THE BLOG
07/02/2015 10:45 pm ET Updated Dec 06, 2017

The Rise and Fall of the BlackBerry: An Interview with  Jacquie McNish and Sean Silcoff

Odds are that, if you're of a certain age, you at one point owned a BlackBerry. (Odds are also great that you don't own one now.) The iconic device not too long ago defined ubiquitous, at least in the business world. Make no mistake: its legacy is alive and well. For my money, it is responsible for creating the expectation that we are always reachable, a problem that haunts us today.

The story of the Research in Motion (RIM), has never really been told--at least until now. Jacquie McNish and Sean Silcoff have penned an excellent book, Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry. I received a copy of this excellent book and sat down with the authors

PS: Why did you write this book?
JM: One of the enduring business mysteries of the last decade is how the makers of BlackBerry, one of the most beloved and transformational devices of our generation, lost their way so precipitously. When we started talking to publishers about the possibility of writing our book, one of our publishers held up his BlackBerry, the Q10 and said: "if you can tell my why something I love so much is a business failure I want to read that book." The same could be said of BlackBerry users all over the world. Shortly after the first BlackBerry was introduced in 1999, offering consumers easy mobile access to emails, business users, then consumers were addicted to their CrackBerrys. We saw a unique and rich narrative in the telling of a very personal and broad industry story about the people who invented the BlackBerry, its mismatched CEOs and one of the most disruptive technology races of all time. There is no shortage of books and case studies about disruption, pivoting and innovation, but it rare to be able to frame these stories with deeply personal narratives about the insiders in the middle of a technology storm. Once we were able to gain access to the central characters at BlackBerry, we knew we had the makings of a unique book.

PS: What were some of the biggest surprises from your research?
JM: One of the biggest reveals was learning how the smartphone race of the last 15 years ranks as one of the fastest and most disruptive technology races of all time. Smartphone sales went from nothing in 2000 to more than 50% of the North America consumer market in less than a decade. That pace of rapid penetration hasn't happened since the television was introduced. The speed of innovation and demand was a blessing and a curse for BlackBerry. It grew from a tiny company in Waterloo, Ontario to a global giant with $20 billion of sales in little more than a decade. While it was scaling to keep up with demand, its success drew much bigger adversaries into the market. Once Apple and Google entered the battlefield, the smartphone industry became the staging ground for one of the most brutish and predatory technology races ever seen. Motorola and Nokia were knocked out and BlackBerry dangerously wounded. It is extraordinary how predatory the competition was and continues to be as new low-cost smartphone makers such as Xiaomi enter the market.

Another revelation was the enormous personal toll of the smartphone wars. From the two CEOs, Mike Lazaridis and Jim Balsillie, to engineers in the lab at BlackBerry, there was such pride in their pint-sized company's success. When success turned so quickly to failure, the BlackBerry story became a tale of Shakespearean rivalries, betrayals, misunderstandings and loss. Many of the ex-employees and executives we interviewed struggle to this day to come to grips with the dramatic upset.

PS: What's next for BlackBerry? Will it survive?
SS: BlackBerry has two things going for it: valuable assets - including thousands of patents and $2 billion in net cash; and CEO John Chen, a veteran fix-it artist, whose turnaround plan is backed by committed long-term shareholders. When you dig in, however, the business offers little to cheer about. BlackBerry generates 40% of its revenue selling smartphones and almost as much from service revenue flowing from its older smartphones still in use. Despite the launch of several new models, BlackBerry device sales continue to drop: the company sold 1.3 million devices to end users in its latest quarter, down from 1.6 million the previous quarter and 1.9 million the quarter before that. John Chen has indicated he needs to sell 8 million to 10 million for devices to remain a viable business. The trend does not look promising for him to do that.

Those service revenues are another problem. BlackBerry generated $1.6 billion last year from those service fees, close to half of total revenue. The company expects those service revenues to fall by 15% quarter to quarter; that means Chen will derive just over $800 million from services this year and, if the trend continues, about $420 million next year.

The bright spot is BlackBerry's software and technology licensing business. Chen has promised to double those revenues to $500 million this year and he's off to a good start, generating $137 million in the first quarter, up over 150%. But most of the gain was from a licensing deal and it's not clear he can steadily deliver those; without licensing, software is growing by 20% year-over-year. Plus, the company admits it won't be able to turn its BBM instant messaging app into a $100 million per year business, as was the plan. BlackBerry still has time, options and assets, but it's destined to become a much smaller company before we know how bright a future it has.

PS: Are there lessons for other companies seeking to avoid a similar fate?
SS: There are lessons both on the way up and the way down. There is a lot to inspire entrepreneurs and executives from BlackBerry's rise: Creating a great, innovative product is one thing. But you also have to make the right moves to market and commercialize it, often against big odds, in the face of skeptical or disinterested partners who won't be onside until there's a compelling reason, and giant competitors who have the resources, if not the focus, to crush upstarts. Figuring how to navigate around these forces requires shrewdness, tactical savvy, a lot of nerve and absolute conviction, and of course adequate financial backing. BlackBerry/Research in Motion had all that, sometimes at risk of enraging wireless carriers whose support was essential.

On the way down, there are many lessons. Technology is a brutally competitive and predatory business, and only the paranoid survive. We've heard that over and over again and it is particularly true in the case of BlackBerry.

The moment Apple unveiled the iPhone and declared it was taking on the mobile data market that BlackBerry had created, the Canadian company would have had to do everything right to avoid being crushed. It had little margin for error, but it made two major mistakes in the months after the iPhone was unveiled in 2007: BlackBerry dismissed the threat of the iPhone and was unable to look past the Apple product's deficiencies to see that the Cupertino company's arrival would forever change the dynamic of the market it had created. And BlackBerry's competitive response - the clickable-touchscreen Storm using RIM's old operating system - showed it didn't appreciate how much Steve Jobs had redefined the smartphone business.
The Storm was full of bugs and it also wasn't the right product for the emerging no-keyboard market. Its failure not only wasted time for BlackBerry, but created an opening for Google to establish Android as THE rival platform to Apple's iOS.

The final lesson is about leadership. In the right circumstances the shared leadership of innovators and businessmen can be really successful in the fast-paced, risky world of technology. It worked for Hewlett Packard and more currently for Google. When companies come under attack, if those bonds cannot hold, it can be a recipe for internal dysfunction. The Blackberry experience shows us that the leadership differences that once made Lazaridis and Balsillie formidable pulled them apart when they confronted a series of legal and competitive setbacks, at a time when the company most needed their partnership to remain strong.