RIM founder Mike Lazaridis had to step down after controlling the company for 28 years.
Editor's note: In this "Apple-ized" tech era, the once highly respected RIM is like a declining noble whose territory and power are shrinking. It struggles with both pain and pride.
BlackBerry is not only the core of RIM’s business but also the spiritual pillar of this Canadian mobile phone manufacturer. However, under the squeeze from Apple's iPhone and Google's Android camp, BlackBerry has gradually fallen from being the preferred communication device for business people to becoming a high-end toy for a few loyal fans. The contraction of market share and the continuous plunge in stock prices have made RIM foresee the ominous fate of being acquired.
RIM founder Mike Lazaridis insists that the company is still a "rookie" with a mission to challenge the authority of other giants. However, historically glorious, large-scale, and prestigious RIM is not an unstoppable start-up company but rather an atypical giant with good intentions but slow-moving steps.
The 28-year-old BlackBerry empire urgently needs to re-equip itself.
The following is the full text of the article:
On a day in April 2011, Mike Lazaridis sat in the BBC studio, holding the company's future: a slim 7-inch tablet computer, black, with the "BlackBerry" logo on the front. This was the PlayBook.
This Canadian company named RIM created the smartphone market through its BlackBerry phones. Success seemed to be inevitable for the company until five years ago when Apple launched the iPhone, which disrupted RIM's strategy of mainly attracting professionals via email. Apple's smartphones were not just developed for business people but also targeted the vast high-tech consumer market, greatly expanding the scale of the smartphone market.
Moreover, Apple's success opened a door for another well-funded competitor - Google - which entered the smartphone market by acquiring and developing the Android system.
The landscape of the mobile field has undergone tremendous changes with new enterprises, new users, and new alliances emerging one after another, while RIM missed opportunities repeatedly, suffering heavy losses.
Apple's iPad similarly redefined the tablet computer market and dominated it. Numerous competitors with Android operating systems followed closely behind. By the time RIM reacted, Apple had already launched the iPad 2, and their response was the tablet computer held by Lazaridis.
This demonstrated RIM's bold transformation: developing a new platform based on the QNX system acquired in 2010 to replace the outdated BlackBerry system. After claiming that “playtime is over,” RIM promised to introduce enterprise-level functions into what was originally defined as the consumer market. Apple had transformed smartphones into consumer devices, while RIM decided to produce an enterprise tablet.
In any case, it was always a kind of hope. Despite several delays, among a series of poorly performing new BlackBerry phones, the PlayBook brought some brightness to RIM's product lineup.
Prelude: The Wind Rises
When Lazaridis was interviewed by BBC journalist Rory Cellan-Jones and demonstrated the product, the iPhone had already been released for four years. The sturdy-built Lazaridis had gray short hair, glasses on his nose, and wore a gray BlackBerry Polo shirt. He claimed that this tablet would provide an "uncompromising enterprise experience."
He ignored questions about the dominance of the iPad and continued with his own thoughts. Although not a captivating demonstrator, he still spoke firmly, except for occasional incoherence. But the interview took a turn afterward.
"Can I ask you about your security issues?" Jones asked, "You've argued multiple times with the Indian government and many Middle Eastern governments. Are these issues resolved?"
Lazaridis frowned upon hearing the word "security." He tilted his head, turned his chair, blinked six times, tightened his jaw, and stared at the lens. After the question ended, he looked down, away from the lens. Only the off-screen voice of "Sorry, Rory" could be heard as Lazaridis shook his head and said, "This isn't fair, Rory."
When the public relations personnel outside the screen asked if there were more questions, Lazaridis spoke up, his voice tense and cautious: "Firstly, this isn't about security - we don't have security problems. We have the safest platform."
"Why do you think this question is unfair?"
"Because you said - you implied that we have security problems. We don't have any security problems," Lazaridis said.
"But you have a problem..."
Lazaridis shook his head again and looked at the ground. "No, we don't," he slowly blinked, shrugged his shoulders. "We're just too conspicuous because we're too successful worldwide. This is an iconic product used by businesses, leaders, celebrities, consumers, and teenagers alike. I mean, we're just too noticeable," he said, "you know," he shrugged again, still holding the PlayBook in both hands, "it all comes from our success."
