The Decibel - Why BlackBerry’s rise and fall still matters

Episode Date: May 12, 2023

BlackBerry changed our lives when it created the world’s first commercially successful smartphone. But its dominance was disrupted and the Canadian tech giant lost nearly everything. BlackBerry’s dramatic fall from grace is now the topic of a film that is in theaters May 12.The Globe’s technology reporter, Sean Silcoff, who co-authored the book that film is based on, is on the show to discuss how he got the inside access needed to tell the story of BlackBerry’s rise and fall and explains why it is still relevant today.Questions? Comments? Ideas? Email us at [e-mail]

Hi, it's Mainika. Your support means a lot to us here at The Decibel, and your feedback matters too. And we want to know what you think of the podcast. So we've set up a quick survey where you can tell us your thoughts. And as a thank you, there's a chance to win some prizes. We'll tell you how at the end of today's episode. It's funny, actually, I always thought I was a holdout because I had my BlackBerry until like 2014 or something. And most people around me had moved to an iPhone or an Android. But you're actually, you held out a little bit longer. I was the laughingstock of my family. Sean Silcoff is a technology reporter at The Globe, and he literally wrote the book on BlackBerry. The story of BlackBerry starts in a little office above a bagel shop in a small town in Ontario. And that company grew and invented the smartphone that changed the way we live our lives. New BlackBerry, huh?

Talk on the phone while you send and receive emails. How sick is the web browsing? Everyone have their new BlackBerry from AT&T? The responsive full QWERTY keyboard makes typing fast and easy. It's kind of hard to remember now, but BlackBerry, with its keyboard-equipped smartphones, was a behemoth in the tech sector. At its height, it was bringing in $20 billion, yeah, that's billion with a B, in sales every year. And then, it lost almost everything. Now, a new movie called Blackberry, based on Sean's book, is hitting theaters.

There is a free wireless internet signal all across North America, and nobody has figured out how to use it. It's like the force. Today, Sean is here to explain why the legacy of BlackBerry is a cautionary tale for today's tech giants. I'm Maina Karaman-Wilms and this is The Decibel from The Globe and Mail. Sean, thank you so much for being here. Thanks for having me. So the BlackBerry movie is based on a story that you and former Globe and Mail reporters Jackie McNish and Steve Laterante wrote nearly a decade ago. Were you surprised that it became a film? Well, there was interest in turning this into a movie from fairly early on.

And I think we signed our first option deal within about a year, probably about 2016. There was some delays along the way, no small part due to COVID. But, you know, over the years, I would say we've heard from probably about a half dozen filmmakers. And you can see why. I mean, it's a great rise and fall story. It's the you know, the little guys outsmarting the big giants like Nokia and Ericsson and Motorola, reaching the pinnacle and then getting disrupted. And then it's also a story about two people, because

ultimately, the co CEOs had a real schism, which the movie explores. And of course, we do as well. And so you had that human drama in the middle of it. So I could see why there were natural elements of the story that would pull in filmmakers. Yeah. Well, let me ask you about the human drama here then, because you talked about Jim Balsillie, who is one of the co-founders of Research in Motion, also called RIM, which is the company behind BlackBerry. So all of those are essentially the same thing. Sean, you got to know Jim a little bit.

So what's he like? Jim is extremely bright and extremely intelligent and strategic. And he's got a savvy about him. And, you know, he's also surprisingly self-effacing in person. I think he came across when he led RIM as a bit arrogant, but he was a loyal, dedicated entrepreneur, very hard driving, did not suffer fools, a real disciple of a book called The Art of War, which, you know, when I went to business school in the 80s and 90s, everyone had a copy of it tucked under their arm. And it's this ancient text about, you know, how to approach battles, how to approach business, ultimately, is what it

became. And, you know, a lot of people paid it lip service and carried around. Jim actually lived it. And he followed some of its teachings to a T, such as, you know, always try and lead your enemy to uneven ground, particularly if you're outmatched, make yourself appear bigger than you actually are. And he put some of these lessons to work at BlackBerry. And how does Jim compare to the other co-founder, Mike Lazaridis? Mike is the scientific genius, so very thoughtful, very scientifically minded. I mean, at certain points in our interviews, and these were, for the book, five-hour marathon sessions, Mike would get up and go to his whiteboard and, you

