FALL FROM GRACE: Blackberry in red
Lack of smarts is killing the company, writes Pearl Boshomane
HOW did BlackBerry go from a growing success story to nearly dead in a few short years? The Canadian former smartphone giant, which has lost $75-billion (R761-billion) of its market value in five years, recently announced it would shed 4500 jobs globally (40% of its workforce).
Two weeks ago, it reported a $965-million second-quarter loss.
Research In Motion (RIM), the company that introduced BlackBerry to the world, was founded in 1984 by Mike Lazaridis with a loan from his parents. By 2008 the company was worth $80-billion and, despite the iPhone launching in 2007, BlackBerry was still the dominant force in the smartphone market. But, by late last month, the company was in talks about selling to Fairfax Financial Holdings for $4.7-billion.
Low employee morale, corporate arrogance and a failure to match competitors all contributed to the downfall of BlackBerry, as did the company's co-CEO structure. Lazaridis ran RIM with James Balsillie and while on paper this wasn't a bad idea - Lazaridis focused on the technology and Balsillie on marketing - the reality was something else.
At first the CEOs shared an office, but eventually they worked from offices 10 minutes apart, leading teams that had little communication with each other.
In June 2011, a person identified only as a "senior RIM exec" wrote an open letter to the company detailing how employees were overworked and demotivated. The note also hit out at the company for its failure to adapt quickly enough to a changing market.
"Overconfidence clouds good decision-making," wrote the executive.
"We missed not boldly reacting to the threat of iPhone when we saw it more than four years ago. We laughed and said they are trying to put a computer on a phone [and] that it won't work."
In a deal with mobile carrier Verizon, BlackBerry launched the Storm in 2008, intending it to be an "iPhone killer". But it was no match - not in design, software or, most importantly, sales.
Just a year after being named the fastest-growing company by Forbes magazine, BlackBerry saw its sales drop significantly in 2010, due to a flood of low-cost Android phones from the competition.
That year, RIM collaborated with AT&T to develop Torch, a phone that was plagued with hardware and software problems.
Then it bought QNX, a systems company that would go on to develop the BlackBerry 10. But the QNX team couldn't work fast enough, and by the time the all-touch Z10 phone was launched earlier this year BlackBerry had missed the boat.
Before Lazaridis and Balsillie stepped down as CEOs in January last year, Balsillie had planned to license BlackBerry's technology and software, including the popular BBM facility, to rivals for a fee. This would give the company income while it worked on a comeback. But the new CEO Thorsten Heins killed the idea.
Lazaridis, who still owns shares in the company, is still hopeful of a rescue.
Everyone loves a good comeback story, but is it too late for BlackBerry?