Losing the Signal: The Spectacular Rise and Fall of BlackBerry (35 page)

If Chen’s strategy prevails, BlackBerry has a shot at a comeback. Some who stumble suffer the fate of BlackBerry’s old adversaries: Nokia, Palm, and Motorola Mobility—shuffled off to new owners, broken up, or sold for parts and patents. BlackBerry’s fate remains uncertain, but it is doubtful the company
would still be in business were it not for the foresight of Mike Lazaridis and Jim Balsillie. The co-CEOs made multiple mistakes, especially in their final years, but there was enough innovation and cash left to shelter the company through the storms. The Passport and Classic phones launched in 2014 are variations on handsets designed years ago by Lazaridis’s engineering team. BlackBerry was able to survive the worst of 2011 and 2012 because Balsillie kept the company debt-free and cash-rich. It would be nice to think that past is prologue and BlackBerry might endure, and that two entirely fallible, very different men who somehow joined together to build an improbable empire would see their legacy carry on in the hands of customers around the globe who will continue to tap away on a product that changed the world. In the technology sector failure is often a precondition to future successes, while prosperity can be the beginning of the end. If the rise and fall of BlackBerry teaches us anything it is that the race for innovation has no finish line, and that winners and losers can change places in an instant.

This book arose from an investigation into BlackBerry’s collapse by the authors for
The Globe and Mail,
which was published in September 2013. That investigation became the foundation of a much more ambitious research effort to document the full story of a small Waterloo company’s improbable ascent and decline in the vicious smartphone war that it spawned.

The stories recounted in this book are drawn from interviews with more than 120 people, including BlackBerry’s founders, officers, employees, customers, advisors, rivals, and investors. We travelled to Waterloo, Calgary, Ottawa, Toronto, New York, Chicago, Santa Barbara, and Silicon Valley to meet with the book’s core characters, each of whom generously shared hours and days of their time. Phone interviews took us to key sources in Finland, Qatar, Great Britain, the United States, and Canada. Detailed recollections, correspondence, and other documents shared with us during interviews were invaluable. Unless otherwise identified, all quoted remarks expressed in the present tense are drawn from those interviews. In addition, dialogue and scenes depicted in the book are based on the recollections of people directly involved. Only a few of the individuals named in this book declined to be interviewed.

At the core of our research is a series of separate interviews with Mike Lazaridis and Jim Balsillie, who graciously welcomed the authors for marathon taped interview sessions lasting, all told, dozens of hours. There were no restrictions or conditions attached to these interviews and we are grateful
for their willingness to respond in painstaking detail to all manner of questions, no matter how difficult.

Others were equally generous with their time, insights and patient explanations of RIM’s history, culture, technology, and management. The vast majority agreed to speak on the record. In particular, we would like to thank Aaron Brown, Dave Castell, Larry Conlee, Margaret Micsinszki, Don Morrison, Don McMurtry, David Neale, Patrick Spence, Matthias Wandel, Chris Wormald and David Yach. Equally helpful were our colleagues at
The Globe and Mail,
in particular Omar El Akkad and Iain Marlow, who generously shared their insights, notes, and research from their years as RIM beat reporters. Other assists came from Globe colleagues Tara Perkins, Renata D’Aliesio, Steve Ladurantaye, and Rick Cash. We also want to thank the
Globe and Mail
’s publisher, Phillip Crawley, and editor in chief, David Walmsley; our editors, Mark Heinzl and Paul Waldie; as well as past editors, Derek DeCloet, Elena Cherney, and John Stackhouse, for enthusiastically supporting a book that kept us away from the newsroom longer than they would have wished.

This book owes much of its existence to our Washington-based agent Howard Yoon, who cold-called us with a proposal to turn our BlackBerry reporting into a book. Howard led us to our U.S. publisher Flatiron Books, helped shape the book, and was an unflinching midwife during its often difficult birth. We are in his debt. Thanks also to Flatiron’s Bob Miller, Colin Dickerman, and James Melia for their unflagging support for this project. Our Canadian agent, Dean Cooke, stickhandled many of the complex issues involved in publishing an international book with grace and finesse. Jim Gifford, our editor at HarperCollins Canada, was a constant and intelligent editor and friend.