know, start sort of explaining things like he was a professor. But you can see he's a scientifically-minded person and also very proud and very passionate of what he created and what he was able to do in Canada, what they were able to do in Canada. Why do you think the rise and fall of BlackBerry is still relevant today? Well, this company operated in the technology sector, which is very fast-mo moving, very predatory, always prone to disruption as it delivers disruption. You know, the example of OpenAI's chat GPT service, which

looks to potentially threaten Google, anyone doing search. So I think it's particularly salient at this moment, because that is sending shockwaves through the industry. And then there's other technologies coming at us like driverless cars, potentially quantum computing. And so I think I think we are in an era of technology disruption that really began with the BlackBerry, but we're probably only in the first or second inning of it. And so it's going to be a state of constant disruption. And the story of BlackBerry is one of a company that reached $20 billion in sales, dominated the smartphone market, changed how we communicate, seemed to have built itself an unstoppable lead until it was completely upended by Apple and Google.

So I think if you look in the current environment, I think there's lessons to draw even from the giants who are now worth trillions of dollars to say, well, don't take for granted your market lead. Just because you created the market, just because you disrupted the market and created something in your own vision doesn't mean that you won't be prone to disruption as well.

Yeah. Okay, so let's go back in time for a minute here, Sean. How did you get the access to piece together the fall of BlackBerry? It was an accident. So I joined the Globe in early 2012. I was a veteran reporter. I took a couple of years off the business and I came back. For my first year, I was just doing random stories. I did a piece on what happens to old Kentucky Fried Chicken outlets when they lose the bucket and try something different. I wrote about payday lenders. I was having a lot of fun. One of the stories I happened to do that year was about the state of venture capital in Canada, which was not a very good state.

And I get this email one day from Jim Balsley in the fall of 2012 saying, hi, I don't believe we've ever met. I'm Jim Balsley. I used to be the CEO of RIM. And he was interested in talking about intellectual property. Well, the first thing I thought was this could not be the real Jim Balsley. Because at that point, he was about eight or nine months out of research in motion, BlackBerry as it's called now. And everyone wanted to find out what had happened to this company how had it lost its footing so badly no one had really told that story and it was like

the fish jumping into the boat you know so i said uh sure mr balsley well maybe we could meet at some point and he responded right away and said i'm going to be in ottawa in two days let's meet at the chateau laurier i showed up and jim balsley was there in a Navy uniform with a little Balsillie name tag on. Yeah, he's an honorary captain of the Navy. So it was very surreal, first of all, to be seeing the real Jim Balsillie, but then also to be seeing him in a Navy uniform. And we talked like he wanted to for an hour about intellectual property. I didn't get any of it. I'd never written about the subject. And then at the end, I said, hey, do you think you'd ever want to talk about BlackBerry, about research in motion? He said, No, no, no, I don't want to destabilize the current management. That's not for me to do. He said, Absolutely, no. And

over the next 10 or so months, we, we exchanged emails, messages, articles about intellectual property until one day, BlackBerry announced that it was actually putting itself up for sale. And I called Jim to tell him that. And he was suddenly ready to help me do a little research into the story. So he opened a few doors, he made a few phone calls, and I was able to start reporting on this story. So that piece came out in the report on business in the Globe and Mail in September 2013. The title of the article was How BlackBerry Blew It. And it was the first comprehensive look at what had led to the company's downfall. We'll be back in a moment.

So at one point, I mean, BlackBerry was briefly Canada's most valuable company, right? It had something like 50% of the smartphone market. Like, when did that slide start to happen? Well, it happened really in two phases. So Apple came along in 2007 with the iPhone, and they immediately captured a chunk of the market. But BlackBerry was kind of holding its own against Apple because it still had a lock on the corporate market. And the iPhone was still seen as a little bit of a consumer-oriented device, kind of fun, something you used in your spare time. So they didn't really have that big a dent in their

market share, nothing that they really worried about. The real impact came when Google came along and Google offered up another device that was also software based. And the real disruptive move that Google pulled was when they had an app store, when they were given an app store, they told the carriers, you know what, our 30% cut of app sales, you can just have that. Here's some free money. And it instantly incentivized every carrier to start adding Androids and allow them to have app stores and to just advertise the heck out of Androids. And that's when you really start to see BlackBerry's market share start to fall off precipitously. Yeah. And so that was in 2010. Maybe this is an unfair question, Sean, because of the benefit of hindsight now in 2023. But why didn't BlackBerry see the iPhone and the Android

