Shares in the Canadian maker of BlackBerry smartphones peaked in August of 2007, at two hundred and thirty-six dollars. In retrospect, the company was facing an inflection point and was completely unaware. Seven months earlier, in January, Apple had introduced the iPhone at San Francisco’s Moscone Center.
Executives at BlackBerry, then called Research in Motion, decided to let Apple focus on the general-use smartphone market, while it would continue selling BlackBerry products to business and government customers that bought the devices for employees. “In terms of a sort of a sea change for BlackBerry,” the company’s co-C.E.O Jim Balsillie said at the time, referring to the iPhone’s impact on the industry, “I would think that’s overstating it.”
Six years later, BlackBerry’s stock is worth just over ten dollars a share, and on Monday itannounced that it has formed a “special committee” to explore ways to sell the company or form a joint venture with another business, among other options. This was a striking declaration: although BlackBerry has been in trouble for some time—it underwent a public “strategy review”of its business plan a year ago—its decision to put up a giant, blinking for-sale sign suggests it has become especially desperate. If BlackBerry sells itself, the buyer’s biggest gains will be a pile of cash, a big portfolio of patents, and some security technology. In other words, one of the companies that pioneered the smartphone market may soon end up selling itself as scrap.
BlackBerry, founded in 1984 by a pair of engineering students, Mike Lazaridis and Douglas Fregin, was for years one of the world’s most innovative builders of communications products like two-way pagers and e-mail devices. But the story of its past six years has been one of missed opportunities. First, the company failed to recognize that the iPhone could hurt it. Then it overlooked the threat of low-cost competitors in Asia. Finally, and most recently, executives threw the company’s little remaining energy into a new line of high-end smartphones that failed to resonate with consumers, having arrived far too late with too little to offer.
BlackBerry, of course, wasn’t the only company that made the mistake of ignoring the iPhone and the revolution it portended: engineers at Nokia, which, years earlier, had introduced a one-pound smartphone, dismissed the iPhone because, among other reasons, it failed to pass a test in which phones were dropped five feet onto concrete over and over again, the Wall Street Journal reported last year. Microsoft C.E.O. Steve Ballmer actually laughed at the iPhone. “It doesn’t appeal to business customers because it doesn’t have a keyboard,” he said. Nokia and Microsoft, which are now building smartphones in partnership with each other, have, like BlackBerry, seen their share of the market shrink.
As early as 2009, BlackBerry’s share price had fallen to less than fifty dollars, from its high of two hundred and thirty-six dollars in the summer of 2007. The “consumerization” of business technology was already underway, and the company had failed to come to grips with it: when BlackBerry users returned home and pulled off their ties, they picked up iPhones, which were a lot more fun to use. Soon, they wanted to use iPhones at work. Simultaneously, companies realized that workers would be happier and more productive buying the device of their choice, and the firms themselves, spared the expense of providing their employees with phones, would save money.
By the time BlackBerry realized it needed to reach consumers directly, it was too late. In November, 2008, the company released its first touchscreen phone, the Storm, to middling reviews. BlackBerry then turned its focus to Asia and Latin America, where the smartphone market continued to explode. For several months, the strategy worked. In Indonesia, where the company made a special push, its products held forty-seven per cent of the market by the first half of 2011, up from only nine per cent in the first half of 2009, according to the research firm Canalys. The decline in the company’s stock price finally started to level off. But the plateau was short-lived: soon, a new crop of Asian companies started to build cheaper smartphones.
Around the time that BlackBerry deepened its efforts in emerging markets, it also bought QNX Software Systems, whose operating systems powered technology ranging from medical devices to computerized automobile interfaces. BlackBerry hoped to augment its own operating-system expertise—but in April of 2011, when the company introduced a tablet powered by a QNX-based operating system, the PlayBook, it flopped.
Then BlackBerry appointed a new C.E.O., Thorsten Heins, at the start of 2012. It would take a year for the firm to throw what David Pogue, the Times technology critic, called “BlackBerry’s Hail Mary pass”: this January, the company launched the Q10 and Z10, its most serious attempts at high-end phones that would actually be attractive to everyday consumers. While some critics praised the phones—Pogue called the Z10 “lovely, fast and efficient, bristling with fresh, useful ideas”—they have failed to sell as well as the company had hoped. In its most recent quarter, BlackBerry shipped only 6.8 million smartphones—roughly a fifth of what Apple sold during the same period.
Coming six years after the iPhone’s introduction, the Hail Mary hardly stood a chance. BlackBerry had lost the game long ago.
Six years later, BlackBerry’s stock is worth just over ten dollars a share, and on Monday itannounced that it has formed a “special committee” to explore ways to sell the company or form a joint venture with another business, among other options. This was a striking declaration: although BlackBerry has been in trouble for some time—it underwent a public “strategy review”of its business plan a year ago—its decision to put up a giant, blinking for-sale sign suggests it has become especially desperate. If BlackBerry sells itself, the buyer’s biggest gains will be a pile of cash, a big portfolio of patents, and some security technology. In other words, one of the companies that pioneered the smartphone market may soon end up selling itself as scrap.
BlackBerry, founded in 1984 by a pair of engineering students, Mike Lazaridis and Douglas Fregin, was for years one of the world’s most innovative builders of communications products like two-way pagers and e-mail devices. But the story of its past six years has been one of missed opportunities. First, the company failed to recognize that the iPhone could hurt it. Then it overlooked the threat of low-cost competitors in Asia. Finally, and most recently, executives threw the company’s little remaining energy into a new line of high-end smartphones that failed to resonate with consumers, having arrived far too late with too little to offer.
BlackBerry, of course, wasn’t the only company that made the mistake of ignoring the iPhone and the revolution it portended: engineers at Nokia, which, years earlier, had introduced a one-pound smartphone, dismissed the iPhone because, among other reasons, it failed to pass a test in which phones were dropped five feet onto concrete over and over again, the Wall Street Journal reported last year. Microsoft C.E.O. Steve Ballmer actually laughed at the iPhone. “It doesn’t appeal to business customers because it doesn’t have a keyboard,” he said. Nokia and Microsoft, which are now building smartphones in partnership with each other, have, like BlackBerry, seen their share of the market shrink.
As early as 2009, BlackBerry’s share price had fallen to less than fifty dollars, from its high of two hundred and thirty-six dollars in the summer of 2007. The “consumerization” of business technology was already underway, and the company had failed to come to grips with it: when BlackBerry users returned home and pulled off their ties, they picked up iPhones, which were a lot more fun to use. Soon, they wanted to use iPhones at work. Simultaneously, companies realized that workers would be happier and more productive buying the device of their choice, and the firms themselves, spared the expense of providing their employees with phones, would save money.
By the time BlackBerry realized it needed to reach consumers directly, it was too late. In November, 2008, the company released its first touchscreen phone, the Storm, to middling reviews. BlackBerry then turned its focus to Asia and Latin America, where the smartphone market continued to explode. For several months, the strategy worked. In Indonesia, where the company made a special push, its products held forty-seven per cent of the market by the first half of 2011, up from only nine per cent in the first half of 2009, according to the research firm Canalys. The decline in the company’s stock price finally started to level off. But the plateau was short-lived: soon, a new crop of Asian companies started to build cheaper smartphones.
Around the time that BlackBerry deepened its efforts in emerging markets, it also bought QNX Software Systems, whose operating systems powered technology ranging from medical devices to computerized automobile interfaces. BlackBerry hoped to augment its own operating-system expertise—but in April of 2011, when the company introduced a tablet powered by a QNX-based operating system, the PlayBook, it flopped.
Then BlackBerry appointed a new C.E.O., Thorsten Heins, at the start of 2012. It would take a year for the firm to throw what David Pogue, the Times technology critic, called “BlackBerry’s Hail Mary pass”: this January, the company launched the Q10 and Z10, its most serious attempts at high-end phones that would actually be attractive to everyday consumers. While some critics praised the phones—Pogue called the Z10 “lovely, fast and efficient, bristling with fresh, useful ideas”—they have failed to sell as well as the company had hoped. In its most recent quarter, BlackBerry shipped only 6.8 million smartphones—roughly a fifth of what Apple sold during the same period.
Coming six years after the iPhone’s introduction, the Hail Mary hardly stood a chance. BlackBerry had lost the game long ago.
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