How a BlackBerry was seen ten years ago. The received wisdom was that doctors, lawyers and chief executives used BlackBerrys
The music had already stopped and partygoers were preparing to head home when noise erupted by the stage.
As the crowd of mostly twentysomethings – a mix of competition winners, demi-celebrities from The Only Way Is Essex and nervous PRs – queued for the cloakrooms, an argument spiralled out of control.
A bottle was smashed, and then a man fell to the floor clutching his throat.
Nearby people tried to stem the bleeding, but neither they nor the paramedics and police who rapidly swarmed the scene could help – the man died in hospital a few days later.
Until the violence erupted, the night had been a perfectly pitched piece of public relations.
The crowd was young, trendy and, as is not always the case at these things, reasonably impressed by the commercial muscle of BlackBerry, the company putting on the show.
The venue – Pulse, in Southwark, south London – was packed.
The acts – including singer Jessie J and rapper Wretch 32 – were high-grade and the company’s smartphones were on display discreetly among the free drinks and canapes.
For out-of-town phone owners who’d happened to buy the latest handset, it should have been a perfect celebration of a newly hip brand – the formerly fusty BlackBerry here touting its free BBM secure, instant messaging service (like texting, but cheaper and even faster).
But if public relations is an art form, this was the equivalent of watching the Louvre go up in flames.
Within hours of the event in April, company reps were on the phone to newspapers and websites asking that no one mention that the party had been sponsored by BlackBerry.
The invitation – a club flyer with Jessie J looking vixenish and not a BlackBerry in sight – was not to be displayed under any circumstances.
But perhaps the biggest question was why BlackBerry, a company that cornered the market in ‘business’ handsets, with 95 per cent of FTSE 100 companies dishing out the phones to their employees, should be filling a south London bar with rappers and cocktails at all.
The received wisdom was that doctors, lawyers and chief executives used BlackBerrys. Violent young men did not.
BlackBerry, people were realising, was not the same brand people thought it was.
Like Burberry or Ralph Lauren, the brand had quietly ‘reached out’ to a mass market, while still serving its Square Mile and government clients.
But BlackBerry’s ‘mass market’ was proving to be an ugly bunch.
BBM messaging turned each BlackBerry
Paris Hilton (left) with her handset; Jessie J (right) performing at the fateful party
Short, instant and – crucially – free BBM messages can be forwarded to hundreds of people at once. Teenagers found it irresistible.
But then rioters used BBM to coordinate their movements during the disturbances in the summer of 2011: ‘Everyone in Edmonton, Enfield, Wood Green, everywhere in north link up at Enfield town station at 4 o’clock sharp!’ read one message.
Another directed looters to Oxford Circus: ‘SHOPS are gonna get smashed up so come get some (free stuff!!!)’
Text messaging was old news to the young rioters. Facebook and Google were too open, too obvious to the police. BBM – routed through secure data centres that even MI6 or a determined hacker couldn’t crack without time or permission – was essential.
The appeal to world leaders, company CEOs and shop-burning thugs was the same – no one could listen in.
But it was a measure of how far – and in what direction – the brand had travelled, that while President Obama can say he’s ‘addicted’ to his BlackBerry and Andy Street, MD of John Lewis, says he couldn’t live without his, thugs who burned whole blocks to the ground in Croydon and looted boxes of televisions, trainers and stereos were coordinating their attacks using the very same devices.
Things were beginning to go wrong within BlackBerry. Its new fans, it seemed, weren’t quite as reliable an earner.
In the first quarter of this year, the company’s co-CEOs publicly fell on their swords.
Smartphone sales were increasing 50 per cent year on year, but Research In Motion (RIM), its Canadian parent company, hit its first quarterly loss of $518 million and, worst of all, handset sales from the company that had pioneered the idea in 1999 were actually falling.
It has since announced it is cutting $1 billion in costs, almost a third of its 16,500 workforce and may sell one or both of its corporate jets. BlackBerry created the idea of the PC-phone, the email-phone – the work phone.
But it is no longer guaranteed that the originator will still be around to see its creation take over the world.
London rioters used BlackBerry messaging to co-ordinate looting
BlackBerry is still young, even in tech-giant terms. But for most of its life, RIM, based in Waterloo, Ontario, has been a pioneer.
