A book to be released on May 26th shares the inside story of BlackBerry’s fall from grace after the iPhone

“It’s okay – we’ll be fine,” said Jim Balsille to his co-CEO, Mike Lazaridis upon watching a replay of Steve Jobs taking the covers off what would be one of the most disruptive products in the history of modern world, the Apple iPhone.

Such as would be part of the mindset of the company then known as Research in Motion (not to mention Nokia and Motorola), confident in its position as a secure platform and partner for businesses and governments around the world.

Even Mr. Balsille was not that naïve though, according to the soon-to-be released book Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, his first thought upon seeing AT&T’s Cingular announce an exclusive multi-year deal to sell the iPhone was that RIM was going to lose AT&T as a customer.

Apple redefined how manufacturers dealt with carriers. Mr. Lazaridis was in awe over what he saw, “How did they do that?” He also correctly hypothesized that the iPhone would crush AT&T’s network.

The co-CEOs were also perturbed at how Apple was allowed to put a full web browser on the iPhone, “The carriers aren’t letting us put a full browser on our products.” The two agreed that the iPhone was a game changer, “These guys are really, really good.”

Despite the functional gaps in the first generation iPhone, RIM’s CTO, David Yach learned a hard lesson about the impact Apple had on the market, “I learned that beauty matters…RIM was caught incredulous that people wanted to buy this thing.”

RIM was not the only company concerned about the iPhone. Verizon too was aware of the competitive edge the iPhone gave AT&T. Dubbed the “Jesus Phone,” Apple’s new device flew off the shelves and as described in the book, “This was no ordinary phone. It was a cult with devoted and rapidly growing following.”

Verizon loved RIM’s eventual response to the iPhone, the BlackBerry Storm, and promised the moon and the stars from a massive marketing budget to stocked product through every retail channel possible. The only problem, a deadline of less than a year from when executives first held a Storm prototype to when Big Red wanted to launch the device.

The deadline was missed, but RIM did get the Storm on market in time for the holiday shopping season of 2008. Internally, RIM’s engineers knew the product was not polished inside or out, and it showed. Even then, the BlackBerry Storm was RIM’s best product launch ever. That success was wiped out however, as Verizon asserted that nearly every device sold had to be replaced, and profoundly high return-rate was seen even on the replaced devices.

Verizon wanted RIM to pay for the wreckage, $500 million. RIM worked out an alternative which Verizon had to accept because the deal on the BlackBerry Storm was a “take or pay” agreement, meaning that Big Red had to buy the lot no matter what. The fix kept RIM’s balance sheet in line, and Verizon’s customers were taken care of, but the relationship between the two companies would never be the same.

Mike Lazaridis was convinced the clickable screen was the best idea for a touch-screen device, and the Storm was a first for Verizon on many fronts as well. Though he still felt that a BlackBerry’s low-bandwidth usage, long battery life, strong security, and best-in-class keyboard was the winning formula, but Apple’s iPhone had opened Pandora’s box and the industry was past the point of no return.

Apple changed the nature of OEM-carrier relationships. Everything Cupertino did was an industry first. Apple drove the platform development and updates, Apple set up an “app store” with no revenue going to the carrier, and the whole dynamic had changed because RIM had been begging carriers to allow it to do these very things for years, all to no avail.

It left Jim Basillie asking a lot of questions of himself, and of RIM. Once RIM’s BlackBerry App World was launched, it was behind Apple to the tune of 1 billion downloads. “The Storm failure made it clear we were not the dominant smartphone company anymore. We’re grappling with who we are because we can’t be who we used to be anymore, which sucked...It’s not clear what the hell to do.”

Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry will released on May 26th. It is available for pre-order through a variety of online markets including Google Play, Apple’s iBooks, and Amazon, as well as through brick and mortar book stores.

source: The Wall Street Journal