BlackBerry – The Story of the Company That Created the First Smartphone… and Lost

This company created the first smartphone, which Madonna kept under her pillow at night. At its peak in January 2010, the company had 50 million customers worldwide. Shareholders celebrated big profits a little earlier, because the company reached an $83 billion valuation on the stock market. However, as is often the case in business, it is easy and quick to fall from the top, and ... that's what happened. Here is the extraordinary and instructive story of BlackBerry.

In this article you will learn:

• How did BlackBerry come about?
• How did BlackBerry achieve such great commercial success?
• Why has BlackBerry's valuation fallen by almost 100% in 16 years?
• What lessons can managers and investors draw from this story?

The History of BlackBerry – Once a Pioneer in Its Field

The story is an incredible lesson in business and investment humility. BlackBerry pioneered mobile devices but lost market share to larger competitors like Apple. The company grew rapidly from 1999 to 2007, but the introduction of the touchscreen iPhone in 2007 sparked a sharp retreat from BlackBerry devices. BlackBerry’s stock price fell from around $148 in 2008 to around $2 in 2024 and now hovers around $4.

The BlackBerry was for a time the gadget of choice for leaders, corporate rats and celebrities. It was a smartphone with a distinctive mini QWERTY keyboard. Owning a BlackBerry was a status symbol, and “BlackBerry addiction” was a common phenomenon – much like addiction to touchscreen smartphones is today.

The BlackBerry played a key role in changing the way people worked. Having a BlackBerry meant that you didn’t have to sit at a desk in a fluorescent-lit office to stay in touch with your superiors or subordinates. It meant that the office was always close at hand, that it became portable, mobile. You could answer emails at night, on vacation, or in the bathroom.

It is worth adding that BlackBerry was the leader in the pager market, now known only from films from the mid-90s. These devices notified about incoming calls to the phone and allowed for reading e-mails.

It is worth understanding this story of rise and fall in detail to understand how to invest in value over the long term. The interesting fact is that BlackBerry Company it still exists today and is still listed on the stock exchange, after his difficult experiences, but more on that later.

From Pagers to Smartphone Market Domination

Once upon a time – in the mid-80s – there lived two engineers: Mike Lazaridis i Jim Balsillie. They had a brilliant idea that was going to change the world of technology. They wanted to change the way the world communicated. So they founded a company in Canada called Research In Motion (RIM). At first, they manufactured the pagers that we’ve already mentioned, and they were quite successful, which allowed them to list the company on the American stock exchange in 1999. In 2000, Lazaridis and Balsillie launched a product that was going to revolutionize the market: BlackBerry 957.

It was a phone. But it wasn’t just any phone. It was the first device that allowed users to send and receive emails instantly, right from their pockets, in a matter of seconds. Back then, having email on your phone was magical. Businessmen and politicians loved the BlackBerry so much that it became not just a phone, but a status symbol. With a BlackBerry, you were important and fashionable, and you were always in touch with your friends, family, and the world, just like other BlackBerry users.

What made the BlackBerry stand out? The best keyboard. It was easy to use and felt like carrying a small computer in your pocket. Users could send emails, reply to messages, and keep up with office work, all from a handy device. The BlackBerry became an object of desire.

RIM's revenues grew rapidly. The company continued to develop the BlackBerry Enterprise Server (BES) functionality and the BlackBerry operating system. The golden period between 2001 and 2007 brought global expansion of BlackBerry and new products in the portfolio. After gaining a strong position in the corporate market, BlackBerry attacked the consumer market. The BlackBerry Pearl series was a great success, as were the subsequent Curve and Bold product lines.

The business press was full of praise for the BlackBerry founders.

“Jim Balsillie has become a top BlackBerry salesperson, winning customers in the financial services industry and among security-conscious governments around the world.” – wrote technology journalist Iain Marlow in The Globe and Mail in 2009. “Under his leadership, the company has grown at a breakneck pace, routinely exceeding internal targets and disrupting the established hierarchy in the wireless technology world.” – he enthused.

At its peak, BlackBerry had about 42% of the US and 20% of the global mobile phone market. Those were the years 2009-10. Back then, the iPhone already existed, but Apple was just conquering the market and had about 25% of the US market share. BlackBerry's stock market peaked in May 2008 - then it crashed, anticipating what would happen on the market. By December 2013, BlackBerry's share of the global mobile phone market had fallen to 2% and in the US to 3,8%. By the end of 2015, BlackBerry smartphones had virtually disappeared from the market, and even then-US President Barack Obama, who boasted in 2014 that he was loyal to the brand, didn't help...

Some Reasons for BlackBerry's Big Failure

What happened? What was behind BlackBerry's great failure, or rather, why it fell so easily from a peak that was so difficult to climb? In general, BlackBerry's downfall is a combination of slow reactions to changes in the market and to competition, focusing on the wrong end market, and misunderstanding the value of smartphones.

• Slow response to competition. BlackBerry executives initially dismissed the touchscreen iPhone, claiming that users preferred a physical keyboard and that nothing would change. When the iPhone started selling well, BlackBerry rushed out a touchscreen device (the BlackBerry Storm), but it was of poor quality and met with terrible reviews. Subsequent versions of the device returned to the keyboard concept, but this proved to be a mistake, because the market wanted larger screens.
• Focusing on the wrong end market. While Apple and Google made smartphones accessible to a broad range of consumers by creating elegant user interfaces and engaging applications, BlackBerry stubbornly focused on enterprise customers and their security and connectivity requirements. It's a prime example of the so-called innovator's dilemma, satisfying the needs of its core customers while neglecting to break into broader waters.
• Misunderstanding the value of smartphones. BlackBerry focused on improving the features of its devices, and failed to recognize that smartphones are a fantastic invention that increases personal productivity and provides entertainment in your pocket. Apple and Google built a moat around their ecosystems, and BlackBerry was left behind.
• Poor execution. Even when BlackBerry tried to adapt to the new trend, it did so clumsily. The introduction of the touchscreen Storm in 2008 was a failure. The Playbook tablet, which appeared in 2010, was widely criticized for its lack of native applications, such as email.

The first half of 2014 saw several positive jumps in BlackBerry's stock price due to announcements that the company would transform from a mobile device manufacturer to a mobile solutions company. In January 2015, reports emerged that Samsung was interested in acquiring BlackBerry, which led to a 30% increase in the stock price. However, this jump proved to be short-lived, and the stock continued to decline in the following years.

Why BlackBerry is still alive and what it does

Interestingly, BlackBerry lost the smartphone war but survived. In late 2013, an experienced manager named John Chen took over as CEO, gave up the smartphone fight and transformed BlackBerry into a software and services company.

Under John Chen's leadership, BlackBerry has redefined its position as one of the leaders in cybersecurity and IoT (Internet of Things) solutions. The company has developed a robust portfolio of cybersecurity products – including DTEK, a suite of security tools for Android devices, and the QNX operating system, which powers millions of cars and industrial systems worldwide.

A significant step for the “new BlackBerry” was the acquisition of the German company Secusmart, specializing in encrypted communications, in 2016. This acquisition increased the company’s capabilities in the field of secure communication solutions, strengthening its position in the cybersecurity market. Interestingly, BlackBerry is also trying its hand at the AI ​​industry, working on AI systems that warn about cyber threats in advance.

BlackBerry is currently worth $2,4 billion on the stock market. In 2024, it had $1 billion in revenue (+19% y/y), but earned only $7,6 million, with EBITDA in the range of USD 189 million (+220% y/y). The company is alive and operating, but it does not impress as a business and is perceived as an average investment: analysts in 8 current recommendations advise "hold" and set a target price of USD 4,48 at a rate of USD 4,00.

Concrete investor lessons from BlackBerry's rise and fall

What are the lessons for investors from BlackBerry's story? They should look for stocks whose management does not rest on its laurels, monitors trends, and listens to consumer needs. What worked yesterday may not work tomorrow. The management of a fundamentally strong company that offers innovative products or services that are popular should adhere to the following principles:

• Never underestimate the competition.
• Listen to your customers.
• Always be innovative.

And they should cut their losses without hesitation and sell shares of a company whose business is starting to fall apart, which is starting to lose market share. Because BlackBerry's valuation would have to grow almost 40 times to reach the level of its May 2008 peak. And that is almost impossible...