BlackBerry

"RIM had an advantage that Nokia and other phone makers lacked: its own data network. BlackBerry messages traveled through RIM’s in-house network, which was plugged directly into the carriers. The unique connection gave RIM a back door to sneak in services carriers wouldn’t allow. In the mid-2000s RIM began shipping BlackBerrys secretly loaded with sleeper applications. Carriers and customers had no idea the applications existed until RIM sent an alert to BlackBerry users about a software upgrade. Hidden within the digital transmission was a file that unlocked the applications on the device—a Web browser and links to popular instant messaging services. Icons immediately popped onto BlackBerry home screens around the world. By the time carriers realized what was happening, millions of customers were using the Internet and exchanging instant messages on their BlackBerrys. Initially carriers were furious. Verizon threatened to pull BlackBerry from all retail channels. “I had to speak with probably twenty different carriers about this,” says Aaron Brown, then a director of services in RIM’s product management group. “But at that point, they realized the truth”: carriers were powerless to turn off the browsing or messaging services. Brown reminded his angry callers about the fine print in service contracts that gave RIM the right to change features and services on its phones “without permission or notice.” After a while carriers stopped complaining. Lucrative data traffic was becoming a multibillion-dollar business for the carriers thanks to the growing popularity of e-mails and instant messaging. “The key was stealthily leveraging and launching, then asking for forgiveness,” Balsillie says."

"There was a bigger game under way. Though they flattered Yankowski with attention, RIM’s partners had no interest in selling their company. They took Yankowski’s calls, showed up for meetings, and swapped boasts to keep him off guard. “Most people’s instincts tell them to seek clarity in business dealings, but ambiguity is more powerful in my view,” Balsillie explains. “You’d be surprised how long you can string competitors along without ever showing your cards.” An unsuspecting Yankowski pursued a takeover of RIM for months. Throughout Yankowski’s courtship of RIM, Balsillie downplayed his own company’s abilities and ambitions—flashing what he calls the “Aw, shucks card.” BlackBerry, he told Yankowski, was a small niche device lacking the global appeal of Palm. He talked of licensing Palm’s operating system and continually asked what RIM should do next. “That seemed to be his primary preoccupation,” Yankowski says. That’s exactly what RIM wanted him to think. “My objective,” comments Balsillie, “was to get him to underestimate RIM.” When Balsillie joined Yankowski in San Francisco for dinner later in 2000, the RIM chief pulled out a prototype of an upgraded BlackBerry, called the 957, which shared many of the features of the latest Palm device, including a large, square screen. He handed the model to Yankowski, who was suddenly full of questions: “What network will RIM use for this BlackBerry?” “We haven’t told anybody yet,” Balsillie replied. Eyeing the screen, Yankowski flashed Balsillie a big grin. “That’s okay. I already know.” “What do you mean?” “It says right here.” Yankowski pointed to the letters CDPD in the top right corner of the screen. CDPD, short for cellular digital packet data, was a wireless data network technology heavily promoted by its creator, AT&T. So that’s what RIM’s up to: dumping Mobitex for CDPD, Yankowski figured. Palm was already testing its next device on the CDPD data network. Balsillie was still giddy when he caught up with David Yach, a Canadian engineer who had been recently hired away from California software maker Sybase as RIM’s chief technology officer. Joining Yach in RIM’s jet, Balsillie blurted out: “He fell for it!” In fact, what he showed Yankowski earlier in the evening was a decoy with the screen changed to read CDPD by one of Yach’s engineers, with the specific intent of fooling the Palm boss. RIM had no interest in CDPD. Lazaridis viewed it as technically inferior technology, correctly predicting it would soon be dead. If Palm wanted to jump to CDPD, that was fine with Balsillie. For now, RIM was sticking with Mobitex, a slower but more reliable messaging highway. Yankowski has no recollection of the San Francisco dinner, but he remembers what happened soon afterward. Takeover talks broke off abruptly when Balsillie said he would have no part of a deal that did not hand him full executive control of the merged company. The petulant demand by a firm with one-twelfth the revenues of Palm seemed…"

"To Balsillie, RIM was in an existential crisis, mired in what he describes as “strategic confusion.” The company’s business had been disrupted on several levels, with no obvious path forward. Was RIM supposed to defend the QWERTY keyboard, or jump all-in and become a touch-screen smartphone maker? Was it supposed to challenge Apple at the high end of the smartphone market or focus on the lower end with devices like its Curve and Gemini models, which were driving heady sales gains in foreign markets where Apple wasn’t yet a factor? Should the company stick to its closed, proprietary software technology or open its platform? One of the biggest puzzles was what to do about apps. For years Balsillie had fought carriers for the right to sell apps to customers, reassuring them RIM was “constructively aligned” with the wireless carriers. Then Apple waltzed in with an app store despite AT&T exclusion from any app revenues. Now RIM was forced to play catchup. Unlike RIM, Apple had an army of outside developers who had already built consumer apps for its computers and iPods and were primed to do the same for the iPhone. By the time BlackBerry launched its app store in spring 2009, iPhone customers had already downloaded 1 billion apps.2 But, Balsillie wondered, was RIM taking the right approach or should it stick to its “constructive alignment” narrative and leave the sale of apps to carriers? Balsillie struggled with each question. “I was strategically confused for a period of time when the game changed,” he says. “There was tremendous limbo-esqueness. Where do we dance? Apple had the same strategy clearly in 2007–08 that we had in 1999, and now we had to re-examine” every element of RIM’s approach. “The Storm failure made it clear we were not the dominant smartphone company anymore. We’re grappling with who we are because we can’t be who we used to be anymore, which sucked.… It’s not clear what the hell to do.”"