"Is the issue resolved now?"
"We're dealing with many issues. I think we will make every effort to meet external expectations," Lazaridis said.
"You sound confident. We have many listeners and viewers in the Middle East and India. Can you confidently tell them that using BlackBerry will have no problems? Can you guarantee everything is, um, secure?"
Lazaridis looked at the ground. Upon hearing the word "secure," he looked away from the lens, shook his head, and said, "Alright, that's it, the interview is over." He then looked at the journalist, continued shaking his head, and looked at the ground, saying, "Please, you can't do this, Rory. This isn't fair." Then, he lowered his voice and repeated, "This isn't fair."
He raised his head, raised his voice, "Sorry, this isn't fair. We're solving this issue. Please, this isn't a national security issue." He pointed at the camera lens and said, "Turn it off." The interview ended.
It should be said that Lazaridis made sense, at least regarding the wording of the question. This journalist wanted to ask whether the Indian government threatened to shut down BlackBerry services in the country unless RIM allowed them to monitor BlackBerry instant messaging and email information. This conflict had escalated. Although Lazaridis might not have expected such a question during a product demonstration, the interview shouldn't have crossed boundaries.
However, asking about vaguely defined "security issues" touched the essence of the BlackBerry brand - it's equivalent to asking Apple about "usability issues" or Microsoft about "ubiquity issues." Lazaridis' reaction to the word "security" felt like someone questioning his life's work - producing a secure, portable email terminal. As a perfectionist and natural engineer, he had already achieved this. So such a question hurt, confused, and angered him. A more restrained CEO could have shifted the topic and regained control; but Lazaridis stormed out.
Whether the complaint was reasonable or not, Lazaridis appeared irritable because he failed to regain control of the interview. This video became a topic of conversation among tech media, RIM shareholders, and even employees.
RIM has lost the willingness to innovate, even the ability to innovate. Under the leadership of Lazaridis and his long-time partner Jim Balsillie, it was almost like a wild fiefdom. They indeed developed great products, and their success exceeded everyone's imagination, but now they have stagnated.
Yet, they refused to admit needing help and chose to stick to their old ways in the face of irreversible new trends. They suffered from the "founder syndrome": they were overly closed-off and nostalgic. Such stories rarely end well.
Within months after Lazaridis halted the BBC interview, his company faced a series of setbacks.
The PlayBook was disappointing. Although the hardware design was good, the software lagged behind competitors - surprisingly so given the long preparation time. Even more shocking was the fact that the product launched without native applications for calendar, contacts, and email. Future upgrades were expected to add these features, but for RIM, not including the iconic email function in a new product was incomprehensible.
In response, RIM claimed that users prefer to connect with BlackBerry in a "free" way. Balsillie also said that complaints about the lack of an email client were "overblown." He stated, "For enterprise users or webmail users, this is not a core element." He hoped users would "stay tuned" for the latest upgrade.
Initial sales of the PlayBook were very poor, and only a $300 discount at the end of last year managed to attract some consumers勉强. After admitting insufficient demand, RIM wrote down $485 million in inventory for the PlayBook. More critically, the security features RIM relied on were challenged in this tablet due to a tool called "Dingleberry," which allowed users to adjust the product's security settings. RIM had to lock these settings, but they were broken again, eventually turning into a game of cat and mouse.
Not only were product sales poor, but in July last year, RIM announced a layoff of 2,000 people, affecting employee morale. This layoff accounted for 10.5% of the total workforce, and RIM called it a "cost optimization project." Due to excessive recruitment speed, the layoffs merely returned RIM to its size at the beginning of the year. The company pointed out that rapid growth caused the "total number of employees to triple in the past five years." This layoff was not only an ominous sign but exposed deeper problems: hiring thousands of new employees just to lay off the same number months later clearly did not contribute to long-term strategy.
A wave of executive departures had also begun. CMO Keith Pardy left in March last year, and COO Don Morrison retired in July after a long sick leave (which gave another COO Thorsten Heins more responsibility, eventually leading to him becoming CEO). Vice President of Digital Marketing and Media Brian Wallace jumped ship to Samsung Mobile, and Senior Product Manager of PlayBook Ryan Bidan soon followed Wallace. Director of Developer Relations Mike Kirkup left in August. Vice President of Global Alliances and Developer Relations Tyler Lessard resigned in September.
