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BlackBerry's Famous Last Words At 2007 iPhone Launch: 'We'll Be Fine'

This article is more than 8 years old.

How does one company go from controlling half the world’s smartphone market to less than 1% today, and from a profit of $1.9 billion to a gaping $5.8 billion deficit -- all within the space of 5 years?

It all started when Apple CEO Steve Jobs took to the stage at the Macworld Conference in January 2007 and showed the world that he could download music, videos and maps from the Internet onto a little glass phone in his hand.

Mike Lazaridis, the founder and vice chairman of BlackBerry at the time, was watching the televised report from his treadmill.

"How did they do that?" he wondered.

Lazaridis’ response along with that of his company are detailed in a new book out today, showing in detail how BlackBerry went from being the seemingly unstoppable king of smartphones, to an also-ran.

BlackBerry’s executives were at first in awe of Apple’s ability to pack so many features into one phone, but they weren't impressed enough to race to build a consumer device that was just as useful and aesthetically pleasing.

Instead they comforted themselves with reminders that the iPhone's keyboard was difficult to use and the battery life, terrible. BlackBerry was leading the pack, after all.

An excerpt from the book, Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, recently ran in the Wall Street Journal and reveals executives in denial about the looming risks that Apple would make a land grab for the market that Research in Motion (RIM), as it was then called, had controlled for so long.

That January day as Lazaridis watched Jobs unveil the first iPhone, he was shocked to see the CEO of AT&T-owned Cingular Wireless join Jobs on the stage to announce a multiyear contract with Apple.

Surely all those downloads of music and videos onto iPhones would collapse the network.

From the book:

The next day Mr. Lazaridis grabbed his co-CEO Jim Balsillie at the office and pulled him in front of a computer.

"Jim, I want you to watch this," he said, pointing to a webcast of the iPhone unveiling. "They put a full Web browser on that thing. The carriers aren’t letting us put a full browser on our products."

Mr. Balsillie’s first thought was RIM was losing AT&T as a customer.

"Apple’s got a better deal," Mr. Balsillie said. "We were never allowed that. The U.S. market is going to be tougher."

"These guys are really, really good," Mr. Lazaridis replied. "This is different."

"It’s OK—we’ll be fine," Mr. Balsillie responded.

For the next few months, according to the book by Globe & Mail journalists Jacquie McNish and Sean Silcoff, little thought was given to the iPhone in RIM’s C-suite.

The iPhone didn’t look like a threat to the company’s core business. “It wasn’t secure,” COO Larry Conlee told the book's authors. “It had rapid battery drain and a lousy [digital] keyboard.”

Yet we all know what happened next.

Apple improved on every subsequent generation of the iPhone, boosting its battery life and making its touch screen brighter and more responsive. It then launched the juggernaut that was the App Store in the summer of 2008, helping the iPhone take ever large bites out of BlackBerry's hold on the market until it had virtually nothing left.

Today BlackBerry is still in turnaround-mode as CEO John Chen pivots the company's business model towards selling enterprise security software to governments and corporate clients.

So far he's helped narrow BlackBerry's annual loss from $5.9 billion in 2014 to a projected $304 million deficit this year thanks to some major cost-cutting.

A sale is also in the cards.

Microsoft and Chinese smartphone makers Huawei, Lenovo and Xiaomi have all been named in multiple reports recently as suitors for BlackBerry, in spite of the slow demise of the company's consumer-facing mobile handset business.

The Chinese are likely motivated by the potential to make their expansions into the U.S. and Europe more palatable for consumers, regulators and carriers with a Western brandname, while they and Microsoft will be interested in the company's patent trove.

For BlackBerry, it would be the final chapter in a whirlwind decade, and the end of a lesson in how devastatingly quick a company can get knocked from pole position.

BlackBerry vs iPhone 6 | SpecOut