Once the giant of the smartphone business, RIM, which was renamed BlackBerry Ltd. in the summer, is now on its knees. The company reported a $965-million (U.S.) fiscal second-quarter loss Friday, primarily because of a massive writedown of Z10 phones that sit, unsold and unwanted, about eight months after they first hit the market. The company is cutting 4,500 jobs, 40 per cent of its work force, in a desperate bid to bring costs in line with plummeting revenue.
Once a fast-moving innovator that kept two steps ahead of the competition, RIM grew into a stumbling corporation, blinded by its own success and unable to replicate it. Several years ago, it owned the smartphone world: Even U.S. President Barack Obama was a BlackBerry addict. But after new rivals redefined the market, RIM responded with a string of devices that were late to market, missed the mark with consumers, and opened dangerous fault lines across the organization. Sometimes, feedback from customers that might inspire changes would die at middle management, because senior executives didn’t want to bring it to Mr. Lazaridis.
Blackberry’s apps looked “uglier” than those programmed in more modern languages, and the simulator used to test the apps often didn’t recreate the actual experience, said Trevor Nimegeers, a Calgary-based entrepreneur whose software company, Wmode, has developed apps for BlackBerry. Further, RIM exerted tight control over developers before it would sign off on their apps for use on BlackBerrys, stifling creativity. “Developers wanted to be embraced, not controlled,” Mr. Nimegeers said. As a result, hot apps such as Instagram and Tumblr bypassed BlackBerry.
In April, 2010, RIM announced a deal to acquire Ottawa-based QNX Software, a cutting-edge software maker that would provide the building blocks for the BlackBerry 10 operating system – the new platform Mr. Lazaridis knew the company needed.
By the time the first BlackBerry 10 smartphones were unveiled in January of this year, market observers generally agreed that the products were two years too late – a view widely shared among many senior RIM insiders.
The integration of the new features into the platform proved to be more complex and thus more time-consuming than anticipated. The issues were not related to the quality or functionality of the features in the software, but rather the time required to manage the integration of such a large volume of code and prepare it for commercial use globally.