Despite the poor sales of the PlayBook, the layoff storm, and the exodus of executives, RIM still had reliable services. But good times didn't last long; in October last year, BlackBerry services experienced a global outage lasting four days. For the first two days, BlackBerry remained largely silent, leaving crisis management to the carriers. Angry users expressed dissatisfaction through Twitter, making #DearBlackBerry a trending topic. Not until the third day did Lazaridis release an apology video. This outage caused RIM to lose $50 million in revenue, but the company remained tight-lipped about the specific cause.
Besides these figures, the company also announced during the analyst call that the much-anticipated BlackBerry 10 operating system (renamed BlackBerry 10 due to the BBX trademark dispute) would not be available until the end of 2012. RIM stated that this was to develop a "superphone" using upcoming chipsets, but recent product delays and operational setbacks led outsiders to doubt if the company was ready.
In December last year, Lazaridis and Balsillie announced that they would reduce their annual salaries to $1 to "further demonstrate our passion, unity, and confidence in RIM's long-term prospects." However, by the end of 2011, RIM's stock price had dropped by 75%, hitting a seven-year low, even falling below book value, i.e., the total value of the company's assets. The market even believed that selling off RIM's buildings, patents, and PlayBooks would be more valuable than continuing operations. Many shareholders called for a reshuffle of management. Canadian mutual fund company Northwest & Ethical Investments demanded that RIM separate the duties of co-CEO, even directly proposing a resolution to investors, clearly showing distrust in the company.
In response, RIM appointed a committee to consider the issue and announced that recommendations would be issued by the end of January 2012. Jaguar Financial Investment Company based in Toronto went further: they told the media they hoped to appoint a new board and sell the company either partially or entirely.
Subsequently, rumors spread that Amazon, Microsoft (in alliance with Nokia), HTC, Samsung, and others were interested in acquiring RIM. Influenced by this, RIM's stock rebounded. But none of these rumors turned into reality; in fact, RIM rejected Amazon's acquisition offer.
Even good news turned bad: when RIM's North American market share declined, it still maintained a stable position globally. As part of the global launch of BlackBerry Bold 9790 Bellagio, RIM promised half-price discounts to the first 1,000 customers in Jakarta, Indonesia, which triggered a rush purchase. Unfortunately, when the phones sold out, a riot occurred, resulting in multiple injuries. The Jakarta police even intended to sue several RIM employees for negligence.
The Jakarta incident caused a PR crisis but at least proved that there was still demand for BlackBerry phones. The last piece of bad news in 2011 couldn't prove anything, but due to its bizarre nature, it sparked various negative interpretations: two drunken RIM executives caused trouble on a Canada Air flight from Toronto to Beijing and refused to be disciplined. The crew eventually subdued them by force but still decided to return for safety reasons. After landing, they were arrested by the police and charged. Both were fined $35,382.
How did it come to this? How did a once respected, creative company that invented the smartphone fall into such a state? How should they reverse their fortunes?
Chapter One of the BlackBerry Empire: Creation and Rise
In Lazaridis' view, despite RIM's 28-year history, his company was still an industry "rookie," a small company challenging established giants. Their offices were simple, scattered within a few blocks around his alma mater, the University of Waterloo. He even donated $123 million to support scientific and mathematical research at the university.
As a child from a blue-collar family in Windsor, Ontario, at the age of four, he built a phonograph with a pile of Lego bricks and made an accurate pendulum clock at eight. He was very studious, especially fond of physics and electronics. When he started studying for his electrical engineering degree, he sold a buzzer he designed in high school, using the $600 earned to pay for tuition.
University was a time that enthralled Lazaridis, providing him with the engineering project resources he had longed for since childhood. His favorite science fiction novels provided him with continuous inspiration, such as "Star Trek." The wireless communication technology in this novel particularly fascinated him. His high school teacher Mikosinski once warned him: "Be careful, don't get too obsessed with computers. Future electronic devices, computers, and wireless devices will integrate, and this will become the 'star of tomorrow.'"