Anyone who has ever written a book understands that the final chapter would never have been written without the love and support of family and friends. Jacquie would like to thank her husband, author Stephen Cole, this book’s first reader and editor, for shouldering with unflagging good humor the extra domestic and parental duties that fall to an author’s partner. She thanks her sons, Harry and Lewis, for their daily climbs to the attic office in search of a mother. As always, she thanks her parents, Jim and Diana McNish, and sisters Michelle, Rachael, and Cathie. Lindsay Abelarde diligently helped with book research and transcribing interviews and Anabel Silva kept the bar high.

Sean would like to thank his wife, Erin, who took on the thankless role of “book widow” and de facto single parent for long stretches with patience,
kindness, and unflagging support. Daughter Clara and sons Ben and Jack were a welcome cheering squad for the “book-ie rookie” in their midst, and were very understanding as he spent long periods burrowed in his basement office while they were scoring goals, performing in concerts, enjoying summer holidays, and trick-or-treating. Erin also provided invaluable constructive feedback on the manuscript. Sean thanks his parents, Carol Silcoff and Brian Silcoff, his step-parents, Gene Swimmer and Janette Hamilton-Silcoff, mother-in-law, Jane Downey, and sister, Marjorie, for their love, support, good humor, and childcare help. Sean is grateful to his aunt Linda Cantile, uncle Bob Downey, friends David Berman and Nicole Butler, and the McNish-Cole family for kindly providing accommodations, food, drink, and great company during his many trips to Toronto/Waterloo. Finally, Sean thanks old friends who introduced him to key sources, including Ken Murray, Byron Sproule, and George Scriban.

2 / ENCHANTED FOREST

1
Tom Standage,
The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century’s On-Line Pioneers,
New York, Walker & Company, 1998.

2
Lore has it Ericsson’s founder, Lars Magnus Ericsson, created the hooked stick so that his wife could stay in touch when she drove country roads. This myth was debunked in 2013 by an Ericsson spokesman, who said the device was created at a later date for Boström. Daniela Hernandez, “The Curious Case of the 103-Year-Old Car Phone,”
Wired,
September 20, 2013.

3
Paul Galvin, quoted in “Calling All Cars,” Motorola Solutions Inc.,
www.motorolasolutions.com/US-EN/About/Company+Overview/History/Explore+Motorola+Heritage/Calling+All+Cars
.

4
Details about the origins of ALOHAnet were obtained from Norman Abramson’s testimony in the civil lawsuit filed by NTP Inc. against Research In Motion, U.S. District Court for the Eastern District of Virginia Richmond Division, Nov. 11, 2002, pp. 859–950.

5
J. M Miles, “Voice/Data Convoy,”
InformationWeek,
May 14, 1990.

6
Richard Wise,
Multimedia: A Critical Introduction,
New York, Routledge, 2000, p. 62.

3 / STAYING ALIVE

1
“Mobile Data Will Be a Brave New World,”
Kitchener-Waterloo Record,
April 4, 1992.

2
“Prices Cut to $495 or Less for PC Cards, Radio Modules for Motorola Networks,”
Mobile Data Report,
December 4, 1995, Vol. 7, No. 23.

3
Ira Sager, “Before iPhone and Android Came Simon, the First Smartphone,”
Bloomberg Businessweek,
June 29, 2012.

4
Mike Strathdee, “Waterloo Firm Succeeds in U.S., Ignored at Home,”
Kitchener-Waterloo Record,
August 26, 1993.

5
“Dull Year Marked by Improving Hardware, Testing Strategies,”
Mobile Data Report,
January 1, 1996, vol. 8, no. 1.

