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 it announced
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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