At the pinnacle of their unprecedented success, Research In Motion, an upstart Canadian company from Waterloo, Ontario which started over a bagel shop, was selling 64,000 BlackBerrys a day, an astounding figure in the hyper-competitive world of cell phone sales.
Who was behind it? How did they almost overnight, leave Silicon Valley and the rest of their competitors in the dust?
And how did it all go so gloriously wrong, so quickly?
Losing the Signal: The Extraordinary Rise and Spectacular Fall of BlackBerry, a new book by Jacquie McNish (former Wall Street Journal reporter) and Sean Silcoff (Globe & Mail journalist) sets out to answer all these questions and more.
RIM’s story is a classic rags to riches to rags story with enough twists, turns, and colourful characters to ensure itself a long-term spot on the New York Times Nonfiction Bestseller list. At the center of RIM’s story is the partnership between Mike Lazaridis and Jim Balsillie, two men so different, that according to McNish, “they couldn’t even agree on how they met or when they broke up.”
Every high tech success story needs a visionary engineer and in RIM’s case it was shy, but well-liked Mike Lazaridis, a guy whose desk was always littered with the detritus of cell phones he’d taken apart.
His partner was Harvard Business school grad, Jim Balsillie, aggressive, arrogant, and sharp-tongued. After Lazaridis brought home Balsillie for dinner the first time, his wife cautioned him that, “This guy’s an animal.” But as in so many other cases of opposites attracting it took the considerable abilities of both men to turn RIM into a revolutionary, cell-phone selling juggernaut.
Losing the Signal is an entertaining, informative, highly recommended read for anyone with an interest in business, entrepreneurship, and the ever-evolving high tech world.
Here are just a few of the lessons we can learn from BlackBerry’s stunning rise and rapid fall.
The ruthless and successful Confederate cavalry General Nathan Bedford Forrest expressed the secret to winning battles simply and succinctly: “Get there the firstest, with the mostest.”
In RIM’s case the ‘first’ was a then new innovation: the BlackBerry’s ability to retrieve email and deliver it to a little handheld cell phone.
Like many major innovations it seems a logical next step, even self-evident in retrospect, but at the time it was revolutionary.
Overnight BlackBerry’s email receiving cell phone became the must-have choice for executives, CEO’s, journalists, and politicians and anyone else who wanted to feel connected in a way they never had before. The ‘most’ was RIM’s ability to manufacture the numbers required to meet the increasing demand— with only a minimum of hiccups.
BlackBerry took off and all of a sudden, all their competitors found themselves playing catch-up.
The same principle applied when Steve Jobs unveiled the first iPhone.
When BlackBerry suddenly bit off a huge piece of the market, Jobs did not react by rushing out a half-assed imitation product. He refused to play catch-up. Jobs built his considerable reputation looking and thinking further ahead than anyone else.
When he unveiled the first iPhone, Jobs called it “a breakthrough Internet communicator” and it was. Essentially the iphone had a touchscreen outside and a mini Apple computer inside.
Almost immediately everyone wanted an iphone the way they had once wanted a BlackBerry. The same line-ups and frenzied buying ensued. Time Magazine named it the invention of the year.
It was more than that.
In a single move Apple had dealt BlackBerry a blow they would never fully recover from, but it wasn’t personal. The iPhone also blindsided Microsoft, Palm, and Nokia and pulled the rug out of Google’s plans to launch the first touchscreen cellphone. Great timing Steve.
To people who have never been there, it may come as a surprise that Jakarta, the sprawling, lively capital of Indonesia, is one of the most cellphone crazed cities on the face of the earth.
Twenty million people dwell in the greater Jakarta area and even the humblest owns a cell phone— or several. Phone numbers run to 17 digits and frenzied competition between carriers and providers keeps user fees low.
While many make do without owning a computer, living without a cell phone is unthinkable. And to a large extent this is true of the entire country, a nation of a quarter of a billion people, a sizable market, but one often forgotten.
Indonesians often feel ignored when major products are marketed, but BlackBerry went after their business and they did it right. Instead of just slapping the name Jakarta on a BlackBerry, they first designed a phone to accommodate Indonesia’s singular wiring issues. Then they incorporated Bahasa, the language of Indonesia, into the interface and menus They even hired a well-known Indonesian artist to contribute graphics for it. The day they launched the Jakarta BlackBerry, there was such a buying frenzy in the Big Durian that a number of people were injured. Nevertheless, the Jakarta BlackBerry became the phone to own.
To this day many Indonesians remain loyal BlackBerry users. It pays to pay attention to niche markets.
Simply stated, the Osborne Effect is when the promise or announcement of new, improved, future products featuring the next big innovation, has the effect of curtailing sales, as people decide to hold off buying until the new product is available.
It’s made worse when the product in question is rushed out before it’s ready. The disappointment with the buggy new product then tarnishes the brand, further hurting current and future sales.
Jobs didn’t rush out the iPhone before it was ready. He waited until he was sure it delivered more or less what was promised.
BlackBerry however, in trying to catch up with the iPhone rushed out a similar product before it was ready.
It did not do well.
Though it should not have to be stated, people get cynical about great success and often suspect there was some sort of cheating involved. This is reinforced when companies flame out in a lurid scandal.
However, this is not the case with BlackBerry. There was infighting, recriminations, and mistakes, but they lost their market position due to rough and tumble capitalist competition, not through wrong-doing, just as Jobs and Apple succeeded with vision and innovation, not cheating.
Okay a cheap shot, but BlackBerry’s CEO’s were notorious for being awkward and sometimes testy and uncommunicative in interviews.
Fortunately, you don’t have to look sexy on TV to succeed and thrive. While Jobs cleaned up nice for the camera, others did not.
Consider Bill Gates, now the undisputed elder statesman of the high-tech world. If you’re old enough, you will recall that as a youth he was somewhat nerdy and geeky.
Now of course, he has the kind of distinguished glow that only decades of success and many billions can bestow.
Is it all over for BlackBerry?
The popular view is yes, they are circling the drain. It certainly seems too big a stretch to imagine they will ever be selling 64,000 units a day again.
However, BlackBerry owns some valuable copyrights and proprietary software still worth a lot of money. The great Steve Jobs, often depicted as Blackberry’s nemesis has passed away, although Apple shows no signs of slowing down. A leaner BlackBerry can still make a profit, even if they are no longer industry leaders.
And if they do pull the plug, the sale of their patents will make their backers rich, or richer still.
BlackBerry took a breakthrough innovation and used it to turn out quality product that overnight made its competitors look old fashioned. Eventually, of course, Silicon Valley caught up and left them behind.
Could something like that ever happen again?
It already has. Consider another Canadian upstart company, Shopify. Like BlackBerry, Shopify leveraged a major breakthrough innovation to deliver services to ecommerce customers much cheaper than their competitors. They have been doubling in size every year for 4 years.
Recently they hit the billion dollar milestone, went beyond 80,000 customers, and are on pace to earn more than 50 million dollars this year.