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>> Milestones of Failure Line RIM’s Path to Disintegration
Blame Barack Obama. Research in Motion might do well to pick on the president, if only to distract from the other reasons for its rapidly declining fortunes. After all, it was around the time then President-elect Obama came out as a BlackBerry addict that the once-dominant mobile company’s slide really began.
But it hasn’t been just Tea Partiers who have defected from the president’s preferred mobile platform in the years since he took office. The Waterloo, Canada-based maker of BlackBerry smartphones has lost customers of all kinds while erecting multiple milestones of failure along a path toward seeming disintegration.
First the happy part of the story.
Back when people still used Palm Pilots and smartphones were still called PDAs, RIM sailed in with a brilliant marriage of technology and branding. BlackBerries meshed perfectly with corporate networks and made the then-novel idea of email anywhere a commonplace reality. Plus the thing was the color and even kind of the shape of a giant blackberry! People mashed away at the tiny keys relentlessly. The CrackBerry phenomenon was born.
And it lasted for years. In May 2007, months after the iPhone was unveiled, the Times’ David Pogue was still calling the BlackBerry Pearl “the most gorgeous smartphone ever designed.” He credited the Pearl, released a year earlier, with broadening the BlackBerry’s appeal from corporate road warriors to average consumers. The company dominated the U.S. smartphone market, and investors responded: In mid-2008, RIM’s stock peaked at nearly $148 per share on the NASDAQ.
Months later the Great Recession hit. RIM’s shares—along with its grip on smartphone sales—never recovered, though even in 2010 more mobile subscribers in the U.S. still used BlackBerries than iPhones or Android handsets.
The beginning of the end, though, was not a flawed economy but a flawed design. Specifically, the BlackBerry Storm. Billed as RIM’s touchscreen answer to the iPhone, the Storm’s confusing interface relied on a “clickable” screen that registered different commands depending on whether you tapped lightly or pressed down hard. The once gushing Pogue compared the Storm to using a manual typewriter: “I haven’t found a soul who tried this machine who wasn’t appalled, baffled or both. And that’s before they discovered that the Storm doesn’t have Wi-Fi.”
The Storm came out in November 2008, its crumminess radiating synergy with the crumbling economy. A few months later, the more traditional BlackBerry Curve came out to good reviews, but signs of internal dysfunction mounted as RIM failed to show it could compete in the new smartphone world in which Apple and Google were the fast-rising stars.
In December 2009, BlackBerry users experienced two service outages in less than a week. The company blamed glitches in upgrades to BlackBerry Messenger, one of its most popular services. At the time, Wired surmised that the loss of the core functions that still drew users to BlackBerry could finally lead cultists to throw off RIM phones that otherwise offered “a browser that’s decidedly 1990s in its look, poor maps, (and) an anemic app store—2,000 apps to the iPhone’s 100,000.”
By the next year, another selling point that kept RIM competitive—its strong encryption technology that allows corporate customers to keep proprietary emails and messages private—came under fire from several governments unhappy about their inability to spy on BlackBerry traffic. While compromises averted threatened bans in India, the United Arab Emirates and Saudi Arabia, the company’s decline steepened starting in 2010. By the end of the next year, RIM’s U.S. smartphone market share dropped by half.
The company wasn’t helped by its first and so far only attempt at a tablet, the BlackBerry Playbook. Hamstrung by a poor selection of apps, the first Playbooks stunned many by lacking the essential features that define the BlackBerry brand: native email, calendars and contacts. Using any of those basic services meant either logging into webmail through the tablet’s browser or linking up to a BlackBerry smartphone.
Eventually RIM took a $485 million loss on unsold Playbooks. Along the way, the company cut 2,000 jobs, about 10 percent of its workforce at the time.
And things haven’t gotten better. Back when Google announced its $12.5 billion purchase of Motorola in August, some analysts said RIM also fit a similar profile of a struggling hardware maker that still made an attractive takeover target. Around the same time, BlackBerry Messenger was outed as one of the key tools U.K. rioters used to incite mayhem. By the fall, RIM itself began burning to the ground. Earnings off nearly 60 percent. Email outages across 5 continents. Uninspired software upgrades. A trademark battle lost in an attempt to brand its new operating system that the company promised would spark its resurrection—the same operating system that the company said last week would not be released until 2013.
With 5,000 more jobs set to be cut, many believe the one-time hot rod of Canada’s economy is set to be stripped and sold for parts. Now valued at less than $4 billion on the U.S. market, a larger company could easily scrape up RIM by the time of the next presidential election. If he’s elected to a second term, Obama may end up using a smartphone as American as Apple pie. Or maybe like one of his recent predecessors, he’ll prefer Jelly Beans. ###
- Eric -