All of the newer players bet heavily on touch phones. On that, the RIM leadership was quite unfazed—at least on the face of it. Why? The aforementioned QWERTY keyboard. They were so convinced in the loyalty and power of the keyboard, they were sure it wasn't going to fail them.
But the iPhone caught the fancy of users across the board. It may have been the novelty factor at first, but it was enough for Blackberry to consider that maybe, just maybe there was something there in touch phones. Apple's latest offering had intrigued users enough to give it more than just a shot, and so it became the NEW hot favorite with corporate honchos. And this was a problem for Blackberry because at the end of the day, this was their core, core market.
And so, just as hastily they launched the 5810, Blackberry launched its first touch phone, the Storm. It's anyone's guess what happens when you launch a half baked product into a competitive market. Reviewers chewed the phone out and spat it. Many websites gave it a one star review. A lack of capacitive display, where you had to press down on the screen instead of tapping it, lack of apps, and a shoddily put together phone meant everyone could see that Blackberry was spooked.
While they still had control on the corporate side of things, observers realized corporate employees were now using two phones—a Blackberry for work, and an iPhone for personal reasons. Meanwhile, Android was growing parallely as well.
It's now widely believed that while Blackberry had reached the peak of its powers in 2010, Apple and iPhone had already signalled that it was all but about to end for the former. In 2009, Blackberry was the fastest growing company, according to Fortune. They ranked first amongst a 100 other companies. In 2010 its marketshare peaked at 43%. Blackberry had 41 million subscribers.
One thing that Blackberry now was falling severely short on was building for mass audience. Once users had the taste of sleek touchscreens, and applications on Android and iOS, they realised what had been lacking in Blackberry. RIM, on their part, weren't too keen on catering to the section that needed these novelty features, preferring to stick to the enterprise side of things. This was a bad move. The potential of smartphone was just starting to expand at this point. People needed a smartphone for more than just work—there was entertainment, fun, personal use at stake. And Blackberry missed its bus to try and leverage that.
While we're talking about apps, it's important to note the glaring difference between the approach between Blackberry and iOS plus Android. While Blackberry didn't give it much thought, Android and iOS leveraged the power of third-party developers to build a robust system of apps, giving them a platform to stand on that they're still benefiting from.
We're still in 2010. Then began the phone wars. iPhone 4 hit the market in 2010, and for the second time, the sale of the Apple phone surpassed Blackberry's. This time for good.
As a knee jerk reaction, the Blackberry Torch was released in 2011. It had a bigger screen, a smoother keypad and a better camera. But it was too late for it to make much of a difference. Then there was the case of the Blackberry Playbook. In 2011, Blackberry entered the tablet market, but quite half heartedly. It ran on QNX, recently acquired by Blackberry. But it was far too expensive for the lack of features. What's funnier is that in 2013, the then CEO of blackberry, Thorsten Heins, claimed that tablets would be dead in the next 5 years. Well, he couldn't have been more wrong.
In 2011 alone, Blackberry's market share dipped from 13.6 in the first quarter to 8.1 in the fourth. To make matters worse, the company faced its biggest outage ever in this same year. On 10th October, a MULTI-DAY outage saw millions of Blackberry users being affected in Europe, Middle East and Africa. The Internet Service went down in North America too. The shareholders were beyond shaken up. This was turning out to be the final nail in Blackberry's bad year coffin. They immediately demanded accountability and change in the company's leadership. Estimates are that the company lost $50-54 million due to this global outage!
Early next year, the shake up of the company leadership commenced. The first casualty were—you guessed it—Balsillie and Lazaridis. Yes, the same guys who thought Blackberry would be okay in 2007, became the first few heads to roll when things went south, just 5 years later. That's how quickly things turned around. Reports from the incident also billed this as the triumph of software over hardware. The new CEO Thorsten Heins also seemed to be made in the same mould as the two departing heads, and claimed they'd only be moving in the same direction anyway. RIM's leadership should've seen this coming from MILES away. Not only did they not see it coming, they tried to ignore a heavy set train screaming towards them as they stood on the tracks.
But Blackberry wasn't bowing out without a fight.
Realizing the importance of software, Blackberry, under Heins, launched a new feature-heavy OS called Blackberry 10. Two new models, Z10, and Q10 were the cynosure of all eyes now. The same QWERTY keyboard, coupled with a touchscreen and an app store to load up your phone. It was EXACTLY what people needed. Or was it?
