BlackBerry withers as innovation of rivals bears fruit

Shares fall sharply as company announces nearly $1 billion loss

Barack Obama checking his BlackBerry in 2008.
Jae C. Hong/AP

On Friday, as thousands waited in hourslong lines to buy new iPhones, the heyday of BlackBerry seemed like an awfully distant memory. But it was just five years ago that Research in Motion (now renamed BlackBerry) was the most profitable company in Canada and its smartphones were flying off shelves.

Today BlackBerry is a shriveled version of its former self. On Friday the company announced a loss of nearly $1 billion in the second quarter and said it would lay off 4,500 workers -- 40 percent of its remaining global workforce. It reported revenue of just $1.6 billion, half of what many analysts expected, furthering experts' view that the company can simply no longer compete in the smartphone market it once helped create.

“Anything BlackBerry could've done to correct their course would've had to have been done a few years ago,” said Simon Sage, editor at large for the mobile news and community website group Mobile Nations, which owns “They had the blinders on. They were fully confident that the old way of doing things was fine.”

Friday's announcement was just the latest marker in the decline of the once-iconic company. Last year BlackBerry laid off 5,000 workers. And just a few weeks ago the company said it was open to being sold, possibly in bit parts.

"We are implementing the difficult, but necessary operational changes announced today to address our position in a maturing and more competitive industry, and to drive the company toward profitability," said Thorsten Heins, president and CEO of BlackBerry, in a statement on Friday.

But according to analysts and BlackBerry users, the company's march toward irrelevance was anything but inevitable. While its latest disappointing sales figures are a sign of its current troubles, many say it has been decaying internally for years.

In 2007, as BlackBerry flip-flopped between focusing on the business sector and the wider public market, it turned off customers with lackluster iterations of its operating system, and alienated developers with its draconian rules for designing apps. In the meantime, Apple’s iPhone and, later, Google’s Android ate BlackBerry’s lunch.

Now, with Apple and Google controlling more than 90 percent of the smartphone market, and BlackBerry maintaining just over 5 percent, it is unclear what the company can do to regain a foothold.

"It's hard for another company to come in at this point," said Jamie Murai, an app developer who used to design apps for BlackBerry. "If you see that all your friends have an Android or an iPhone, you're probably not going to be the one out of 10 that says, 'I'm going to get a BlackBerry.'"

Murai said BlackBerry could have maintained a fan base if it had invested in creating an ecosystem for apps that rivaled Android's and Apple's. But, he said, it seemed to be stuck in a mindset of focusing on the business market, even as it tried to win the dollars of the general public. That led it to neglect app development.

“Apple looks at their developers' experience as a product itself, (but with) BlackBerry, it seemed like an afterthought,” Murai said. “If people don’t want to develop for your platform, you’re never going to get high-quality software.”

Now BlackBerry says it will refocus on the enterprise market, trim its number of models from six to four, and make its messaging app BBM available on iOS and Android.

But even as it lost market share, BlackBerry maintained a loyal fan base, especially among those who prefer a full-fledged keyboard.

Even President Barack Obama waged a two-month-long battle with his staff to keep his BlackBerry when he was elected in 2008. He was spotted still using one at his second inauguration, in 2013.

"The typing experience on iOS doesn't hold a candle to BlackBerry," said Sean Kelleher, a 25-year-old BlackBerry enthusiast from Redondo Beach, Calif. "I've had one since I was 18. They've never broken, and they've never had hardware issues."

Still, Kelleher carries an iPod Touch when he wants to watch movies or play games, features at which even the latest, touch-screen iteration of BlackBerry does not excel.

The fact that Obama and a few others still love their BlackBerries may point to a way forward for the struggling company, according to some. Perhaps if BlackBerry goes back to its roots, focusing on a core group, as opposed to trying to compete with Apple and Google, it can carve out a niche for itself.

"They might be able to do well focusing on that core set of users," said Murai. "BlackBerry is not going to be the consumer behemoth that Apple is, but that could be a long-term sustainable strategy."

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