BlackBerry Crumble: 10 of its biggest mistakes

BlackBerry may be on the verge of an emergency buyout deal, but that doesn't guarantee its salvation. Where did it all go wrong?

by Gabriella Griffith
Last Updated: 01 Nov 2013

Crackberry. That’s what its fans and indeed foes used to call the mobile phone company whose handsets were deemed so addictive, scores of celebrities, politicians and business leaders couldn’t put them down.

It was the first mobile handset to offer emails on the go. At its peak, BlackBerry controlled half of the smartphone market. Everyone from Barack Obama to Beyonce had one. But the phone maker is failing.

As Apple hits the headlines, having reportedly sold nine million iPhones in three days, BlackBerry has a different story to tell. It has agreed to be bought for $4.7bn by Fairfax, its main shareholder - a tiny fraction of its former valuation, and less than the amount Apple has raked in over the past few days in sales of its new iPhone 5s ($4.9bn).

Last week, the company announced it is cutting 4,500 jobs (40% of its global workforce). Its second quarter results pointed to a near $1bn loss and it now intends to write down $1bn in unsold inventory.

All told, it’s a spectacular fall from grace. But how did it happen? Here are BlackBerry’s top mistakes…

1. It underestimated 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 BlackBerry co-chief executive, Jim Balsillie in 2007.

How wrong he was.

While the iPhone was storming into the smartphone market, BlackBerry rested on its laurels, sure that its consumers would remain loyal and the iPhone would never break into the enterprise market. Greater attention should have been paid.

2. Wifi

BlackBerry was the first smartphone maker to offer emails on the go. But it was slow to offer wifi options to non-enterprise consumers: its phones aimed at the business market came with wifi – but its first iPhone ‘competitor’ phone, the BlackBerry Storm, which was aimed at the consumer market and released in 2008, didn’t have wifi.

Blackberry overlooked regular consumers as users who needed or wanted connectivity on their mobiles.

3. Touch screen

BlackBerry’s executives were disparaging when iPhone came on the scene with its touch screen.

‘Try typing a web key on a touchscreen on an Apple iPhone, that's a real challenge. You cannot see what you type,’ chirped co-chief executive Mike Lazaridis in 2007.

A year later it launched the Storm, which was designed to be a touch screen that felt like a keypad. So basically it clicked when you pressed it. But it was just a bit too weird and cumbersome. Sometimes the best of both worlds doesn’t quite work.

4. PlayBook flop

When BlackBerry should have been working on its handsets in order to maintain some of its smartphone market share, it decided to leap headfirst into the tablet arena.

The PlayBook cost millions of dollars and ate up resources. When it was released it was deemed over-priced and, well, inferior. Perhaps a close look at its core offering would have paid off more.

5. BlackBerry Enterprise Server ignored rivals

BlackBerry’s Enterprise Server (BES) is one of BlackBerry’s core offerings and allows businesses to manage their employees’ mobile devices. BlackBerry didn’t envisage that businesses would start letting their teams use Android or Apple phones and therefore didn’t add these operating systems to the Enterprise Server’s capabilities until this year, with the launch of BES 10.

Too little, too late.

6. Open Letter to staff

BlackBerry seemed unaware or unwilling to face the scope of its problems until a disgruntled senior staff member wrote an open letter to the management team, airing the company’s dirty laundry for all to see.

It started with the effective and damning statement, ‘I have lost confidence.’

Pretty hard to bounce back from a PR nightmare of that magnitude.

7. ‘Nothing is wrong.’

BlackBerry finally realised perhaps its co-chief executives weren’t making the right decisions. In January 2012, BlackBerry announced CEOs Jim Balsillie and Mike Lazaridis were to step down, with Thorsten Heins would taking their place. Good news, right? Yes, except Heins didn’t really think anything needed to be changed.

‘There’s nothing wrong with the company as it exists right now,’ he told CBC radio. Hmmmm. 

8. Late BlackBerry 10 operating system

The BlackBerry 10 operating system and its partner devices were supposed to hit the shelves in time for Christmas 2012 but the operating system didn’t launch until the end of January 2013 and the much-anticipated ‘saviour’ handset, the Z10, didn’t arrive until March.

Not only was the Z10 late, it was unpopular, and BlackBerry ordered too many. About $1bn too many: the handsets didn't sell, and the company was left with thousands languishing on shelves. Hence the $1bn write-down announced in May.

9.    Multiple outages

The word ‘outage’ (if it is really a word) has become synonymous with BlackBerry. It started in October 2011 when the BlackBerry messaging service went down for three days. Then in September 2012, when the BlackBerry network went down. And then again in January 2013 (around the time the Z10 was launched). And again in May 2013...

Nail, coffin?

10.  Jet fiasco

The latest in the long line of crucial mistakes by BlackBerry centres around a private jet. In January, the company hatched a plan to sell two of its private jets, which Thorsten Heins inherited from Balsillie and Lazaridis. Instead of realising the company clearly couldn't afford to buy another jet, it ordered a Bombardier Global Express jet to replace the other two.

This new jet was delivered in the same quarter that the company posted a $950m loss and announced it would have to shed 40% of its global workforce. Although the company has now vowed to sell the aircraft, it doesn’t send out a good message about the BlackBerry executives’ self-awareness or decision making.
 
Will the buy out by Fairfax Financial Holdings halt the tally of blunders? Only time will tell.

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