Photo: Ian Gavan / Getty Images
Research In Motion was the pioneer of the smartphone segment with its BlackBerry device—it’s now more like Palm, about to be forgotten. Over the past five years, RIM has experienced near continuous months of turmoil while Apple and Android continue to eat up the market it once owned.While RIM weathered the storm initially, since the summer of 2008 it has been a company destructing before the eyes of the world. The company was once a gem of Canada, it now has lost even that market to Apple. What’s unique about the case is not that it lost to Apple and Google, but how it lost. (After all, many saw this coming.)
Late last year, amidst major executive changes, RIM made the case that better marketing was the key to its turnaround—not better products. So, we decided to look at RIM’s epic collapse through its own ads.
Research In Motion was founded by Mike Lazaridis (pictured) and Douglas Fregin in 1984 while they were both engineering students in Canada. RIM began with products for Mobitex's networks. In 1996, it introduced the [email protected] Pager, the first messaging pager. A year later it was listed on the Toronto Stock Exchange.
By 1999 RIM was listed on Nasdaq, but the bigger news was in the introduction of BlackBerry software and RIM 850, the first BlackBerry. It truly was the first fully-featured smartphone and led the category for a decade. By Q1 2008, RIM had 44.5% of the market according to IDC.
This wasn't one of its ads, but you get the point:
RIM's management said a lot of stupid things (and you can read all their quotes here).
First it dismissed the iPhone. 'It's kind of one more entrant into an already very busy space with lots of choice for consumers ... But in terms of a sort of a sea-change for BlackBerry, I would think that's overstating it,' said Jim Balsillie, CEO of RIM. There were rumours that it actually didn't think the iPhone would work.
Then it played to its user-base.
'Try typing a WEP key on a touchscreen on an Apple iPhone, that's a real challenge. You cannot see what you type,' said Lazaridis.
And then there was delusion. Lazardis told reporters, 'But I think what happened was the amount of marketing and the attention (Apple) generated in the market -- the customers are now coming to the store and saying I didn't know you could do all that with a phone. And when they get there they realise there's a selection -- there's not just one device. And so what it's actually done is increased our sales.'
The Storm was supposed to be the iPhone killer, but it wasn't. It came out a year later, didn't have wi-fi, and was really a poor excuse for a touchscreen phone, let alone an iPhone copy. While it posted decent initial sales, users weren't thrilled about it. The New York Times' David Pogue ripped the phone in his review and users began returning the phone shortly after its launch.
The selling point of the Storm? It clicked, literally.
The Bold 9900 was much like the original Bold--too little, too late. In 2008, BlackBerry talked up the Bold as the answer to the iPhone, and a large part of that was stealing some of the attention from the iPhone. Unfortunately, after a delay in shipping, by the time the Bold debuted it had lost any hope of challenging the iPhone. Ironically, it failed at being bold.
While things were OK early in the year, the Q1 numbers were bad, really bad. While it barely missed analysts' expectations, ($2.24 billion vs. $2.27 billion expected, $.84 EPS vs $.85 expected, 5.4 millions phone shipped vs. 5.5 million estimate) -- the expectation was RIM was going to easily beat those numbers.
By the end of summer, panic was brewing and the Q2 call did not go any better with misses pretty much everywhere on both guidance and estimates. A month later (October 2008) it was reported the iPhone was outselling the BlackBerry for the first time in history. There was a brief recovery in 2009--but it was in the middle of a recession.
Apple was cooler and better, and BlackBerry was struggling to catch up.
Cases in point, these two ads. Everyone remembers this ad:
No one remembers this ad:
On October 12, 2011, the BlackBerry network went down due to a switch outage that shutdown BBM and e-mail for a day in the U.S. It was the largest and most embarrassing outage in history, and came shortly after various European outages. RIM not only apologized, but offered users a $100 of apps for free.
The winter didn't get much better. December's earnings call was disastrous, BB10 was delayed, and murmurs that RIM was having e-mail issues similar to that of the PlayBook on the new OS.
The company was in paperweight mode:
After public scepticism over tablets, Lazaridis announced BlackBerry was changing the market with its PlayBook.
It was a flop. BBM and e-mail, the two biggest selling points for a BlackBerry, didn't work and consumers didn't want the PlayBook. Things got so bad there were rumours RIM had actually halted production. By December, RIM announced it would take one-time charge of $485 million to cover the Q3 losses, largely due to the PlayBook's flop. Even after all that, Lazaridis still tried to convince investors the PlayBook is a 'compelling tablet for consumers that also offers unique security and manageability features for the enterprise.'
RIM tried to salvage the device with PlayBook 2.0 through 2011 but the product was still bad and the $120 keyboard wasn't anymore compelling. It took 10--yes 10--months for the email issue to be resolved.
The irony of it all: RIM promoted the PlayBook by running ads proclaiming, 'Amateur Hour is Over'--turns out, it was just beginning.
RIM's 2011 Q4 call provided a blueprint for turnaround--better marketing. This came shortly after the departure of its CMO and at a time when marketing seemed to be towards the bottom of the company's worries, externally at least. A month later it launched the #TeamBlackBerry campaign on Twitter--featuring cartoon superhero kids.
Here's the campaign.
A few weeks later, a board member publicly acknowledged Balsillie and Lazaridis needed to go years ago and that the board couldn't stop the trainwreck. Balsillie resigned from the board in March alongside the departure of COO Jim Rowand.
In addition, the company ceased giving earnings guidance after another big miss.
At least they had wil.i.am and love:
BB10 was described as 'BlackBerry's Last Chance To Beat The iPhone'--a new OS that borrowed many of the popular features from iOS and Android. While there were only glimpses of the unfinished OS, it seemed BlackBerry was at least finally catching up--even if it was only catching up.
Now it's being described as the OS that, 'may never see the light of day.' An announcement last month pushed the release to 2013--after the new Samsung Galaxy S III and a presumed iPhone 5, two new products that could dilapidate the already shrinking size of BlackBerry users.
On June 20, 2008 RIM closed at $144.56, 49 months later to the day on July 20, 2012 it closed at $6.78--a near 95% loss. Here's what that looks like in Google Finance.
Samsung, Microsoft/Nokia, HP, Vodafone, perhaps even going private via Silverlake, and more. The problem is, no one really looks the ideal buyer of RIM. For those wondering, here's Henry Blodget's thoughts on the 11 companies that could buy RIM.
At least the PlayBook is special (according to its ads):
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