"The solution, Lazaridis and Balsillie decided, was an unorthodox plan to infiltrate Fortune 1000 companies. RIM made it easy for influential managers and executives to link the addictive BlackBerry system into their corporate e-mail without involving the IT department. Their secret weapon was the software designed by RIM engineer Gary Mousseau. The program was included free with every BlackBerry purchase and took only fifteen minutes to install on any computer. Once it was running, it connected the BlackBerry to a user’s e-mail and the device was operational. RIM even priced the devices so they fell within executives’ discretionary spending budgets. The idea was to get a critical mass of top executives in a company to use BlackBerrys before their CIO realized a new technology had infiltrated the business. This would be all the leverage RIM needed, Balsillie and Lazaridis believed, to convince CIOs to acquire sophisticated RIM servers to centrally manage large volumes of BlackBerry devices from within their IT departments. The CIO end run was a unique strategy, making BlackBerry the first IT product ever sold from the top down, pushed by senior management onto their IT organizations."

"BlackBerry: The Inside Story of Research in Motion, Toronto, Key Porter, 2010, pp. 115–"

"Harvesting the BlackBerry: An Insider’s Perspective,"

"A final draft of the handout circulated by e-mail to directors and advisers on January 19, 2012, began with the statement that RIM’s board, “acting on the recommendation” of Lazaridis and Balsillie, had unanimously approved Heins as the new CEO. Much of the remaining announcement praised the leadership and devotion of the departing chiefs and their courage in sacrificing short-term gains for long-term growth by acquiring QNX and its operating system. This was hardly a reassuring message to rebellious shareholders. A board faulted for deferring to CEOs would be seen to have bowed again, this time to their proposed successor, Heins, an insider who shared responsibility for PlayBook and BlackBerry 10 delays. Instead of reassuring shell-shocked shareholders that a new beginning was under way, the company chose to honor the status quo, hailing years of strategic confusion and product failures as courageous long-term vision. The approach did not sit well with at least one director. “Jesus Christ. What are we doing?” director Roger Martin fumed in a blistering e-mail reply to the company’s directors, CEOs, and advisers. The press release was doomed, he believed, by leading with Balsillie’s and Lazaridis’s recommendation for Heins, as their successor. To his mind, the proposed press release failed to send a clear message that meaningful change was occurring at the embattled company. “We have to remember shareholders are pissed,” Martin continued. “If Thorsten was so fantastic time and time again, why the huge problems at RIM, people will ask?… Let’s stop. Let’s think. Yes, there are persistent storm clouds and threats. Yes, this company is learning to be a $20 billion company. I get all that. But it doesn’t give us license to stop thinking.”"

"Yach charged his software teams to work on alternative plans. Two possible solutions emerged, neither of them ideal: Yach favored running the existing Java BlackBerry platform on top of QNX’s core technology in order to support existing apps. But many developers, including Alan Brenner, championed a different approach: tacking the BlackBerry interface on top of an Android operating system with QNX at its core. Android offered ready-made technology that would enable RIM to push out a new device to market quickly, with a running start in consumer apps, where Android was a significant player. But it would also mean apps developed for BlackBerry wouldn’t work anymore. By late 2010, Yach embraced a third option: combining RIM’s Java operating system with Android’s. Lazaridis wanted no Java on future BlackBerrys and was troubled by Android: he felt an Android BlackBerry would be less distinguishable from countless other smartphones and would be far less secure than the QNX or existing BlackBerry operating systems because Android was written using publicly available open-source code. Businesses were sure to reject it. Nevertheless, Lazaridis allowed the debate to play out for months. “There was no right answer,” says one engineer involved in the discussions. “You just needed to pick an option and run with it. There was more and more discussion about looking at options than making a decision. And making the decision wasn’t easy because ownership wasn’t there. I think the decision was clear in Mike’s mind: there was going to be a rewrite, done by brand-new people. It was probably the right decision. But the execution of that decision,” in the engineer’s view, “was done poorly.”"

"Balsillie concluded that RIM’s hardware business would never recover. “When the game changes, if you’re not able to become what the game is now, you must pivot to another game,” he says. “I saw a tsunami of Androids coming and didn’t want to bet everything” on BlackBerry 10 smartphones. RIM, he says, had to offset the vulnerability of the hardware business with “a big, big shift.”"

"RIM was a one-product company struggling with a damaged brand image and an outdated product. Years of strategic confusion and poor product execution had caught up to the BlackBerry maker."

"O’Marah recognized that Apple’s strategy was brilliant. It accounted for why the company was running circles around the competition, turning revered companies like Nokia and BlackBerry into case studies of strategic failure. But it had one major flaw. Whereas smartphone rivals like Samsung could bolt a bunch of off-the-shelf components together and make a handset, Apple’s strategy required it to become ever more wedded to the industrial clusters forming around its production. As more of that work took place in China, with no other nation developing the same skills, Apple was growing dependent on the very capabilities it had created."