NHL dreams didn’t sink BlackBerry, co-founder insists
BlackBerry co-founder Jim Balsillie can rattle a long list of factors behind the company’s stunning fall from the top.
Addressing the Empire Club of Canada in Toronto Tuesday, he discussed many of them: patent lawsuits, aggressive competition from Apple’s iPhone, the failure of the touchscreen BlackBerry Storm. But there’s one theory in particular he wants to permanently debunk: That he was too distracted from the handset business by his pursuit of a new NHL team for Ontario.
“It gave a lot of people an opportunity to make a very simplistic solution to a very complex problem,” Balsillie said. “In 20 years, I didn’t miss one day of work. I didn’t miss one meeting, or one email, or one document to review.”
Wearing a pink jacket and a white dress shirt with no tie, Balsillie walked through the company’s dramatic story — from its humble origins in the mid-’90s, to its ultimate heyday in 2011 where it was making $20 billion in revenue, followed by its rapid loss of handset market share to competitors.
Balsillie and co-chief executive Mike Lazaridis stepped down from the company, formerly known as Research In Motion, in 2012. Last year, the company’s revenue was $4 billion.
Of course, BlackBerry can take credit for inventing an entirely new product, the now-ubiquitous smartphone. At a time when pagers were the height of business communications technology, BlackBerry gained traction with everyone from teenagers to business leaders by making it possible to send and receive emails on a hand-held device.
But finding funding as a technology startup wasn’t easy, Balsillie said. “We were ahead of our time. Tech wasn’t embedded in everything, as it is today,” he said. “You had to have a profitable business model that you can defend.”
It was an aggressive business. BlackBerry found success by partnering with big telecommunications carriers like AT&T and Verizon Communications, but the parties were each trying to make as much money as possible and the relationships were sometimes bumpy.
In 2007, AT&T signed a multiyear exclusivity deal with Apple’s iPhone. BlackBerry introduced the Storm, its most sophisticated product ever, to compete with the iPhone for the high-end smartphone market. It ended up rushed to market too soon, it was full of bugs, and slow, and customers didn’t want it.
A year later, Verizon made a deal with Google’s Android, Balsillie said. “Here you are being fired by your second largest customer. Your largest customer is partnered with iPhone. The lesson is, there’s a fine line between ambition and biting off more than you can chew,” Balsillie said. “With the Storm, we tried to do too much ... It blew up on us.”
If anything is most to blame for nearly killing BlackBerry entirely, it was the massive patent-infringement lawsuit launched by NTP Inc. against the company, Balsillie said. NTP had claim to a patent on a wireless email technology that it claimed — and a U.S. court later agreed — BlackBerry had wilfully violated. The company was criticized for letting the lawsuit drag on for years before eventually settling, after appealing the infringement ruling, for about $600 million US. Balsillie said that settling any faster than the company did would have been a death sentence.
“It’s kind of like your child living through a senseless accident. You’re happy they’re alive, but it’s not a happy dance,” he said. “But my goodness, you’re relieved.”
Balsillie no longer has any official ties with the Waterloo, Ont.-based company he helped create, as current chief executive John Chen leads a difficult turnaround strategy. But unlike most of his former customers, the BlackBerry founder said he remains a loyalist.
“When it comes to smartphones, I’m sentimental,” Balsillie said. “I use a Bold. I love it and you’ll have to pry it out of my cold, dead hands.”