coming? Well, you have to go back to the birth of the BlackBerry. Everyone was trying to combine wireless devices and data together in the 90s and doing a terrible job of it, except for BlackBerry. They kind of figured out how to do it. They built a simplified device based around the payload of messaging, which was email. Email was becoming very prominent back then, and they offered people a simple, seamless, and frankly, fun way to read and send emails on the go. And no one else could figure it out. Everyone else was trying to ram too much into these devices, turn them more into fully functional computers. And RIM had the right approach. They had the right science behind it because it was very complex. They made it look very simple. They made it fun to use. And they started to beat everyone else. And so they beat some of the best and brightest companies of Silicon Valley circa 2000, 1999. And so along comes Apple six, seven years later, with a device that to BlackBerry looks remarkably similar. You're trying to put the whole internet, a mini Mac computer in people's hands it's going to suck batteries remember the first blackberry lasted for four weeks on a single double a battery on a

single on a single battery it was incredibly efficient because what they were really doing was messaging and everything else was secondary wow so the first iphone burned through batteries mike thought it was silly that people had to walk around with their plugs everywhere. Like who, who needed that? That was ridiculous. Also, you know, if you're putting the whole internet in people's hands, that's a lot of data and that's going to clog up the networks. And AT&T, which had the exclusive on the iPhone for four years, certainly had a network clogging problem. There were lawsuits because of dropped calls and all this data that was gumming everything up. So BlackBerry thought all of these things were going to be a problem, essentially.

They'd say, who would want these things? Yeah. And they kind of said, well, we've seen this movie before. We've beat these folks back successfully. But what they didn't realize was once people had the internet, the full internet in their hands, that they were going to fall in love with it. Just like they had fallen in love with the idea of sending emails wherever they were, you know, eight, nine, 10 years earlier. That was the pattern. And then they made a critical error because Verizon didn't have the iPhone, they'd actually passed on it. And AT&T had it exclusively for four years in America. So Verizon said, geez, we need an iPhone killer. BlackBerry, can you give

us one? Yeah. So what was BlackBerry's response then to the iPhone and the Android that were already out there? Their response was one of the most critical technology failures in recent memory. And it was a device called the Storm. And the big mistake BlackBerry made was not recognizing that the paradigm had shifted, that this was now software in a case as opposed to a nice device. And so they made really the BlackBerry version of a smartphone. And they had that same thin operating system that had been good enough for messaging. They put it in a device with a touchscreen, but their version of a touchscreen wasn't something you just tapped with your fingers. You had to push the entire screen down.

The screen was like floating on the device. And they thought, well, people like their buttons in a BlackBerry. So they want that satisfying, tactile feeling of pressing down on the screen, hearing a click, and knowing that they've engaged. This is kind of like a weird hybrid, isn't it, of like the traditional BlackBerry and the touchscreen on an iPhone. This is a weird mix in the middle. In retrospect, it's a weird mix. To be fair, this was a brand new market. And, you know, who knew where this was going to go? You could say that in their defense. But what they ended up doing was producing a device with too little time that was too different than anything they'd

done before. And it was buggy. It didn't really work. And the first million of them they sent out pretty much got returned. Verizon was unhappy. They threatened to sue them. But worst of all, Verizon didn't have its iPhone killer. It needed an iPhone killer. That was the opening that Android took. And Motorola, which at that time was a failing company, Motorola and Android banded together, Google with Android, to produce the first successful Android device, which was called the Droid. And then the next year, around Christmas time, Verizon basically has put all its chips on the Droid, and it's a massive seller, and it delivers the first true competitive response to the iPhone. So, Sean, one thing I can't really figure out is, why did they kind of stick with what they were doing for so long? If they could see there was all this other innovation happening, why not change too? Well, remember, this happened really fast. And these are not simple things.

And also, you know, strategically, this company had a hard time because they had never had to worry about apps. Apps really drove adoption of the smartphone market. And, you know, before Apple came along, the carriers, the telecom giants, really were jealously guarded their relationship with the customer. They didn't want app stores, and they certainly didn't want the handset makers to have any control of them. Nokia tried to do an app store store and they were punished mightily. And then along comes Apple and AT&T says, sure, do an app store.