6
Scott McCartney, “U.S. Robotics Dials Up Dollars in Market for Modems,”
Wall Street Journal,
July 27, 1995.

7
Cowell did not recall the details of the contract dispute with RIM during a 2014 author interview.

8
Kurt Eichenwald, “Microsoft’s Lost Decade,”
Vanity Fair,
August 2012.

9
Cheryl Krivda, “Mobile Data Networks: Do They Deliver?”
LAN Magazine,
December 1, 1994.

10
Research In Motion new issue prospectus, October 17, 1997, p. 13. Filed online at the
System for Electronic Document Analysis and Retrieval,
www.sedar.com
.

11
Graham Tubbs and Terry Gillett,
Harvesting the BlackBerry: An Insider’s Perspective,
Wheatmark, 2011, p. 35.

12
All references to the contents of “Success Lies in Paradox” are drawn from Rod McQueen,
BlackBerry: The Inside Story of Research in Motion,
Toronto, Key Porter, 2010, pp. 115–19.

4 / LEAP

1
Geoffrey A. Moore,
Inside the Tornado,
New York, HarperCollins, 1995.

2
John Colapinto, “Famous Names,”
New Yorker,
October 3, 2011.

5 / SPREADING THE GOSPEL

1
The term “evangelist” was commonly used by U.S. computing companies in the 1990s. Mike Boich is believed to have originated the title at Apple in the 1980s,
when he set out to convince developers to create software applications for Macintosh computers.

2
Joann Muller, “Cambridge, Mass. Software Firm Fends Off Microsoft at Conference,”
Boston Globe,
September 10, 1998.

3
One of Fabian’s best scores happened on another trip to Boston in 1999, when he attended a negotiating seminar at Harvard University. During a break, Fabian pulled out his BlackBerry to show fellow participants. He returned with dozens of leads.

4
Mark Evans, “Stock Sale Ends Dispute Between Com Dev,”
Globe and Mail,
February 4, 1999.

5
Douglas Gibson,
Stories About Story Tellers,
Toronto, McClelland and Stewart, 2011, p. 25. Robertson Davies frequently told the story of attending a Vancouver cocktail party in 1957 when news was announced that Canadian diplomat and future prime minister Lester Pearson had been awarded the Nobel Peace Prize for his work during the Suez Canal crisis. An elderly woman attending the party greeted the news by barking, “Well! Who does he think he is?”

6
Michael Gartenberg, “BlackBerry Back in the Game with BB10 OS and Z10 Smartphone,”
Computerworld,
January 30, 2013.

7
“Making It Big,”
Forbes,
April 16, 2001.

8
Kevin Maney, “BlackBerry: The ‘Heroin’ of Mobile Computing,”
USA Today,
May 7, 2001.

9
Michael Smith, “All Thumbs,”
Report on Business Magazine,
March 31, 2000.

6 / TOP THIS

1
After buying Palm in 1995, U.S. Robotics was subsequently taken over by 3Com in 1997.

2
Beth Piskora, “$1.07B in His Palm; CEO Is a Big Winner as IPO Rockets to $53B,”
New York Post,
March 3, 2000.

3
The 1994 Simon is widely regarded as the world’s first smartphone, but the term didn’t appear until 1997 when Sweden’s Ericsson promoted the term in its marketing campaign for the GS 88 Penelope, a device that combined mobile computing, text, and voice applications.

4
European Commission, “Microsoft: A History of Anticompetitive Behaviour and Consumer Harm,” March 31, 2009, p. 4.
www.ecis.eu/documents/Finalversion_Consumerchoicepaper.pdf
.

5
Adrian Ryans, “Research In Motion Ltd.,” Richard Ivey School of Business case study, University of Western Ontario, published February 9, 2000,
www.iveycases.com
.

6
Horace Dediu, “In Memoriam: Microsoft’s Previous Strategic Mobile Partners,”
Asymco.com
, February 11, 2011,
www.asymco.com/2011/02/11/in-memoriam-microsofts-previous-strategic-mobile-partners/
.

