Losing The Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of Blackberry
Jacquie McNish, Sean Silcoff
Narrated: William Hughes
250 pages, 11.5 hours
Start: May 13, 2021 :: End: May 18, 2021
May 14, 2021
The first few chapters told tales of how Jim Balsillie and Mike Lazaridis, the two former co-CEO of Research in Motion grew up and later worked together. Lazaridis found the company but never really had a proper commercial product until much later. The first real Blackberry (also known as “Leapfrog”) was not introduced until 1998, 14 years after RIM was incorporated.
In Chapter 3, Lazaridis described his vision for the Blackberry – a simple device that is powerful and reliable. He wrote that handheld devices did not need more functions; they need fewer. “We must revel in its limitations” he wrote in 1997.
Today our iPhone and Android phones are capable of doing a lot of things apart from emails. Will there be a market today for an email and text only device? Will I carry another device apart from two iPhones?
I was curious of how Leapfrog looked like and found many references of it on the internet. It was pocket calculator sized device in landscape form. It looked simpler than the bulky Blackberry I had in the past. It reminded me of the iconic design of HP 12c calculators (which I still use one today). Something about the landscape form made it very appealing. If Blackberry reissues this design today with ARM processor and 5G connectivity, I would get one simply for emails and texts. I will love the textured matt plastic case (I have grown to dislike aluminium, glass and faux leather). Honestly, these days I read many emails on my phone even when I was in my office. A lighter plastic device with physical keyboard will help.
My very first email account was my university email firstname.lastname@example.org. In those prehistoric days, we used a UNIX-based mail client call Pine. Computer terminals were limited in the university and there were always long queues. After a while, I found that from the library catalog OPAC terminals, I could invoke the telnet protocol to the fk.um.edu.my mainframe and ran Pine from there! It worked a few times. I don’t know if anyone still remember telnet protocol or Pine email client. All from another era that I suspect even Gen Y may have never used.
May 17, 2021
Chapters 5 (“Spreading The Gospel”) to 8 (“Games of Phones”) documented the rapid adoption of Blackberry by corporate users, politicians, and later the mass market consumers. Along the way, it crushed Palm and displaced it as the market leader in the personal digital assistant (PDA) category. I remember in 2006 during a special lecture relating to e-commerce, the speaker proclaimed the PDA war was over and there was only one survivor, i.e. Blackberry. The truth is the entire category of “PDA” was erased soon after the arrival of iOS and Android devices.
I had a Blackberry 8707g back then. It was black bulky device and the last model with a track wheel. There was something addictive about the device. I would pull it out of my pocket every few minutes to check for emails. Sometimes I thought I felt it vibrated although it didn’t.
The decline of RIM started in Chapter 9 (“Rocket Docket”) where the company was sued for patent infringement. To my own assessment, it started sooner due to one individual and a technology factor. Blackberry ran on Mobitex, a paging telecommunication service. A chemical plant I previously worked in had a Mobitex paging system they added in 1997. It allowed a chemical plant to send short alert messages to neighbouring plants in events of emergency. As I read RIM continued to used this platform well into mid-2000’s, I felt uneasy. Blackberry’s success was built in an antiquated platform.
The second factor was the obsession of the founder Mike Lazaridis to keep the device simple for the sake of not draining the battery and crashing the telecommunication infrastructure. He only realised his mistake when he dissected an iPhone and to his horrors found Apple had packed a miniature Macintosh into the small frame. Even the earliest iPhone was by his estimate 20 times more powerful than the best Blackberry then, at only twice the price. Apple took years to develop the iPhones. It meant RIM technology was already obsolete when iPhone came out. RIM missed the strategic inflection point. Jim Balsillie although the most pessimistic paranoid completely missed the threat.
May 18, 2021
Starting Chapter 10 (“Jesus Phone”), it was all the way downhill through Chapter 17 (“Hanging Up”). I will summarize the missteps highlighted explicitly in the book, and some implicit ones from my own assessment.
1. RIM did not buy Motorola Mobility or accede to Verizon’s demand of $500 million compensation for faulty Storm devices. In a twist of fate, Verizon contracted Motorola to build the Android powered Droid (which had a keyboard!). Adoption of Android in US market accelerated its downfall. I couldn’t fault Balsillie for these decisions which were prudent. Even if RIM had bought Motorola, Verizon would have contracted another handset maker for the same effect.