Contrary to Apple’s rewriting of history, the smartphone era didn’t begin when Steve Jobs launched the iPhone in 2007.
RIM has sold over 190 million smartphones worldwide, and remains the top seller in many markets. It has more than $2 billion in cash and no debt, and will soon introduce a revolutionary new operating system. But even now, the company feels smaller than it is.
It was founded in 1984 by university students Mike Lazaridis and Douglas Fregin and is still devoutly Canadian, in a way that American rivals such as Microsoft have ceased to be ‘national’.
When its CEOs stepped down, a long-serving company insider took the helm, and the company was even reluctant to open data centres outside its native country.
RIM first targeted corporate customers with a wireless email device in the late Nineties.
It was described by tech site CNET as a ‘pager-sized wireless email device’, long before the term ‘smartphone’ existed.
Companies – and only companies – used BlackBerrys for corporate email long before Keanu Reeves’s black-coated hero used a Nokia 7110 in The Matrix, the first mainstream phone that attempted such technical feats.
Tyler Lessard started working for RIM in 2001.
‘I joined when the company was about to launch its first phone-based device.
'This was the first real smartphone on the market, although the terminology wasn’t there yet.
'For the first six or seven years it was just commonplace for the business to grow 25-50 per cent quarter-on-quarter.
'That’s a luxury. It was probably 2006 or 2007 when we started to feel, wow, this really is a global brand or phenomenon.’
Lessard has since left RIM to work for IT security company Fixmo.
But complacency soon set in. BlackBerry had cornered a market so thoroughly that its Canadian CEOs laughed in the face of threats such as iPhone.
‘Why would I want to read my email in colour?’ mocked co-CEO Jim Balsillie five years ago.
President Obama is still pictured with his, and naturally Washington is now filled with loyal Democrats messaging on theirs.
But tech insiders sniff that the White House’s endorsement of the device is typically late to the game.
Younger, hipper CEOs use iPhones. So do world leaders. David Cameron is an iPad devotee whose ‘specially programmed’ version of the device reportedly cost £20,000 – a price that might have seemed steep even in the mid-Noughties, when jewellers made solid-gold BlackBerrys for rappers.
‘There was always a certain kudos to hunching over those tiny keys and being seen as indispensable,’ says Michael MacNamara of NextShoot, a hip London video agency.
‘But that’s changed. Across Soho and the City you’ve got to be seen with an iPad. Typing is for interns. If you pull out a BlackBerry in a meeting the assumption is you were foolish enough to sign a 24-month contract.’
The gap between the BlackBerry and the iPad has increasingly been filled by companies that offered phones that did more: touchscreens with app stores, where news and social networking apps and predictive text meant users didn’t have to type so much.
Apple grew to a point where its iPhone division alone was bigger than the whole of Microsoft. Korean giant Samsung came from nowhere to become the world’s biggest mobile company, selling 20,000 Galaxy phones an hour.
Meanwhile, BlackBerry stalled.
The company’s foray into the tablet market, the PlayBook, was a half-billion-dollar disaster. The brick-like tablet had one drawback, when it shipped it couldn’t do email.
This, from a company whose entire success had been built on email. It was like Kellogg’s releasing a cereal you couldn’t eat. To email using a PlayBook, you needed a BlackBerry as well.
The company’s market share dropped from 40 per cent to four per cent in four years.
Lord Sugar – a devotee for 13 years who said, ‘I think I was one of the first who decided that I was not going to hump two devices around with me (BlackBerry and a mobile phone)’ – began to tweet about rivals such as Samsung’s Galaxy SIII.
And as the boundaries between work and home blurred, people wanted to have one phone for both – and they wanted it to be their own, not a company handout.
The tech world had a name for it: BYOD (bring your own device). They also wanted apps, in their billions. BlackBerrys went from being the ultra-desirable accessory of the successful to the equivalent of a Mondeo from the company car pool.
Europe, the Middle East, Africa, and even parts of Canada and America were cut off.Then came last year’s riots, swiftly followed by a failure of email, BBM and web access on nearly 80 million BlackBerrys.
There had been a computer code failure in an underground data centre in Slough, after which the back-up failed, then its back-up too.
The headlines were cruel, and inevitable – ‘BlackBerry crumbles’.
