BlackBerry's Collapse: 5 Key Mistakes

Aug 17, 2013 (05:08 AM EDT)

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Watching BlackBerry stumble and fall during the last few years has not been pleasant. The company once stood at the top of the smartphone market. Its smartphones were carried by mobile professionals in the tens of millions. These devices were the envy of the office, and the company helped push mobility in new and exciting directions.

And then everything went wrong.

The company made a number of mistakes along the way that led to its current position at the bottom of the smartphone market. It's still losing share. BlackBerry this week announced that it is exploring strategic options, including an outright sale of the company to investors or other third parties. BlackBerry is close to the end of the road and desperately seeking an escape route.

Here's how BlackBerry found itself trapped with nowhere to go.

1. It Wrote Off The iPhone

Former BlackBerry co-CEO Mike Lazaridis scoffed at the original iPhone. He thought it was a toy. He derided its poor battery life and balked at the idea that anyone would want to type on glass when BlackBerrys offered full QWERTY keyboards.

The original iPhone may not be impressive by today's standards, but there's no denying that it forever altered the smartphone paradigm. It offered a big screen, a capable browser and the best music/video experiences available from a mobile device, something that BlackBerrys (and most other smartphones at the time) did not.

As the saying goes, BlackBerry didn't adapt -- at least, not fast enough -- to the changes in the market. Classic Darwinism in action. (Nokia is guilty of this too.)

[ What's next for BlackBerry? Read Will BlackBerry 's Future Be A Piecemeal Sale? ]

2. It Wasted Resources On The PlayBook

The BlackBerry PlayBook tablet is one of the biggest tech industry failures in in recent memory. The company introduced the tablet during the fall of 2010 (following the debut of the original Apple iPad tablet earlier that year), and brought the PlayBook to market in April 2011.

BlackBerry's leadership probably thought it was responding to the Apple iPad in a timely manner, getting a competitive product to market as quickly as it could. It did this at the expense of its smartphones. BlackBerry pulled resources away from its smartphone development teams in the months leading up to the PlayBook's debut. Instead, it should have skipped the tablet altogether and focused on its core smartphone business, which was already in trouble. (Handset sales historically are responsible for 80% of BlackBerry's revenue.)

The one thing BlackBerry did right with the PlayBook was to base the operating system on QNX, which it had purchased earlier. QNX and PlayBook OS eventually led to the foundation of today's BlackBerry 10 operating system. If BlackBerry had only skipped the PlayBook and begun work on BlackBerry 10 right away, it might have had a better chance.

3. BlackBerry Didn't Fire Lazaridis And Balsillie Soon Enough

BlackBerry's former CEOs, Mike Lazaridis and Jim Balsillie, are far more responsible for the company's position today than is current CEO Thorsten Heins. Lazaridis and Balsillie were bullheaded and unwilling to change with the market. They ignored competitive threats from Apple and Google, they frittered away time and money pursuing the PlayBook, and by the time they realized their mistakes it was too late.

BlackBerry's board of directors should have recognized this sooner and done something about it. It was obvious to everyone else that Lazaridis and Balsillie didn't know how to handle the changing market.

Why did the board not see it? Had BlackBerry's board noticed the writing on the wall 12 months earlier, the company might be in a much better place right now. Was the board scared of what would happen if it fired the two founders of the company?

Lazaridis and Balsille stepped down from their co-CEO roles in December 2011, ceding control to Heins, who officially became CEO in January 2012. Heins hit the ground running, but BlackBerry was already too far behind to catch up.

4. It Didn't Take BYOD Seriously

One of BlackBerry's core strengths is the BlackBerry Enterprise Server. The BES is the tool used by businesses to manage their fleets of BlackBerrys. It remains a capable and incredible service for mobile device management.

Once the iPhone and Android were proven enterprise devices able to run business apps, some businesses began to let employees pick their own smartphones. Guess what they picked? iPhones and Android smartphones, not BlackBerrys.

The problem is that BES was unable to manage the iPhone and Android devices in the way it can manage BlackBerrys. Enterprises began to allow mass adoptions of these competing products and had to choose other solutions to manage them. BlackBerry didn't add the ability to control the iPhone and Android smartphones to BES until BES 10 was released this year.

5. It Delayed BlackBerry 10 Until 2013

BlackBerry debuted BlackBerry 10, its next-generation operating system, in January 2013. The first BB10 devices hit the market shortly thereafter. Of course, by this time, Apple's iOS was onto its sixth major generation, Google's Android was onto its fourth major generation, and even Microsoft's Windows Phone platform was on its third major generation. BlackBerry 10 would have been late to the game if it showed up in January 2012, let alone January 2013.

Of course, building an operating system from scratch is no easy task. Had Lazaridis and Balsillie reacted to the iPhone immediately in 2007 (or even to Android in late 2008), it's possible they could have gotten something improved to the market by early 2010. That alone could have helped significantly.

But they didn't. The company released two more iterative updates to its aging platform (BlackBerry OS 6 and OS 7). These were both significant improvements over BlackBerry OS 5, but not nearly enough to compete with Android and iOS.

Along with the iterative OS updates, the company stuck with iterative hardware updates, too. The Bold, Curve and Pearl lines remained essentially unchanged for years, despite the interesting and new form factors being introduced by makers of Android devices.

At the end of the day, BlackBerry's current predicament traces back to poor leadership. It's truly a shame, because the company had plenty going for it.

Now the company's fate is surrounded by questions. Will anyone buy it? If they do, what will become of the smartphone maker? Will it be sold in pieces, which seems likely, or as a single company? Will it be shut down or kept alive? There will be no fairy-tale ending for the former smartphone king.