And then a year later, Verizon, which passed on the iPhone, turns to Android and says, let her rip. Let's have an app store. So BlackBerry never had to have the kind of operating system or environment to support all those apps. And they were just unprepared for the sudden arrival of an app-driven world. And it was really tough for them. It's actually really interesting to see how slow, essentially, they were to adapt to that. And it'll be interesting to see now how long Google resists the urge to adapt in the wake of AI bots, how tech companies today may adapt to the changes that we're seeing. It's really hard when your company is built a certain way and it's been so successful

for so long to consider the idea of jumping over to something entirely different that's going to disrupt your model. And the same thing happened to BlackBerry actually at one point late in the game with smartphone sales falling, there was a plan that Jim Balsley had to basically double down on BBM which was another thing that they innovated on they they created the first mobile instant messenger that was BlackBerry messenger BBM yeah BBM yeah and now WhatsApp dominates the market and they had a plan to make BBM available on all devices instead of just BlackBerry that was killed by one half of the company in the board, which thought, you know what, that's just going to hasten the demise of our smartphone business.

Well, the smartphone business went away anyway. They didn't put BBM everywhere. And now nobody uses BBM. And WhatsApp is worth many times more than BlackBerry. Well, so their smartphone business is no more. But even after this fall, BlackBerry didn't die completely. I mean, what has the company been up to since the mid-2010s? Well, that's the thing, right?

BlackBerry is still one of the largest and most valuable technology companies in Canada. That's, I think, maybe surprising to a lot of people to hear because I feel like we don't, we used to talk about BlackBerry a lot and we don't really anymore, but they're still doing well enough. Well, you know what? That's part of the problem. Probably they should have changed the name of the company a long time ago to avoid confusion and separate them from the legacy of the smartphone business,

which is clearly in the past. But, yeah, you know, it's a bit of a hodgepodge. You know, it's a device management business, so they have the software that allows corporations to manage all the smartphones that their employees use. They do cybersecurity. They also have a connected car business. So they have the software that allows corporations to manage all the smartphones that their employees use. They do cybersecurity. They also have a connected car business. This is a software business they bought in 2010. And they were also licensing off their old intellectual property until they sold it actually just this year. So I think the market's been kind of confused. I think some of those businesses have been very uneven and it's made for very messy results. It's a hard company to follow. And really there's one jewel

in the middle of it, which is this connected car business. Like this could actually reestablish BlackBerry as a significant technology company. Sean, when the history books on Canadian business, when they've written their chapter on BlackBerry, what do you think its legacy is really going to be? Pioneer. Pioneer, and also a major contributor to the Canadian innovation ecosystem, because everyone talks now about Waterloo, how it is such a fountain of ideas and talent and young companies. That's Waterloo, Ontario, where BlackBerry is headquartered. That's right, of course. And that's largely due to BlackBerry. I think the legacy is going to continue to build.

And I liken BlackBerry to a fallen cedar tree in the Pacific Forest. You know, it nourishes the rest of the forest. It's a tragedy in a way that that tree isn't there anymore, but it's giving life to the ecosystem around it. And I think that's true in the case of research in motion BlackBerry. Yeah, that's a beautiful metaphor, actually. Just lastly here, Sean, I want to come back to the idea that we talked about off the top in terms of this story's relevance today. If BlackBerry's rise and fall is a cautionary tale, what's the moral of the story for tech giants today?

Always look over your shoulder. Always question every assumption you make about your business. And never take for granted the success you have. And always be thinking contingency plans and what if. And try to avoid the kind of thinking like you've locked in an unbeatable position and no one can touch you because you never know when things could change all around you and the competitor you least expect is the one coming to eat your lunch. Sean, this is really interesting.

I'm sure the movie is interesting too. Thank you so much for taking the time to speak with me today. Thank you. It was my pleasure. So about that survey on the decibel, we want to know about you and what you want to hear on the show. Just go to thedecibelsurvey.ca, fill it out, and as a thank you, you'll be automatically entered to win one of three grocery gift cards worth $100. Again, that's thedecibelsurvey.ca. We can't wait to hear from you.

That's it for today. I'm Mainika Raman-Wilms. Our interns are Wafa El-Reyes, Andrew Hines, and Tracy Thomas. Our producers are Madeline White, Cheryl Sutherland, and Rachel Levy-McLaughlin. David Crosby edits the show. Adrian Chung is our senior producer, and Angela Pachenza is our executive editor. Thanks so much for listening,

and I'll talk to you next week.