Inside the fall of BlackBerry: How the smartphone inventor failed to adapt | Sean Silcoff, Jacquie McNish, Steve Ladurantaye | Sept. 28, 2013 | The Globe and Mail

Research on Blackberry history should be case study for business schools. @SeanSilcoff @JacquieMcNish @Sladurantaye provide balanced journalism on Innovator’s Dilemma in progress.  If you were leading Research In Motion, would/could you have done differently?

The challenge was clear starting in 2007.

Mike Lazaridis … first saw the Apple iPhone in early 2007. There were a few things he didn’t understand about the product. So, that summer, he pried one open to look inside and was shocked. It was like Apple had stuffed a Mac computer into a cellphone, he thought.

… the iPhone was a device that broke all the rules. The operating system alone took up 700 megabytes of memory, and the device used two processors. The entire BlackBerry ran on one processor and used 32 MB. Unlike the BlackBerry, the iPhone had a fully Internet-capable browser.

By 2010, a strategic alternative had been implemented.

After relying on its own technology for so long, Mr. Lazaridis decided the company’s next advance would come from outside. In April, 2010, RIM announced a deal to acquire Ottawa-based QNX Software, a cutting-edge software maker that would provide the building blocks for the BlackBerry 10 operating system – the new platform Mr. Lazaridis knew the company needed. [….]

Mr. Lazaridis decided he would isolate the QNX team and get them to focus solely on the new operating system, while leaving existing programmers to work on products for its existing platform, BlackBerry 7. Eventually he hoped QNX, led by its CEO Dan Dodge, would retrain his entire organization.

But first, RIM had to answer a key question: If it wanted to remake the BlackBerry on the QNX system, what was the best way to do that? Should it move over some of its old Java-based applications, or rewrite them all from scratch? If the company abandoned Java altogether, what would it mean for third-party developers who used it?

In parallel, BBM was a distinct feature unique to Blackberry that could be exploited.

RIM developers created the BBM app in 2005 to enable users to communicate not by e-mail but by using their devices’ “personal identification numbers” or PINs. It was the first instant messaging service built for wireless devices, and it caught on quickly. It was reliable, free, always on and users could send as many messages as they wanted at no extra cost, unlike basic text messages. [….]

But BBM only worked on BlackBerrys. As Apple and Android took off, BBM knock-offs appeared that could function on those devices, [….]

Mr. Balsillie began floating the idea that carriers could instead offer BBM as their own enhanced version of text messaging, generating revenue for carriers while providing a cut for RIM. He called it “SMS 2.0.” (SMS stands for “short message service.”)

Undercutting that direction resulted in a corporate clash.

Mr. Balsillie was pushing to formally launch SMS 2.0 at an industry conference at the end of February, 2013. But with the company under mounting pressure to overhaul its top leadership, he and Mr. Lazaridis handed the reins to Mr. Heins in late January.

A few weeks later, Mr. Heins killed the SMS 2.0 strategy, backed by Mr. Lazaridis. [….]

Mr. Balsillie, no longer an executive but still a board member, urged directors to reconsider, but they backed the new CEO. Mr. Balsillie couldn’t abide by the decision. He resigned from the board in late March, then sold all his stock. Few people knew the reason for his departure, including his long-time co-CEO, Mr. Lazaridis.

The launch of the delayed BB10 device put core customers who wanted a keyboard secondary to the touchscreen model.

Finally, close to six years after Apple unveiled the iPhone, the long-awaited BlackBerry 10 made its debut at a glitzy launch event in January …

Once again, the market had shifted, and there was little demand for the Z10 in an era where sophisticated operating systems were commonplace and phones were getting cheaper. The one advantage the BlackBerry may have had over its rivals – a physical keyboard – wasn’t present in the first model to hit the market.

“The only people still clamouring for a new smartphone from BlackBerry were in it for the keyboard,” said S&P’s Mr. Moorman. “Then they come out with a touchscreen. Anyone who wanted a touchscreen was already gone.”

As it turns out, both Mr. Balsillie and Mr. Lazaridis were proven right. It was hard enough to compete in a commoditizing smartphone market. Leading with the wrong product on top of that only made BlackBerry’s task more hopeless. Mr. Heins’s strategic errors only compounded the challenging situation he had inherited.

On February 15, Jim Balsille sold his stock at about $11 per share.  On October 20 announcement of job cuts, the price had falled to about $8 per share.

Full article as “Inside the fall of BlackBerry: How the smartphone inventor failed to adapt” | Sean Silcoff, Jacquie McNish, Steve Ladurantaye | Sept. 28, 2013 | The Globe and Mail at http://www.theglobeandmail.com/report-on-business/the-inside-story-of-why-blackberry-is-failing/article14563602/?page=all.

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