Dumb or Disrupted? The Demise of RIM

Poor, dumb, old RIM

There sure has been an awful lot of talk of late about just how awful things have gotten for poor, dumb, old RIM. Some of the talk is sympathetic: “How could it have come to this?” A lot of the talk is apoplectic: “What is wrong with the players in the mobile industry?” Some of the talk is sad and regretful: “Oh, those poor people in Waterloo, Canada.”

But much of the talk has been downright giddy, spiteful, and soaked through and through with twenty-twenty hindsight.

“RIM,” the critics chortle, “was too arrogant to recognize the dangers posed by the iPhone and Android; too slow moving to react when they finally saw the danger; and too dumb to know what to do when they finally did react.”

“Keyboard loving co-CEO’s Jim Balsillie and Mike Lazaridis got exactly what was coming to them. Their sanctimonious, self-righteous, self-assured, sanguinity finally caught up to them and now they, and RIM, are paying the price for their arrogance and their ignorance.”

Hmm. Maybe. Maybe so. But then again, maybe not.

A Littler Perspective

In 2006, the crown princes of smart phones were RIM, Palm, Nokia and Microsoft. They were smart, successful companies run by smart, successful men.

Today, Palm is gone, Windows Mobile is gone and its replacement, Windows Phone 7, is running in place unable to gain any traction in the market. Meanwhile, Nokia has given up its independence and become a vassal to Microsoft and RIM has one foot in the grave.

Did all of these powerful companies and all of these smart CEO’s suddenly become incompetent and deadly dumb all at the same time? Or did something external happen that made them just look stupid to unsympathetic and unforgiving critics like you and me?

The iPhone Happend

In 2007, the iPhone happened. it’s not like the industry wasn’t watching. But what they saw didn’t scare them at all. It was pretty obvious, even at a cursory glance, than the iPhone was no phone competitor. They were oh so right. But that’s what made what was about to happen so very, very bad. Bad for them, at least.

Market disruption is caused when an innovation creates a new value network. Prior to 2007, smart phones were phones that did a little computing on the side. The iPhone was a computer that that did a little phone calling on the side. RIM, Palm and Nokia were phone companies. Apple, Google and Microsoft are computer companies. When the value shifted from the phone to the pocket computer, the advantage moved from the phone companies to the computer companies.

Palm, Nokia, RIM and Microsoft’s Windows Mobile thought they were safe from another phone competitor – especially one that wasn’t that great a phone and didn’t even come with a keyboard. They were right. But what Palm, Nokia, RIM and Microsoft didn’t realize was they weren’t competing with a phone. They were competing with a pocket computer.

The value chain had shifted. The incumbents were still – successfully – defending the old value chain. But their customers weren’t leaving them for better phones, they were leaving them for better computers. They fact that those computers sent texts, did email and even made phone calls was simply a bonus. The phone makers were blind-sided. The pocket computers were good enough to compete with them. But they had no answer to the superior benefits provided by the pocket computers.

  • Google
  • Google (Android) was the first to react. They dumped their RIM-like phone designs and (eventually) created a superb alternative to the iPhone. Their market success is a testament to their flexibility and their programming prowess.

    I don’t want, in any way, to diminish the stellar job that Google did with Android, but, in addition to being good, they might also have gotten just a little bit lucky too. (Nothing wrong with that.) Their timing was ideal. Their OS was ready, they hadn’t yet committed to the market and when the newly minted iPhone arrived on the scene, the Android team pivoted on a dime and took advantage of a gap in the market and what turned out to be a golden opportunity.

    The stuff of champions.

  • Palm
  • Palm was the next company to see the writing on the wall. They ditched their existing OS and went all in on webOS. Unfortunately for Palm (and perhaps for us all), they didn’t have the resources to sustain their efforts. They ran out of money, ran out of time and they ran out of chances.

    (I’m not going to rehash their second chance with HP. Too painful.)

  • Microsoft
  • Microsoft was the next company to see the light. We can mock Ballmer all we want for initially laughing at the iPhone but once Microsoft decided to act they acted decisively. Microsoft unceremoniously dumped Windows Mobile and entered into a massive effort to create the wholly re-imagined Windows Phone 7.

    Their reward? A tiny sliver of the market and no traction whatsoever. All of Microsoft’s business connections and all of their resources couldn’t buy them back into the market. Most didn’t know it at the time, but the window of opportunity to climb back into mobile phones that were really pocket computers had already closed or was closing fast.

  • Nokia
  • Nokia was the next to see the light or, in their case, they were next to see the “burning platform”. Ex-Microsoft executive Stephen Elop shoved Nokia off the platforms that were Symbian and MeeGo right into the icy waters that are Windows Phone 7. Their efforts, not unexpectedly, were met with a chilly reception. Nokia isn’t sunk yet but they may be going down for the third time. If circumstances don’t throw them a life preserver soon, we’ll be writing requiems for them next.

  • RIM
  • RIM was the last to have the scales fall from their eyes. And while it’s true that RIM’s co-CEO’s kept us all constantly entertained with their oh-so-dumb,-we-obviously-don’t-get-it quotes, it was probably over for them long, long ago.

    If it was already too late when Palm tried to make the switch; it if may have already been too late when Microsoft tried to make the switch, what chance did RIM’s belated efforts really have?

    Not an Excuse, but an Explanation

    It may be true that RIM was arrogant, RIM was slow to change and RIM made some bad choices. But if you had been in their shoes, you too may well have followed the same path that they did.

    In 2007, RIM was a bastion of strength and the iPhone was an impudent interloper. Go back and read the commentary from the time and you’ll see that even as the iPhone started to catch on and even as Android started its meteoric rise, RIM’s future was assured.

    RIM had an impenetrable moat built around their business. BBM’s instant message service and RIM’s security gave RIM two unique and competitor-proof features. Customers adored (and still adore) using RIM’s BlackBerry phones for texting and emailing. And business and government entities were never going to give up their CrackBerry’s and the airtight security that came with them.

    For RIM to have changed in 2007, 2008 or even 2009 would have seemed like madness. Why abandon one’s strengths to chase a chimera? Let consumers play with their Apple and Android toys. Real phone lovers loved to do real work on real phones like the RIM BlackBerry. And RIM’s loyalty and sales retention were second to none. They didn’t call those phones “Crackberries” for nothing.

    Requiem for RIM

    We can make fun of RIM and their codependent CEO’s all day long or – maybe, just maybe – they deserve our understanding instead of our derision. Maybe, instead of mocking RIM, we should be whispering a silent prayer of thanks that Apple didn’t come into our back yard and disrupt our business and make us all look as dumb as a box of rocks.

    Was RIM really dumb or were they doomed from the get go? The iPhone and the Android phones were pocket computers. Apple and Google and later Microsoft were computer companies with tons of experience in creating computer software and computer operating systems.

    RIM was a phone company that did computing on the side. Compared to Apple and Google, they had little experience in computers and computer operating systems. They would have had to abandon their roots, toss out everything they knew and chose to compete with computer companies on their terms, all while their current business model was still, not only viable but, very successful and profitable as well. When you think of it that way, it’s asking a awful lot.


    Maybe RIM did wait too long. Or maybe their so-called window of opportunity never really existed in the first place. When the iPhone first appeared, RIM could have tossed everything that had worked for them in the past and chased a device that, by all rights, was sure to fail or, at best, become a niche product. They could have done that. But most likely, RIM never really had a chance at all. They were finished that moment, in January 2007, when Steve Jobs lifted the iconic device over his head and declared: “…and we call it..iPhone!”

    Published by

    John Kirk

    John R. Kirk is a recovering attorney. He has also worked as a financial advisor and a business coach. His love affair with computing started with his purchase of the original Mac in 1985. His primary interest is the field of personal computing (which includes phones, tablets, notebooks and desktops) and his primary focus is on long-term business strategies: What makes a company unique; How do those unique qualities aid or inhibit the success of the company; and why don’t (or can’t) other companies adopt the successful attributes of their competitors?

    19 thoughts on “Dumb or Disrupted? The Demise of RIM”

    1. Very tight analysis that turns the frosted glass of introspection into daylight. The Apple computer that did phone calls seems akin to the first true human with his lean form, trumping its ancestors with his new brain.

    2. I believe Steve Jobs said that the way Apple created the iPhone was to look at the market situation prior to 2007, which Steve said was “everybody hates their phone,” and then design a product missing all the characteristics that everybody hated.

      I have no idea why the industry would design products that would inspire such negative feelings, but the overwhelming success of the iPhone suggests that Apple’s assessment of the cellphone market pre-2007 was correct.

    3. Nice article. I’m keeping this one in mind as an example of disruptive innovation.

      I have to disagree with the ending though. What did Apple know of phones prior to the iPhone? What you do not know can usually be learned. You may start out at a disadvantage, but that can be overcome in various ways.

      One of the tricky parts about facing (potential) disruption is to unlearn what you already know.

      1. “One of the tricky parts about facing (potential) disruption is to unlearn what you already know.”

        This statement is the biggest barrier for nearly everyone.

        1. So very true in almost every business sector. The naysayers and the ones who torpedo ideas outside of their comfort zone are the ones who are most responsible for the lack of innovation.

    4. A wonderful article with a fantastic ending: “They were finished that moment, in January 2007, when Steve Jobs lifted the iconic device over his head and declared: “…and we call it..iPhone!”

      Many great articles fizzle out at the end. This one ended with an appropriate BANG!!

      I had not given much thought to the idea that the iPhone was really a computer that could make phone calls. However, when I think about it, I had a friend who had an iPhone for that reason. We both had the iPhone 1 and whereas mine was used as my primary mobile phone, he was tied to a Sprint family plan and rarely used his as a phone. When he and I would talk about our iPhones and I would mention something about the phone capabilities, he would often joke “You mean you can use it as a phone?”.

    5. A completely sane and informative post that manages to inform and entertain at the same time. You’re like a throwback to real opinions/editorials that borders on unbiased journalism. Thanks for not going the route of click bait with an over the top headline.

    6. Thanks, great article. One thing I would say is that this is not the complete picture. Microsoft’s early efforts were also pocket computers (just not very good ones). The iPhone’s success became assured when they further disrupted the phone industry through their business model – a high end, value added product that was incredibly easy to use (e.g. no stylus) supporting Apps and backed by the existing Apple Store customer base and infrastructure.

      1. “Microsoft’s early efforts were also pocket computers”-DW

        You make a good point DW. It is my contention (not expressed in this article) that the touch user interface was the key to the tablet and that the iPhone, not the iPad, was Apple’s first tablet.

        This is also why I think Microsoft may be going in the wrong direction with the Surface. They are seemingly doing everything in their power to diminish rather than enhance the touch aspects of their tablet. (A discussion for another day. 🙂

    7. The iPhone did for phones what the iPod did for portable music players. Before iPod, it was Archos who had the best MP3 player on the market. iPod enters the market with its slick styling and (later) its click-wheel, and its already-embedded synergy with all things Apple, and it clicked. Add to that a marketing team second-to-none and a truly dedicated fan base, and the iPod brought MP3 players to the masses, becoming the dominant name in MP3 players, leaving all others in their dust.

      The iPhone took smartphones out of the hands of geeks and businessmen and brought it to the masses. It made smartphones sexy and stupid-easy to use, and showed John Q. Consumer that he could actually get some real use out of this thing beyond making phone calls and sending texts.

      1. Thank you for your comment, schlice.

        One of the things that Apple seems to do is to step back from the market. Normally, we start where we are and try to make improvements from there. I’m sure that Archo, Rio and others were working hard to make better versions of their current products. Apple seems to step back and say “How can we make a better MP3 Player” or better “How can we make music more portable”. When one asks these broader questions one is likely to come up with more innovative and out of the box solutions.

        Apple doesn’t reinvent products – they reinvent categories.

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