The University of Waterloo had a widely respected engineering department, where he found a spiritual home and fertile ground to grow, combining academic research with practical application. When he entered, the department's main focus was on the burgeoning computer industry. A young company named "Microsoft" began recruiting promising students from the University of Waterloo, but mainframes still dominated the industry. The renowned supercomputer company Control Data Corporation (CDC) became Lazaridis' first internship site, where he learned automatic data detection and error correction technology.
There, he also developed a commercial concept that became RIM's mission, laying the groundwork for the company's rapid growth and subsequent challenges. At that time, many Japanese companies emerged hoping to challenge CDC, forcing CDC to adopt a defensive strategy. According to Lazaridis' observations, to attract users, the importance of marketing departments surpassed engineers. They stopped developing cutting-edge technology and focused on catering to user demands, simplifying products. Disheartened engineers flocked to the more promising Silicon Valley, further weakening CDC's competitiveness. Lazaridis said that he must not make such mistakes: his company would cultivate engineers, giving them sufficient time and space to create the future. "When marketing suppresses innovation, the end is near," he later said.
During his university years, he continued his innovations. Since high school, he was fascinated by wireless communication technology, transmitting text to televisions using business radio equipment. At the University of Waterloo, he improved this technology. By 1984, nearing graduation, he developed a similar system and began exploring business opportunities. His idea was that retailers could use programmable wireless displays instead of printed advertisements. Although he admitted he had never done business before, his economics professor believed his idea was completely feasible.
With the help of childhood friend and technical partner Doug Fregin, he decided to take the risk. At the age of 23, Lazaridis had his own company. After researching several names, he named it "Research In Motion."
This was the beginning of what would later become the famous RIM.
Early RIM was no different from any other startup: the office was located on the top floor of a shopping center, cramped and small. Employees worked late into the night developing new products and rushed around during the day to secure orders. They achieved a certain level of success, enough to sustain basic operations, but they hadn't yet created a truly breakthrough product. An early contract worth $600,000 with General Motors at least showed a bright future for RIM.
However, the market reaction to RIM's LED billboards was lukewarm, with fewer than 100 units shipped. RIM sold the patent rights to this technology, gaining partial income, and then focused on other projects. One of them was the DigiSync film barcode reader, which solved a very tricky problem for movie editors.
DigiSync was launched in 1990, won an Emmy Award in 1994, and an Oscar four years later. Lazaridis attended the award ceremony, receiving the certificate from actress Anne Heche (unfortunately, not the Oscar statuette).
Although DigiSync received praise from the music and film industries, it no longer excited Lazaridis' greater interest: he and RIM were more interested in wireless data. By the late 1980s, Lazaridis began working on a project around Mobitex (a new wireless network technology designed by Ericsson). At that time, Ted Rogers' Canadian wireless company Cantel had started building the Mobitext data network, but the market potential was still unclear.
If successful, the Mobitext network would be the first public wireless data network in North America, with a pioneering concept, although Cantel was still unclear about the appeal of this technology. Cantel hired Lazaridis and RIM as consultants for this project, developing modems and software toolkits compatible with Mobitex. Unfortunately, when Cantel's Mobitex network was launched in 1990, it met with little enthusiasm.
Although the Mobitex network left a deep impression, the problem was that few within the wireless industry knew how to use it, let alone ordinary people. The dawn of the email era had not yet arrived, let alone wireless email, and two-way paging was a new concept. Cantel reduced investment in the Mobitex network and redirected employees to other projects.
In the same year, RAM Mobile Data (the predecessor of BellSouth Mobile) began developing its own Mobitex system and collaborated with RIM. RIM thus gained more Mobitex experience, and Lazaridis began thinking about how to better utilize the Mobitex network. Lazaridis later referred to it as the "RIM sandbox." Over the next decade, RIM developed modems and other elements of the Mobitex network.
By the late 1990s, RAM Mobile Data was eager for two-way pagers. Paging had existed for over 30 years but was always a one-way device. With the deployment of the Mobitex network, the development of two-way pagers saw an opportunity. RIM began developing two-way pagers; notably, Lazaridis went further, targeting a new concept: the wireless PDA.