BlackBerry Doomed By First iPhone, Storm Failure - InformationWeek
IoT
IoT
Mobile // Mobile Devices
Commentary
5/26/2015
12:05 PM
Eric Zeman
Eric Zeman
Commentary
100%
0%

BlackBerry Doomed By First iPhone, Storm Failure

BlackBerry corporate leaders' inability to react effectively to market changes, specifically the first iPhone and AT&T's deal with Apple, doomed the famed smartphone maker.

10 Management Books Every CIO Should Read
10 Management Books Every CIO Should Read
(Click image for larger view and slideshow.)

BlackBerry executives Mike Lazaridis and Jim Balsillie were blown away by the original iPhone's browser and other media powers, but wrote it off as just another competitive threat -- not the worldwide, industry changer it turned into. Their initial assessment, as we now know, eventually led to the company's collapse in the face of a crushing sea change across the industry.

When Steve Jobs debuted the original iPhone in January 2007 BlackBerry's co-CEOs were left with many questions, according to excerpts from the book by Jacquie McNish and Sean Silcoff, Losing The Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry.

"Jim, I want you to watch this," said Lazaridis to Balsillie the day after the iPhone's debut. "They put a full web browser on that thing. The carriers aren't letting us put a full browser on our products."

"Apple's got a better deal [than us]," responded Balsillie. "We were never allowed that. The U.S. market is going to be tougher. It's OK, we'll be fine."

Lazaridis' initial thought was that the iPhone would destroy AT&T's network -- which it almost did. His amazement wore off and both he and Balsillie decided the iPhone didn't target business users and wasn't something to be concerned with at the time. After all, the original iPhone had only a 2G radio and battery life that measured in hours rather than days, cost a fortune, and had -- what BlackBerry called -- a terrible keyboard.

(Image: Sami Sert/iStockphoto)

(Image: Sami Sert/iStockphoto)

BlackBerry's core focus was on battery performance, limited use of carrier network resources, providing a functional keyboard, and secure messaging and email. The iPhone didn't do any of that. BlackBerry's leaders concluded the iPhone would fail. They were caught off guard when it didn't.

Can't Weather The Storm

So was Verizon Wireless.

The iPhone was an exclusive to AT&T and it became a powerhouse seller there. Verizon desperately wanted a touchscreen device to compete against the iPhone. It asked BlackBerry to deliver that device, and the result was the BlackBerry Storm.

The Storm was a curious, but tragically flawed smartphone.

It had a touchscreen, but the entire glass panel of the phone moved when users typed on the keyboard. The resulting "click" was meant to feel like typing on a traditional keyboard rather than a piece of glass. The phone was buggy, however, with a slow browser and lots of crashes. It didn't help that BlackBerry delivered the device six months late -- well after Apple launched the iPhone 3G, iOS 2, and the iTunes App Store.

The Storm was an initial success, with more than one million units sold in the first two months. "It was the best-selling initial product we ever had," said Lazaridis. "We couldn't meet demand." But the bugs killed the phone. Verizon was forced to replace nearly every unit it sold and came down on BlackBerry hard for the massive failure.

"You're going to make us whole on the money we've spent fixing your Storm product problems," said John Stratton, Verizon's chief marketing officer, to Lazaridis and Balsillie, "or we'll revisit our whole supplier relationship with you. This is your responsibility. We expect you to step up because this is your fault, not ours."

Verizon wanted $500 million, but RIM said it didn't have that kind of cash. Instead, the company offered free repairs and other concessions.

Internally, BlackBerry took the Storm's failure hard.

"Everybody was upset. It was demoralizing for the whole organization," said chief operating officer Don Morrison. "You're shattering the very fabric of what BlackBerry stood for."

[Read about the BlackBerry Leap.]

Lazaridis insisted on staying the course and had the company focus on creating devices that offered its four core pillars (battery, security, keyboard, efficiency). By this point, however, Android was making a play in the consumer space and began to push screen sizes larger and larger. The Storm 2, with the iPhone 3Gs and Motorola Droid as competitors, fared no better than the original.

In the end, Lazaridis gives more credit to AT&T than to Apple.

"There was a point where the carrier, by changing the rules, forced all the other carriers to change the rules eventually," said Lazaridis. "It allowed Apple to reset what the expectations were. Conservation didn't matter. Battery life didn't matter. Cost didn't matter. That's their genius."

Had AT&T not allowed Apple to put the Web browser and other network-dependent apps on the original iPhone, it may not have been the success we know today.

Losing The Signal is available from Amazon.com beginning Tuesday, May 26.

[Did you miss any of the InformationWeek Conference in Las Vegas last month? Don't worry: We have you covered. Check out what our speakers had to say and see tweets from the show. Let's keep the conversation going.]

Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio
We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
Ashu001
50%
50%
Ashu001,
User Rank: Ninja
6/6/2015 | 11:31:05 AM
Re: not willing to adapt to change
Pedro,

Absolutely right!

There is an enormous amount of Potential in the Medical Space going ahead.

Can you imagine the massive-massive Cost-reductions possible in Medical Care if there is more competition in the Medical Equipments/Suppliers space?

The possibilities are endless as long as Apple does'nt stick to its enormous Brand Premium as they do on Smartphones.

In that case ,Google and MSFT will eat their lunch!

LOL!



 
PedroGonzales
50%
50%
PedroGonzales,
User Rank: Ninja
6/4/2015 | 9:37:54 PM
Re: not willing to adapt to change
I read a lot of articles that the medical field is in great need to redesign all the electrical devices because they aren't very good to use.  I think this is the field that Apple could really make a difference in the health field. Imagine the Iblood pressure, Imedical bed.
Ashu001
50%
50%
Ashu001,
User Rank: Ninja
6/2/2015 | 12:02:59 PM
Re: Blackberry Classic
CBJ,

Question is -Is it too little too late to save RIM from total extinction?

This is what I personally feel about this issue today.

 
Ashu001
50%
50%
Ashu001,
User Rank: Ninja
6/2/2015 | 12:01:18 PM
Re: Blackberry, we hardly knew ye
asksqn,

The RIM Management have made too many mis-steps too quickly to keep up with the competition.

And neither are they able to innovate as fast as their competitors(at low costs either).

Guessing having their entire Management team concentrated in and around North America really did'nt help matters much?

 
Ashu001
50%
50%
Ashu001,
User Rank: Ninja
6/2/2015 | 11:59:13 AM
Re: not willing to adapt to change
Pedro,

I am guessing that's why Apple is chasing the iCar idea so aggressively??

Have you also noticed that the iWATCH was a massive Sales Disaster?

They need to reinvent their strategy bigtime if they want to keep this superb success rate going further.

My recommendation?

Look at the IoT Craze properly.

That and Medical industry.

 
Ashu001
50%
50%
Ashu001,
User Rank: Ninja
6/2/2015 | 11:50:54 AM
Re: not willing to adapt to change
Stratustican,

You remind of the Fondness/longing which Fins had for Nokia.

Sad but true reality is that its very much an innovate or perish mantra in this space today.

What never ceases to amaze me is how inspite of being so robust (and relatively speaking) popular and having relatively speaking sticky consumers ,RIM really messed up bigtime in the Enterprise space,

There are so many Android users who won't hesistate to switch to an iphone and viz if the features they so desire are present there.

But RIM has some incredibly sticky consumers.RIM should have built their entire company catering to their needs only.

 
PedroGonzales
50%
50%
PedroGonzales,
User Rank: Ninja
5/30/2015 | 5:46:25 PM
Re: not willing to adapt to change
@ angelfuego. as you know they are "it" now but that doesn't mean they will be "it" forever. I wonder what will be their strategy to stay dominant.  I'm sure they do not want to be the next Blackberry.  May be that is why they are moving to other devices, once the iphone starts losing steam they got other products stand by.  May be the new Chinese phones will overtake the iphone. 

 
asksqn
50%
50%
asksqn,
User Rank: Ninja
5/30/2015 | 2:37:13 PM
Blackberry, we hardly knew ye
It's a damn shame that Blackberry management was unable/unwilling to adapt to market changes in order to compete with smartphone tech. 
mak63
50%
50%
mak63,
User Rank: Ninja
5/30/2015 | 2:25:40 AM
Perfect Storm
I didn't even know that BlackBerry released the Storm back in the days. How they even considered that it could overtake the iPhone is beyond me. They could have released the new Classic in 2008 and we, probably would be writing another story for RIM.
CBJ505
50%
50%
CBJ505,
User Rank: Apprentice
5/27/2015 | 5:24:45 PM
Blackberry Classic
The Blackberry Classic is the way to go! Look online at the reviews from BUSINESS men and women alike, the Classis is here and taking back the Business world. RIM must have listed to their continuants because this is one or shall I say, the BEST release yet. Everything flows so well and the keyboard is CRITICAL to avid email users. I enjoy this phone so much I am considering buying one for my self as I have had two prior to my two iPhones. 
Page 1 / 2   >   >>
Register for InformationWeek Newsletters
White Papers
Current Issue
The Next Generation of IT Support
The workforce is changing as businesses become global and technology erodes geographical and physical barriers.IT organizations are critical to enabling this transition and can utilize next-generation tools and strategies to provide world-class support regardless of location, platform or device
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll