BlackBerry’s Fall: How Apple’s AT&T Exclusive Toppled The Canadian Tech Giant

On a crisp January morning in 2007, Mike Lazaridis, then co-CEO of BlackBerry, is running on a treadmill in front of his television.

Steve Jobs appears, ready to unveil a new product.

A technology that would change the course of the smartphone business.

“And we’re calling it iPhone,” Jobs exclaims.

“How did they do that?” Lazaridis asks.

Then Stanley Sigman, the CEO of Cingular Wireless joins Jobs on stage, announcing a multi-year contract to sell iPhones.

AT&T is the parent company of Cingular Wireless.

“It will collapse the network” Lazaridis thinks.

So he gears down his treadmill, heads to Blackberry headquarters and storms into Co-CEO Jim Balsillie’s office.

He plays the webcast of Apple’s soon to be famous keynote.

He points out how Cingular let Apple install a full web browser in their phone, something they never let BlackBerry do.

“Apple’s getting a better deal, it’s going to be tough to compete in the US.” Balsillie remarks.

“These guys are really, really good,” Lazaridis adds.

And then Balsillie ends the conversation,

“It’s OK, we’ll be FINE.”

BlackBerry’s Battle Plan

And so they started poking holes in the design and build of the iPhone.

BlackBerry executives believed if the iPhone gained traction, it would be with consumers who cared about YouTube and Internet escapes, not efficiency and security.

The iPhones battery lasted less than 8hrs, operating on a 2G network.

Music, video, and downloads would strain AT&T’s network, slowing the iPhone’s speed.

BlackBerry’s core customers valued secure and efficient communication systems.

The iPhone shifted the landscape of smartphones, from functional devices to beautiful devices.

BlackBerry felt threatened.

But a Storm was coming.

BlackBerry & Verizon Partner Up

Nearly 1 Million iPhones sold within the first three months in the summer of 2007.

The iPhone had a cult following and Verizon wanted a knight to slay AT&T’s dragon.

So Verizon approached BlackBerry, still the world’s largest smartphone manufacturer.

Mike Lazaridis initially offered the new BlackBerry Bold, a traditional BlackBerry featuring a keyboard and new square touch-screen display.

Something that would win the hearts of die-hard BlackBerry users while introducing new touch technology.

But the Bold was not a suitable solution for Verizon officials.

If AT&T succeeded with an all-touch phone, then obviously the market wants an all-touch phone, so this new BlackBerry needed a full touchscreen.

Lazaridis’ solution was the BlackBerry Storm, a phone in its prototype phase.

Like iPhone, the Storm had a full touch-screen display, but it was clickable.

It gave users feedback, and Verizon officials loved it.

They loved it so much they threw a $100 Million marketing budget at BlackBerry to promote Storm in thousands of retail outlets.

Lazaridis couldn’t say no, even though an impossible deadline of a Spring 2008 launch loomed, which BlackBerry missed.

The Storm Arrives

In November 2008, Storm started shipping for the Christmas season, but internally engineers knew the phone had flaws.

Physically the phone was beautiful, a work of art.

But the browser was slow, the clickable screen didn’t respond in the corners, and it froze regularly.

Yet it was the best selling initial BlackBerry ever, with 1 Million units sold.

BlackBerry couldn’t meet demand.

Reviews were scathing and returns were plenty.

Software updates were not fixing critical issues and Verizon became frustrated.

Verizon called Balsillie to its headquarters to review sales data.

Nearly every single Storm of the 1 Million sold needed replacing, and replacements didn’t work either.

For the first time, BlackBerry delivered a product that severely missed the mark and missed an opportunity to overtake Apple.

The Storm didn’t meet customer needs and failed to stay true to hardcore BlackBerry users

But Mike Lazaridis did not see Storm as a failure.

The Second Storm & The Beginning of The End

He saw it as BlackBerry’s first attempt at a new technology.

He loved the camera, replaceable battery, speaker system, and most important, the clickable screen, something most customers could do without.

But he loved it so much BlackBerry doubled down, building and releasing the Storm 2.

Lazaridis didn’t understand the appeal of the iPhone, but the path was clear: everyone followed Apple, the new leader.

The Storm 2 pushed through until 2010.

By then US carriers lost interest, not only in the Storm, but in BlackBerry as a whole.