Data centres – huge, underground banks of computers – are not invulnerable.
A lightning strike near Dublin knocked out some of Microsoft’s online Office services for six hours last year, and O2 services disappeared for some customers last month.
Even Facebook has gone offline – albeit briefly.
But BlackBerry was gone for a week. It was evidence, critics claimed, of a company that had tried to grow too far, too fast.
During the height of the blackout, the company was communicating via one Twitter account, with updates that were often wrong.
Days later CEO Mike Lazaridis took a flight from Canada to stand in front of the offending data centre and apologise to the world. Four months later he resigned.
Amid the crisis, City insiders and analysts began to wonder if there was any future at all for BlackBerry. It couldn’t get touchscreens right – its Storm touchscreen phone was a disaster. Its PlayBook was a clunking failure. Its half-touchscreen, half QWERTY Torch was hideously ugly. Meanwhile, Apple ploughed ahead.
‘When you saw the second- or third-generation iPhone, you saw the ridiculous queues at the Apple stores,’ says Tyler Lessard, who witnessed the gathering clouds from within BlackBerry.
‘That was a difficult moment. And then you saw it happen again with the iPad. The iPad was very much a surprise at RIM – we thought it was just a bigger-screen iPhone, what’s the big deal? Then you saw the power of apps on the iPad – and we took two hits.’
BlackBerry’s app store was tiny and bare compared to Apple’s and Google’s, even though it had had nearly a decade’s head start in terms of creating third-party software for its phones.
Suddenly, Google’s Android and Apple’s iOS were numbers one and two in the mobile-phone market.
‘RIM is at a point where the issue is no longer about gaining ground,’ says Tuong Nguyen of mobile phone analysts Gartner.
‘It’s about keeping a foothold on what they do have – and preventing drastic market share erosion.
'The hardware keyboard has lost its appeal but they still have significant strength in managing security.’
One of the company’s own investors, Canadian merchant bank Jaguar Financial, has suggested since late 2011 that the company should at least confront the idea that it be dissolved into its constituent parts.
‘Among the options are the sale of the whole company, or splitting the handset and enterprise businesses,’ says Vic Alboini, CEO of Jaguar Financial.
‘We have been suggesting since September that the company should have a strategic review. What they do with the next BlackBerry, that’s the magical question.’
But BlackBerry, still outwardly confident after a string of hires and fires, hopes that it can compete in the very market it failed in – touchscreens.
And it isn’t retreating to the business market either. Instead, it’s relying on a new operating system – BB10, a touchscreen operating system similar to (and, it claims, more advanced than) iPhone’s operating system or Android – to turn things around.
Perhaps to illustrate that it really has learnt its lesson, the first gadget running BB10 will be a touchscreen, not a keyboard device (although the keyboard will follow shortly afterwards).
‘With BB10 we are going to offer a next-generation smartphone user experience,’ claims RIM’s chief marketing officer, Frank Boulben.
‘For the past five years, all smartphones have worked the same way – apps and an “in and out” button. In BB10, everything will run in the background – Facebook, email, calendar – and you’ll move from one to another with a simple gesture.
‘We’re aiming at a certain audience that want a device to get things done as quickly possible – whether that’s someone with a busy personal and professional life or a hyper-connected teenager.
‘We will still have the best keyboard on the market – but we’ve also put a lot of research into having the best touchscreen keyboard.’
However, the new operating system has been delayed and delayed and delayed. It’s now due in spring 2013.
‘The window of opportunity is closing quickly,’ says Nguyen. ‘It may already be closed, depending on who you ask.’
Jaguar Financial’s Alboini also has his doubts.
‘The most successful scenario is that they shoot the lights out with BB10 – but even that may not be enough to compete with Samsung and Apple,’ he says.
‘The worst case is that it’s a dud. Does the market want to have a third competitor? RIM is being coy.
'It should be looking at what, say, its email system might be worth to Apple subscribers or Android users. They should be studying that now.
'Otherwise, they could be looking at a $3 stock price.’
The question is whether BlackBerry’s latest innovation, which it claims is more agile, faster and more powerful than either of its rivals, is enough.
The company’s pedigree in invention is unquestionable. Whether it still has the ‘magic touch’, though, is a very different matter.
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