In 2012, Heins and co. also realized the need to play on their strengths. In the beginning of the year they announced the BBM, something that had been a favorite of users for messaging, would be coming to Android and iOS. It led to a mad scramble amongst ex-users for nostalgia value and new users to see what the hype was. The long wait list coupled with delayed launch of the app later that year only added to the underwhelming style of the platform, and cross-platform BBM had flopped too.
The new Blackberry phones flopped too. And were beaten through an unlikely opponent. Nokia's Windows Phone Lumia had surpassed the sales of Blackberry. This was a point of no return for Blackberry.
In August 2013, not too long after their supposed resurgence, Blackberry announced their intention to sell the company. Their financial position was untenable now, and the competition they had underestimated too large for them to ignore any longer. They'd scripted their own downfall by not evolving and expecting their strengths to keep pushing their sales forever. Now, the newest casualty were the staff of the company. An estimated 40% of the workforce were laid off by the very next month, and the product line too was reduced from six to four models. It's important to note that this was also the same year RIM officially rebranded itself to Blacberry.
The company invited acquisition offers, and received one from Fairfax Financial for $4.7 billion, but they decided to wait till November 4, 2013. When the day arrived, the news broke that Heins had been replaced by interim CEO John S Chen. He had the chops to navigate Blackberry through this mess, and maybe help them pivot. Chen proclaimed loudly for the world to hear, “We are committed to reclaiming our success."
Well, in a way this happened that very year. It had long been known that Blackberry was a favorite with government authorities. Heck, when Barack Obama was elected president, it was known he'd keep his Blackberry on him. In 2013, the US state department confirmed that Blackberries were the only devices still approved for US missions abroad. The high encryption standards were touted to be behind this move. In India, police departments in Pune, Bangalore and Kochi would still use Blackberries.
Chen had now begun to pivot and pivot hard. Blackberry started to slowly move away from phones and into the space of cybersecurity. Their previous acquisition of QNX had helped. A lot. A side note about QNX: Way ahead of its time, QNX was used in car infotainment systems, driver assistance, even ATC and medical devices. It strengthened Blackberry's security portfolio, and formed the base for when the company acquired Cylance in 2019, an AI based cybersecurity company.
But there was still a lot happening on the phone front. Not like Blackberry really STOPPED releasing phones. However, in 2016, they announced that they would NOT be making their own hardware any longer. By then, Blackberry had swallowed its pride and released Priv, its first phone to run on Android. A slider phone, it was touch based but a proud Blackberry still kept the QWERTY keyboard on it. The phone released to mixed reviews and sold only 650,000 units during the 2016 fiscal quarter.
Having learnt its lesson with hardware, Blackberry now turned to TCL to design and manufacture its next phones including flagships DTEK50, DTEK60 and KeyOne and KeyTwo. Blackberry released two more devices—Evolve and Evolve X in 2018.
Chen, in an interview, explained that Blackberry was completely cash strapped and couldn't keep releasing phones. They killed several phones that were in development. He said that a company needed a billion dollars to make a mark, and Blackberry just didn't have that sort of money anymore. The cybersecurity bit, meanwhile, was going well. This is indeed a great example of a perfect pivot. Unfortunately, Blackberry is so synonymous with mobile phones that hardly anyone realizes the success story here.
Cut to 2021. There were probably not too many hardcore Blackberry users left in the world. But the company had to make it known. On January 4th, the company shut all its key services down. No data, SMS, phone calls, or even 911 support. The phones had effectively turned to paperweight.
While the parent company is now doing other things, the world's collectively mourning the demise of the phones because of the nostalgia value they held dear. But this is also a lesson. A lesson in stubbornness, of refusing to accept change, of listening to the market, and putting off evolution till it's too late.
Once a coveted phone brand with massive marketshare, Blackberry's phone business met with a slow and lonely demise. It's truly the end of an era, and with that, the end of this episode.
Join us again next time for another fascinating tale from the world of startups and corporates. Also stay tuned for more interviews, byte-sized productivity hacks and much, much more. If you don't already, subscribe to our podcast, available now on all leading podcast platforms. Oh and don't forget to share this episode if you liked it. Tag us on Twitter, we're @SketchnoteCo.
Until next time, I'm Nishtha and this has been The Sketchnote Startup Podcast.