The Rise and Fall [and Rise Again?] of BlackBerry

It was 1999 when Research In Motion (RIM) first imprinted itself in the world of electronic communication. When the company reached its peak it was difficult to imagine that an innovative company such as RIM would sit idly by watching the market change. RIM’s lack of innovation compared to its competitors is what caused its dramatic fall. Now, here we are, with the BlackBerry 10.

The Rise of RIM

Nearly 30 years ago two young engineering students, Mike Lazaridis and Douglas Fregin, co-founded RIM. The company began as an electronics and computer science consulting business in Waterloo, but would then shift its focus towards the transmission of wireless data. RIM would become one of the first companies to develop wireless data technology in North America.

With RIM’s rising success in the late 1990’s, the company went public and began trading on the TSX. Shortly after, RIM introduced the first wireless handheld computer signing agreements with several wireless Internet providers. RIM was ranked as one of Canada’s fastest-growing technology companies.

Patent Infringement, Competition, and the Fall of RIM

Late 2001 gave rise to patent litigation that would last nearly five years. NTP Inc., holder of numerous patents for wireless email technology, filed a lawsuit in a U.S. Federal Court. NTP accused RIM of patent infringement and was awarded $23.1M in damages. An injunction was also granted which banned the sales of BlackBerry in the U.S. On appeal, the Court upheld RIM’s patent infringement.

In 2006, a settlement was reached which saw RIM agree to pay NTP $612.5M for a “perpetual, fully paid-up licence going forward.” This licence essentially allowed RIM to continue selling its products and services without any further payments to NTP.

Irrespective of the patent infringement lawsuit which arguably stifled RIM’s growth, 2007 saw RIM deemed the most valuable company in Canada with over 12 million subscribers and shares that rose over 150% from the beginning of the year. Ironically, one of RIM’s most successful years also saw the emergence of the competitor that would be responsible for its decline: Apple’s iPhone.

The iPhone achieved immediate success. Its operating system was innovative, touchscreen technology novel, and application software (app) unparalleled. RIM’s slow and inadequate responses with the BlackBerry Storm, Torch, and PlayBook, were not only met with disappointment, they saw RIM’s 20% global market share plummet to below 10% by 2011. To make matters worse, RIM’s lack of innovation also made it vulnerable to other competitors such as Samsung, Nokia and HTC. Currently in a distant fifth place, RIM (now BlackBerry) holds a global market share of less than 4%.

The Rise Again?

Now that BlackBerry has released its new touchscreen smartphone (Z10) the main question is, will this smartphone be any different? Opinions will vary; however, the general consensus is that the Z10 is comparable in performance to other high-end smartphones on the market today. Not only does the Z10 technology allow for easy navigation through its operating system, BlackBerry has realized that hardware should not be the only consideration. BlackBerry has put considerable efforts into bolstering its apps and ensuring the top four U.S. mobile carriers will sell BlackBerry smartphones. One can speculate that the company might have all the right pieces together to compete.

On the other hand, many analysts feel that while the Z10 may help BlackBerry in the short-term, the company’s problems are too deeply rooted. Analysts feel that BlackBerry will continue to contend with two main problems:

1) BlackBerry’s dominance of the “company phone” market will be a non-factor. Companies have stopped purchasing smartphones for their staff and are allowing their employees to select their own devices. Home Depot being the most recent company to do so causing BlackBerry share prices to drop slightly; and

2) BlackBerry will struggle to appeal to mainstream customers. Current BlackBerry users will likely purchase the Z10; however, the company’s long-term success will depend on its ability to take the market share away from its competitors.

An issue not often discussed is the stigma BlackBerry has instilled upon itself of being an inferior smartphone. BlackBerry’s repeated failures coupled with its competitors cult followings makes BlackBerry’s road to increasing its market share a difficult one. Only time will tell if the smartphone world holds a place for BlackBerry.

Danny Titolo is a JD Candidate at Osgoode Hall Law School.

