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Losing the Signal: How BlackBerry’s bid to one-up the iPhone failed Add to.

The Globe and Mail

Published Friday, May 22, 2015 11:35AM EDT

Last updated Monday, May 25, 2015 11:41AM EDT

Excerpt from Losing the Signal: The Spectacular Rise and Fall of BlackBerry by Jacquie McNish and Sean Silcoff

Excerpt from Losing the Signal: The Spectacular Rise and Fall of BlackBerry

Mike Lazaridis, ever the boy electrician, liked to relax by tearing apart small machines in his spare time. Just as he once opened radios in his basement lab for fun, Lazaridis lifted hoods on competitors’ phones. Staff visiting his third-floor office in a building called RIM 4 grew accustomed to disemboweled phones with chipsets, antennas, and wires strewn across his desk. Usually the desktop autopsies confirmed Lazaridis’s faith that BlackBerry was the smartest phone on the market.

In the summer of 2007, however, Lazaridis cracked open a phone that gave him pause. “They’ve put a Mac in this thing,” he marvelled after peering inside one of the new iPhones. Ever since Apple’s phone went on sale in June, critics and consumers were effusive about the sleek phone’s playful touch screen, elegant graphics, and high-resolution images. Lazaridis saw much more. This was no ordinary smartphone. It was a small mobile Apple computer whose operating system used 700 megabytes of memory – more than twenty-two times the computing power of the BlackBerry. The iPhone had a full Safari browser that traveled everywhere on the Internet. With AT&T’s backing, he could see, Apple was changing the direction of the industry.

Lazaridis shared the revelation with his handset engineers, who had been pushing to expand BlackBerry’s Internet reach for years. Before, Lazaridis had waved them off. Carriers wouldn’t allow RIM to include more than a simple browser because it would crash their networks. After his iPhone autopsy, however, he realized the smartphone race was in danger of shifting. If consumers and carriers continued to embrace the iPhone, BlackBerry would need more than its efficient e-mail and battery to lead the market. “If this thing catches on, we’re competing with a Mac, not a Nokia,” he said. The new battleground was mobile computing. Lazaridis figured RIM’s core corporate market was safe because the iPhone couldn’t match BlackBerry’s reliable keyboard and in-house network delivery of secure e-mails. But in the consumer market, where the Pearl phone was competing, RIM needed a full Web browser. BlackBerry was a sensation because it put e-mail in people’s pockets. Now, iPhone was offering the full Internet. If BlackBerry was to prevail, he told RIM’s engineers, “We have to fix everything that’s wrong with the iPhone.”

While Lazaridis pushed internally for a response to the iPhone, publicly he and Balsillie dismissed their new rival. Companies often ignore competitors’ triumphs, but by downplaying a consumer sensation, RIM suddenly seemed out of touch. “I haven’t seen one,” RIM co-CEO Jim Balsillie told the Toronto Star after the iPhone went on sale in June. Months later, when the iPhone grabbed a fifth of the U.S. smartphone market, Lazaridis complained to the New York Times about its keyboard: “I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it. It’s hard to type on a piece of glass.”


Reporters Jacquie McNish and Sean Silcoff on researching and writing Losing the Signal: The Spectacular Rise and Fall of BlackBerry.

With every click of his PowerPoint presentation, Lazaridis felt his audience grow slack and bored. It was late August 2007 and RIM’s boss was making a pitch in a Manhattan hotel meeting room to a team of senior executives from Verizon and its British affiliate Vodafone. Lazaridis and chief operating officer Larry Conlee had been invited to New York by the carriers to propose new phone ideas. Although the iPhone wasn’t mentioned, there was no doubt Verizon and Vodafone were looking

for a device that might supplant what was now America’s fastest-selling smartphone.

Judging by the drooping faces of John Stratton, Verizon’s chief marketing officer, his colleagues, and the executives from Vodafone, Lazaridis was losing the room.

RIM’s co-CEO had started with a pitch for BlackBerry Bold, due to launch in 2008. Clicking from slide to slide, Lazaridis extolled Bold’s improved keyboard, with an innovative track pad to replace the trackball, and large screen. This, he told the room, was the best phone RIM ever designed. But to Stratton and company, Bold failed to live up to its name. Up against AT&T and its exclusive multiyear deal to sell the iPhone, Verizon had little interest in another keyboard phone, nor did Vodafone. “The whole atmosphere was, AT&T has the iPhone and we don’t, so what do we do?” remembers Conlee. “Neither of those carriers likes to lose. It’s a religious war.”

‘I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it. It’s hard to type on piece of glass.’

Mike Lazaridis

Verizon had been caught off guard by iPhone’s ascendency. Two years earlier, Verizon rejected an overture from Steve Jobs to partner with Apple on its plans for a new phone. A stickler for bandwidth reliability, the New York-based carrier wouldn’t relinquish control of its network to an unseen phone Jobs wanted complete authority to design. Like Lazaridis, Verizon executives correctly predicted iPhone traffic would create gridlock on AT&T’s network. What they didn’t anticipate was that consumers didn’t care. A multibillion-dollar market in carrier revenue was opening up and AT&T had a lock on the hottest device. RIM’s Bold was no match for the iPhone.

Sensing the audience’s mood, Lazaridis hurried to plan B. Up on the screen, surrounded by lightning, shone an ebony glass-covered phone. That, Lazaridis explained, was Storm. Phone and computer companies had experimented with touch-screen devices for years. None, he said, could match the magic touch of Storm. Pulling out a prototype, Lazaridis pressed a finger on the glass screen. There would be no sweeping fingers, no clumsy iPhone typos on this device. To make the point, his finger hovered like a computer mouse over a digital version of BlackBerry’s signature keyboard on the phone’s touch screen. When he pressed on a digital key, the entire screen clicked down like a giant button, replicating the tactile feel of tapping a BlackBerry keyboard. RIM had combined the navigation feel of a computer mouse with the secure handling of a BlackBerry keyboard. Under the hood, the ingenious floating Storm screen was designed to activate existing BlackBerry software every time it was clicked. This was how RIM would outsmart Apple, by combining the best of BlackBerry with the seductive lure of a touch screen. His old swagger returning, Lazaridis hailed the next smartphone wave. No one disagreed. Superlatives followed as Verizon and Vodaphone executives passed around the prototype. “They were over the moon,” Lazaridis would remember. “They loved the prototype. They called it revolutionary.”

RIM had its own reasons for backing the kind of touch phone that Lazaridis had initially and so publicly disdained. Verizon and Vodafone were two of the world’s biggest carriers with deep ties into the U.S. and European consumer phone market. Their endorsement of Storm came with an estimated $100-million marketing budget and thousands of retail stores to promote the phone. If Storm took off, the two carriers could potentially sell millions of phones. RIM could stand toe-to-toe with Apple. This was the biggest break in RIM’s history. When Lazaridis and Conlee returned to Waterloo, Balsillie had only one reservation about the Verizon contract. RIM had to make the transformative phone in nine months. Was it possible for RIM to deliver in such a short time frame? The answer, Lazaridis and Conlee agreed, was yes.

Category: Forex

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