7
Walter S. Mossberg, “Palm’s New Hand-Held Goes Mano a Mano with a BlackBerry,”
Wall Street Journal,
January 31, 2002.

8
Douglas McIntyre, “The 10 Biggest Tech Failures of the Last Decade,”
Time,
May 14, 2009.

9
“The Emergence of the CIO,” IBM corporate report,
www-03.ibm.com/ibm/history/ibm100/us/en/icons/emergenceofcio/
.

7 / EL CAMINO

1
Quentin Hardy and Joan Indiana Rigdon, “Motorola Overhauls Staff Structure, Slashes Management Pay,”
Wall Street Journal,
March 24, 1997.

2
Paul Desmarais died in 2013 at the age of eighty-six.

3
In 2003 the Library of Congress acquired 911 Digital Archive, a large collection of digital e-mails, notes, recordings, and photographs from the September 11, 2001, terrorist attacks in New York, Washington, and Pennsylvania. The New York Graduate Center and George Mason University jointly assembled the collection. Many e-mails in the collection were written by people using BlackBerrys.

4
The worker identified as Craig submitted an account of his experience on September 11 to the 911 Digital Archive. His story included copies of e-mails exchanged on his BlackBerry with his wife and many coworkers in search of missing colleagues. “I am very grateful to have a BlackBerry and to have been able to keep in touch so instantly that day,” Craig wrote in his story. See
http://911digitalarchive.org/items/show/17220
.

5
Bill Kelley’s sisters described his last e-mails during an interview with CNN on September 14, 2002, during a special program called
9/11: What Really Happened.

6
Michael Martin and Denise Pappalardo, “Carriers Stay Course with NYC Networks,”
Network World,
March 11, 2002.

7
Simon Romero, “The Simple BlackBerry Allowed Contact When Phones Failed,”
New York Times,
September 20, 2001.

8
Ibid.

9
Lauren W. Wittington et al., “Sorrow and Defiance Security Review Planned,”
Roll Call
, September 13, 2001.

10
Ibid.

11
National Journal Staff, “Voices of 9/11,”
National Journal,
May 3, 2011.

12
Dawn S. Onley, “Smart-Card Rollout Might Need More Time,”
Government Computer News,
July 21, 2003.

8 / GAME OF PHONES

1
Nokia press release, February 23, 2000.

2
Walt Mossberg, “Wireless Carriers’ Veto over How Phones Work Hampers Innovation,”
Wall Street Journal,
June 2, 2005.

3
LinkedIn page for Matthias Wandel, retrieved October 30, 2014.

4
Kevin Maney, “BlackBerry: The Heroin of Mobile Computing,”
USA Today,
May 7, 2001.

5
Brad Stone, “BlackBerry: Bring It On!”
Newsweek,
September 26, 2005.

6
Richard Kay, “How Much Money Does Linley Need?”
Daily Mail,
August 10, 2006.

7
“Transition,”
The West Wing,
season 7, episode 19, aired on NBC, April 23, 2006.

8
Marshall Loeb, “Don’t Let Your BlackBerry Be Your Boss,”
Dow Jones Business News,
June 21, 2007.

9
“You’re So Busted!! DDB Canada Battles PDA Misconduct with ‘Colourful’ Penalty Card System,” press release from
DDB Canada,
February 12, 2008,
http://www.ddb.com/japan/press/02-12-08_YellowRedCards.pdf
.

10
Richard Schmelzer, “Sheraton Provides Guests Vacation from Hand-Helds,”
PRWeek
, Octpber 23, 2006.

11
Mike Elgan, “Why the BlackBerry Pearl is the Smart Phone of the Future,”
Computerworld
, December 14, 2006.

9 / ROCKET DOCKET

1
Barrie McKenna, Paul Waldie, and Simon Avery, “Patently Absurd: The Inside Story of RIM’s Wireless War,”
Globe and Mail,
February 21, 2006.