2. RIM had problems with its employee stock option scheme (ESOS), and corporate governance was weak. ESOS was a hot topic when I was a MBA student. It appeared again and again in discussion around finance, accounting and ethics. But many companies were back-dating options then, and some even expertly concealed them. RIM was unfortunately sloppy in its bookkeeping and left a clear paper trail (investigators simply needed to read their emails!). The book attributed the ESOS as fracturing the trust between Lazaridis and Balsillie. Maybe so. RIM however did have a weak board and a terrible organizational structure. Imagine a company with 2 CEO’s and 3 COO’s.
3. Lazaridis made many wrong bets on technology and product development front. When Verizon was invited RIM to build a 4G device, he stubbornly refused to move from his “2.5G” position. He didn’t even have a 3G product! He took too long to move away from the legacy Java based platform. I suspect if RIM had adopted Android as swiftly as Samsung did, its strong balance sheet would have helped it turn around.
My own assessment is that RIM was doomed because of Lazaridis’s hubris and refusal in listening to the market. Somewhere deep inside he must have felt he was a more superior engineer and obstinately refused to admit Apple and Google were better. Building the Playbook tablet was a waste of resources considering the hype Apple created with iPad and how they quickly introduced a much improved iPad 2 in less than a year. There is no second place in this race even after more than a decade. No Android based tablet even came close to challenge iPad dominance.
The book was published in 2015, and hence its story ended with Blackberry Passport. It was a very nice device considering my work phone back then was a Nokia Windows phone. But I also had a Samsung Note 3 and later an Apple iPhone 6 Plus in the same year. Today Blackberry has transformed into a very different company. Maybe one day it will go back to its roots.
In 2007, I took “Corporate Business Strategy”, the capstone subject of my MBA program. Together with several classmates, we studied Nokia and Motorola, the two largest mobile phone companies then. This was a period before Apple introduced iPhone and Android phones did not exist. Our group analysed many angles, but it was our accounting analyses that gave us the most insights.
1. We broke down the cost of a mobile phone to its bill of material and attributed who really made money when we bought a device. I remember the device maker’s profit was a small fraction of the total cost. The biggest slice was the supplier of the microelectronics. Samsung was the largest supplier back then and still is today. This was the first insight, i.e. Samsung will be formidable if they decided to compete aggressively. The second insight was that a device maker must be very lean and have a robust supply chain.
2. A second analysis we did was comparing the two companies against all their competitors. We used a bubble plot. We plotted profit margin as the y-axis. We wanted to plot asset turnover as the x-axis, but due to limited data, we chose a ratio of sales over number of employees. This was a concept we learned in e-commerce as a indirect measure of supply chain leanness. As it was a period when many M&A took place, we added a third dimension using sales revenue as the bubble radius. We wanted to see how big each company were in relative size and if any was small enough to be an acquisition target.
Our analysis churned out many insights. Many device makers had low profit margin and low sales-per-employees. Motorola was near the origin, i.e. it was barely profitable and had probably too many employees (overhead!). Nokia fared better on profit margin and had the highest sales-per-employee. Our analysis confirmed our earlier hypothesis that Nokia had a superior lean supply chain.
3. RIM was on our chart. It was the smallest bubble, but had the highest profit margin. On hindsight, we should have realized that RIM was a single SKU company with only one product. It did not have a secondary business to fall back on if something went wrong. Very vulnerable.
4. Samsung was a maker of popular clamshell phones back then. However when analyzing its corporate structure, we realized the mobile phone maker and the electronic component maker were a single company. Hence, Samsung appeared as the largest bubble on the chart. Sales-per-employee was low, but it fared better than Motorola on profit margin. If we treat the Samsung as a vertically integrated phone maker (which it was!), it was performing quite well and financially invincible.
5. Back then, many people started using their phones to take pictures or play MP3. So we expanded our analysis to include companies that manufactured cameras and MP3 players, e.g. Sony, Creative, and Apple. Sony was near the origin like Motorola, clearly in its sunset. Creative was unprofitable and very small. We concluded it would bankrupt sooner or later. To our surprise, Apple was at the same profit margin level as Nokia and comparable sales-per-employee. We predicted if Apple enter the mobile business, it will be Nokia’s strongest competitor. We were right.
- 338.4 MCN
- Corporate & Business History
- Industries — Computer Industry
- Blackberry (Smartphone)