Did the iPhone kill BlackBerry?

imageYes and no.

I raise this issue today because of the extract from a soon to be released book, Losing the Signal: The Rise and Fall of BlackBerry by Jacquie McNish and Sean Silcoff that appeared in the Wall Street Journal. I happen to have read this book for a forthcoming review of it in the Literary Review of Canada. I have a keen interest in this area as it is an important part of my own forthcoming book on disruption that will be published in 2016 by MIT Press.

The extract, and indeed the book, is worth reading but the highlights are as follows, the iPhone appeared and it broke every single rule RIM (the company that sold BlackBerries) had believed was important to its customers — mobile phone carriers. Namely, phones had to be scant in their use of data so that networks don’t collapse. AT&T had an exclusive contract with the iPhone with an unlimited data plan too boot. And just as would have been predicted by any radio engineer, iPhones made that network worse so much so that for years AT&T struggled with an increasingly poor reputation.

Now in a mode familiar to those who study disruption, RIM assessed the iPhone and decided that it was not for its customers. It was a consumer product, included a touch screen keyboard that was inferior to those in BlackBerries (and possibly still is), it was slow (on Edge rather than 3G) and would suck up battery life. Not to mention that email would not travel through RIM’s more secure network — a network that they operated and was then adopted by the US Government who were no puppies when it came to security. True to form, the iPhone appealed to customers who didn’t care about these things and, at least initially, there weren’t that many of them. (Yes, a million were sold in the first quarter but that number would not be predictive of its future success).

What surprised RIM was that their ‘real’ customer, carriers, and specifically, Verizon and Vodafone were worried about the iPhone and the fact they wouldn’t be able to sell it for years. They felt vulnerable. In hindsight, they had reason to worry. Two months after the iPhones release in 2007, Verizon approached RIM to see if they could come up with something that would compete with the iPhone. The problem was that, at that time, RIM and Verizon assessed that the main issue with BlackBerries was the fact that the keyboard took up half of what could be screen space. The solution to that was a big touch screen. And RIM immediately complied with this and came up with the BlackBerry Storm — a touch screen BlackBerry. Verizon were thrilled and placed one RIM’s biggest ever orders.

The problem was that it was hard to produce this new phone. It took 15 months and by then the list of failings on the iPhone started to be ticked off. The Storm launched and, like the iPhone, it had 1 million sales in the first quarter. Consumers wanted this. The problem was, they didn’t want it for long and returned them in droves. The Storm was flawed on dimensions too numerous to count.

The rest of the story is well known. Verizon went elsewhere for its iPhone killer and seeded Motorola with producing a new Android phone. And unlike iPhones, Android phones were cheap. And unlike BlackBerries they had a modern mobile computing heart of software and hardware. BlackBerry subscribers continued to rise world-wide and peaked in 2011 (4 years after the iPhone was introduced). The disruption finally caught up with them after that.

So it is tempting to suggest here that the iPhone killed BlackBerry. But if you read the whole book you will find that perhaps it was not as inevitable as that. RIM wasted time producing a touch screen BlackBerry when it could have been re-architecting its product. As I have argued elsewhere that is where the iPhone was truly disruptive: it gave rise to a new dominant design that would take over the industry. BlackBerry didn’t really adopt that design until 2013 (with the BlackBerry 10) and by then it was definitely too late. BlackBerry also wasted time with a skunkworks to produce the PlayBook to counter perceived disruption from the iPad.

The book suggests that this lost time was perhaps critical. Yes, the iPhone changed the market. But BlackBerry had alot to offer. It was dominant in enterprise and also around many parts of the world where the networks could not handle iPhones and Android phones and these were too expensive anyway. It was also ahead of the game on mobile messaging with BlackBerry Messenger which could easily have, on its own, become WhatsApp or WeChat but RIM waited way too long to see its potential. Instead, at this critical strategic juncture, it was bombarded with poor managerial advice that devoted key resources to wasted endeavours. I am not saying here that RIM would have remained the force for impact that it had been but that, had it more appropriately crafted a response and not rushed itself and instead kept to its engineering routes and its pioneering efforts for user-first usability, it may have retained a substantial amount of its value.

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