2
Ibid.

3
Ibid.

4
Robin Feldman, Tom Ewing, and Sara Jeruss, “The AIA 500 Expanded: The Effects of Patent Monetization Entities,” UC Hastings Research Paper No. 45,
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2247195
.

5
“Pager Maker Gets Patent for E-Mail Delivery,”
Wall Street Journal,
May 18, 2001.

6
Kevin Restivo, “The Firm That May Run RIM Off the Court,”
National Post,
December 8, 2005.

7
Federal Judicial Caseload Statistics, Table C-5: U.S. District Courts Median Time Intervals from Filing to Disposition of Civil Cases Terminated, by District and Method of Disposition, During the 12-Month Period Ending March 31, 2001,
Administrative Office of the United States Courts, Washington, D.C.,
www.uscourts.gov/uscourts/Statistics/FederalJudicialCaseloadStatistics/FederalJudicialCaseloadStatistics2001.aspx
.

8
Mosahid Khan, “The Surge in Worldwide Patent Applications,” World Intellectual Property Organization, June 6–10, 2011, p. 5.

9
Chetan Sharma Consulting,
Mobile Patents Landscape: An In-Depth Quantitative Analysis,
3rd ed., 2014,
www.chetansharma.com/MobilePatentsLandscape_2014.htm
.

10
All references to the proceedings in original NTP-RIM case are drawn from court transcript,
NTP Inc. v Research in Motion Ltd.,
U.S. District Court for the Eastern District of Virginia, Richmond Division, November 4–21, 2002, Civil Action 3:01CV767.

11
Author interview with Rose Ann Janis.

12
Theodore Schleifer, “In Virginia Trial of McDonnell and Wife, an Imposing Judge Sets the Pace,”
New York Times,
August 10, 2014.

13
District Judge James Spencer, Memorandum of opinion, filed in
NTP Inc. v. Research in Motion Ltd.
May 23, 2003.

14
Donn Smith,
Internal Perfection: The New Frontier for Performance, Well-Being and Health, 2013,
available at
www.iamenergy.ca/internalperfection.php
.

15
“Patent Office Rejects NTP Claim Ahead of BlackBerry Injunction Hearing,”
RCR Wireless
News, February 23, 2006.

16
Brian Baxter, “Hitting the Jackpot,”
American Lawyer
, May 1, 2007.

10 / THE JESUS PHONE

1
Walter S. Mossberg, “Wireless Carriers’ Veto over How Phones Work Hampers Innovation,”
Wall Street Journal
, June 2, 2005.

2
Fred Vogelstein,
Dogfight: How Apple and Google Went to War and Started a Revolution,
New York, Penguin Group, 2013, p. 45.

3
“U.S. Wireless Data Market Update 2006,” Chetan Sharma Consulting,
Chetansharma.com
, 2006.

4
Vogelstein,
Dogfight,
p. 47.

5
Ibid., p. 45.

6
Ibid.

7
David Pogue, “iPhone Soars (Even with AT&T in Tow),”
New York Times,
July 2, 2007.

8
Walter Isaacson,
Steve Jobs,
New York, Simon & Schuster, 2011, p. 395.

9
Ibid., pp. 417–8.

11
/
STORM

1
Chris Sorensen, “CEO Balsillie Shrugs off ‘BlackBerry Killer,’ “
Toronto Star,
July 7, 2007.

2
Brad Stone, “BlackBerry’s Quest: Fend Off the iPhone,”
New York Times,
April 27, 2008.

3
Vogelstein,
Dogfight
, p. 120.

4
Andrew Bary, “World’s Best CEOs,”
Barron’s,
March 24, 2008, p. 33.

5
Jim Balsillie made these remarks during a June 2, 2009, talk to students at the Asper School of Business in Winnipeg, Manitoba.

6
Stone, “BlackBerry’s Quest.”