6 Comments
  1. Good blog. Liked your summary as I’m in agreement with most of what you’ve presented.

    I think I fall with the skeptics. The new BB10 OS is definitely good, but it’s not significantly better than iPhone or Android. The BB10 will help BB stay in business. Many current BB users will buy the new handset and even more will probably buy the Q10 when it finally decides to present itself. I’ll even go as far as to say that there will even be many converts. But in order for BB to become a big player again (i.e. top 2), it has to give people a reason to come back. The fact that BB might be on the same playing field or even slightly better than its competition just isn’t going to cut it.

  2. A changed name, Alicia Keys, and a new phone that is still inferior won’t save BlackBerry. Big companies don’t supply BlackBerry’s anymore, so the company can’t bank on the monopolies it once had and clearly depended on. Business people carry iPhones and Androids now. I was a long-time BlackBerry user until I switched to Android. It would take a lot to make me even consider switching back. You said it yourself: “BlackBerry’s repeated failures” is what made it earn such a negative stigma.

  3. Nice blog, and I can appreciate the comments made by the individuals above. I recently purchased the new Z10, switching over from iPhone. I think the author of the blog raises an interesting point in that iPhone does have a cult following. So much so that the company can do no wrong. Personally, its ridiculously high price tag, horrible battery life, and constant glitching makes me wonder how iPhone is maintaining such a strong hold on the market. I really think buyers are won over by “pretty and shiny things.” Regardless, having used the Z10 for a few weeks now I can say that it is on the same level as its competitors. Its speed and OS are satisfactory.

    Having said that, I do want to bring up a few potential issues which I’ve raised on other IT blogs. The all-in-one space communication, although a great idea, just doesn’t work as I had hoped. The hubs main access panel is not always accessible and it should be from every screen. You can’t see notifications from the lockscreen, which can be quite frustrating at times. The media player is not what it could have been. Also, the syncing has been quite slow. Emails that I had read and deleted on my Z10 were still unread in my email account 20 min later. Finally, the number of apps is disappointing. Users were promised apps and blackberry still hasn’t delivered.

    As a whole, the Z10 isn’t all bad. But I can’t say it’s as good as it should have been for blackberry to become competitive again.

  4. Having been a former user of the Blackberry Curve and now, a user of the Galaxy 3, I wouldn’t look back twice at purchasing a Blackberry.

    Blackberry was my first smartphone and it did me well for the time being in 2007. Within just six years however, Apple and Samsung exploded as they offered more applications and thats the main reason why more people switched to these smartphones.

    How long will it take Blackberry to get these same types of apps because I don’t think most dedicated BB users will want to wait around and just hope the BBZ10 comes out with them soon.

  5. Blackberry 10 sales are south of what was anticipated by the Blackberry…that being said I still think they have a great chnace of re-couping past losses in marketshare….ever since the death of Steve Jobs and Apple’s inability to launch a flawless product…blackberry has a fighting chance. Think of all the people out there that do not have smart phones and look at the surpising success of Samsung and their galaxy line of smart phones…blackberry, as long as they do their due diligenece in coming out with near flawless phone/programs/apps – they can be competitive and successful in the smartphone market.

    I currently own a bold 9900 touch screen and I love it, apart from it rebooting itself at random occasions, it’s the best smartphone I have ever owned. I dislike screen texxting so I am excitedly anticipating the launch of the qwerty keyboard blackberry Q10

  6. Great summary!

    While I am self-confessed iDrone, I will admit that a big part of me was cheering for RIM and the Z10. I have always loved that RIM was a Canadian company and had taken the world by storm. That being said, I still mocked my Crackberry toting friends and never considered owning one myself.

    With the release of the new Z10 my perspective has changed slightly such that if my iPhone4S were to tank (god forbid! touch wood) I would test out the Z10 and the iPhone5 together. In my case, my loathing of Samsung devices will only work for RIM as I wouldn’t consider a Galaxy. Likely, I would still go with the iPhone because I like the Apple interphase and am an Apple automaton, but a little part of me would cringe as I realized I was putting another nail in RIM’s coffin.

    The patriotic part of me hopes Blackberry and RIM are able to pull it together to scrape enough market share in the big bad Apple and Samsung world. Whether that is likely remains to be seen. I will say this though, Good Luck RIM! Go Canada!

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