June 29, 2012

Once the darling of Wall Street executives, the Blackberry now seems to be dying a slow, inexorable death.

News emerged on Friday that RIM is delaying BlackBerry 10 - surely another nail in the smartphone firm’s coffin. RIM was pinning all its hopes of a revival on the phone, but has now said it will delay its launch until 2013.

Meanwhile, the firm said it will cut 5,000 jobs from a workforce of 16,500 and has also reported a $518m net loss in the three months prior to June 2. Just one year ago, the firm had reported a $695m profit in the same period.

So what weapon did RIM use to murder the corporate world’s favorite smartphone?

It turns out that multiple errors are responsible for BlackBerry’s downfall.

One of the earliest and most foreboding signs was a divisive leadership, according to reports, or a “split personality executive,” as the Wall Street Journal says.

RIM’s two co-chief executives – Mike Lazaridis and Jim Balsillie once shared an office before eventually settling in offices 10 minutes apart, each managing their own team.

The teams did not communicate well with each other, according to reports. Further, Lazaridis was focused on a “make-or-break push to launch a next-generation BlackBerry with a new operating system,” reports the WSJ, which interviewed dozens of RIM executives. Meanwhile, his co-CEO was heavily focused on licensing out some of the company's proprietary technologies. Both men are now gone, replaced by Thorsten Heins, who has been slashing costs.

[The WSJ reports that RIM, in a statement, said the split-personality characterization wasn't true. "As with any innovative company there were times when various people within the organization disagreed, but this was not the norm," it said.]

RIM also mistakenly had a naïve, almost blind confidence in the classic BlackBerry phone, even as Apple’s iPhone took the consumer world, and eventually the business world, by storm. The company failed to act on the trend of smartphones evolving from phones and simple emailing devices to pocket-sized computers that are full of enticing apps, games, good cameras and seamless Internet browsing.

Just over one year ago, I interviewed Mike Lazaridis for a series we published on the Top 10 Innovators of the decade.

When I asked him about the recent inroads Google's Android and Apple's iPhone devices had already made in the smartphone market, Lazaridis said he was always braced for the rise of BlackBerry's competitors.

But perhaps naively, he argued that it was RIM's single-minded focus on smartphones that differentiated it from the pack. At the time, BlackBerry was still the No. 1 or No. 2 selling smartphone around the world. And BlackBerry was still the clear favorite for enterprises - a fact that Lazaridis underlined could be directly attributed to RIM's steely focus on security.

[Read: Mike Lazaridis: Wireless Visionary for the full interview.]

It now looks like the company focused too much on security and not enough on innovations that would excite users.

Ultimately, smartphone users have more of an appetite these days for flexibility in how they access corporate data, and the flexibility of what their phone will allow them to do, rather than security.

Wall Street firms have taken note. Firms have adapted to the fact that more and more employees are asking to use their iPhones or Android devices at work – and are dismissing BlackBerries. These days, they are implementing security locks and other measures to all devices employees are using at work.

In a strong signal that Wall Street firms are abandoning BlackBerry, we recently reported that Citi expects to see a 66 percent drop in BlackBerry use after implementing a ‘bring your own device’ strategy.

Meanwhile, Lazaridis's plans for innovation seemingly took a backseat to other plans the company had. The former CEO, for example, must be kicking himself over a response he gave analysts ten years ago at an investor meeting. Asked whether RIM was moving to a color screen, a feature appearing on devices in Asia, he replied: "Do I need to read my email in color?"

Disturbingly, RIM also ignored warning signs about the growing popularity of touchscreen devices. The company’s sales division reportedly produced a research report in 2010 warning that smartphone keyboards were on their way out, at least in the minds of users. The warning was ignored, the WSJ reports.

RIM has dug itself into a big, ever widening hole. It seems that nothing short of a miracle will now help the firm reverse its decline.

As one Wall Street Journal reader points out, “A true innovator that let their egos and complacency get the best of them. What a shame.”

ABOUT THE AUTHOR
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in ...