Losing the Signal: The Spectacular Rise and Fall of BlackBerry (14 page)

BlackBerry’s success was a validation of Lazaridis’s counterintuitive bet that professionals wanted less, not more, from a mobile communicator. His high school teacher John Micsinszki was proved right: the proper combination of computing and radio would be transformational. Like many innovators experiencing belated success, Lazaridis was enchanted with his creation. He carried a bag of BlackBerrys with him on trips to show off the latest models. On an office desk cluttered with family photos and his high school oscilloscope, he made room for a few BlackBerry models encased in Lucite. The device was his baby and he rigorously opposed the addition of emerging smartphone features such as color screens, Web browsers, and video. These enhancements drained batteries and clogged networks, he explained to staffers who suggested the additions. Part of his reluctance reflected his belief that engineers built useful things, not toys. RIM’s clients also informed his views. Conservative carriers worried incessantly about heavy data loads and network crashes, while large clients didn’t want to risk exposing secrets by allowing cameras in the workplace. “The carriers were absolutely terrified of a bandwidth-hogging application. So they didn’t like browsers; they didn’t like streaming video,” Lazaridis says.

In the summer of 2000, RIM’s director of product management, Steve Eros, urged Lazaridis to add a universal serial bus connection to BlackBerry. USB cables, which connect mobile devices to computers, were gaining popularity as a convenient way to charge mobile devices while simultaneously synching data. Lazaridis was against the idea. It cost too much time and money to replace the existing connection technology. Days later, Lazaridis called an urgent meeting to chide engineers for failing to anticipate the need for a BlackBerry USB. Lazaridis rarely acknowledged his change of heart, but such shifts became a familiar pattern. His first response to proposed BlackBerry enhancements was typically negative. After days, sometimes weeks of research, he would often embrace the new idea, forcing difficult deadlines on engineers.

“He wouldn’t adopt new technologies when they came out. He would adopt them when they made sense … when it made his devices better,” says Eros.

Lazaridis would add to the confusion by visiting engineering teams with shopping lists of ideas. He became so enthusiastic about some design concepts that when he intoned, “This is important,” his engineers often mistook his passion for marching orders. When Lazaridis’s chief lieutenant, Larry Conlee, noticed engineers working on unauthorized parts or software, he quickly realized his boss had paid a visit. Mindful of pressing delivery dates, he asked Lazaridis to choose his words more carefully. Don’t use the word “important,” he warned, because there were too many people “saluting and clicking their heels.” RIM’s engineers learned to be more cautious about embracing Lazaridis’s ideas. It soon became accepted wisdom that no one was to follow Lazaridis’s orders unless he issued the command three separate times.

The shifts marked what some engineers believed were discouraging changes in RIM’s collegial culture. The company that inspired staff to experiment and think outside industry conventions was taking fewer chances with its products. More troubling, its chief innovator, Lazaridis, was harder to read and less accessible after Conlee’s arrival. “We started acting like a big company,” says Perry Jarmuszewski, a RIM radio designer. “It felt like we had lost some of the innovative team feeling where everyone worked together to solve problems.”

Change was also evident in Balsillie’s domain: sales and marketing. Success was not a relief to the ambitious executive; rather it was a new stress point. Like a seasoned general who had just won an important skirmish, Balsillie worried about the next battles. “You can’t imagine how much personal pressure I felt,” he remembers. “That personal pressure increased each time RIM doubled in size, so that pressure didn’t really allow me to sit back and think ‘We made it.’ “ Inevitably, there were explosive, General Patton–like outbursts with RIM’s expanding sales troops. He could be particularly testy with fresh recruits. It fell to Rick Costanzo, hired as a sales manager in 1999, to coach incoming employees on how to survive their first meeting with Balsillie.

“Be brief and don’t look him directly in the eyes,” Costanzo warned hires. “You don’t know if he’s going to hug you or … maul you. So lie down on the ground in the fetal position and let him do whatever the hell he’s going to do.” Costanzo made light of his boss’s temper but hoped newcomers paid attention. They had to watch their step. If Balsillie began rubbing his forehead, Costanzo advised, it was a bad sign. If he asked a question requiring a yes or no answer, the answer had to be one or the other. If recruits gave rambling or confusing replies, Balsillie cut them off. “Just stop. You’ve forgotten the
question I asked you, haven’t you? Because you’re
not
listening to me,” Balsillie would seethe as his face grew red with rage in a typical interaction. “Why you’re not prepared coming into this meeting is beyond me. I need to be working on other things.” It’s a message few needed to hear twice. Sometimes, his fury was calculated. If Balsillie grew angry in a meeting, he checked after with managers to see how staff responded. “I wanted to keep the organization on its toes,” he says. “I think having a level of nervousness, installing an oh-my-god-ness in the organization, is not a bad idea. I’m not perfect. Sometimes you go too far.”

Mobitex, the rickety Swedish radio highway that carried BlackBerry into the world, was near the end of the road. Its rudimentary technology wasn’t up to the task of managing increasing data traffic. Lazaridis and Balsillie could see that if they wanted to continue developing the company, they would need a new network home for their wireless e-mail service.

RIM wasn’t the only communications company in need of a new wireless network. Second-generation, or 2G, wireless networks launched in the 1990s only had limited capacity for mobile data. Carriers were under pressure to invest in new systems and technology to a newer, faster generation of networks, called 3G, to satisfy a widely expected boom in wireless data traffic. They spent tens of billions of dollars to acquire 3G licenses from their governments. Building the networks would cost billions more.

Across the industry, many believed the era of 3G was just around the corner. But Lazaridis was convinced the expensive 3G revolution would arrive later rather than sooner and set his sights on what many industry experts dismissed as a pale alternative. For a fraction of the cost of implementing 3G, carriers could make minor upgrades to their existing 2G networks, adding speed and bandwidth. The fix wouldn’t deliver the full benefits of 3G, but it would provide enough capacity to handle a rising tide of data. Network suppliers called this semi-upgrade 2.5G.

Many device makers and carriers dismissed 2.5G: why waste money on a temporary measure when a more powerful third generation was imminent? For RIM’s thrifty bosses, however, 2.5G was the perfect choice. It provided all the bandwidth they needed for BlackBerry to thrive and expand. European carriers were the first to invest in 2.5G in 2000, which is why BlackBerry sold its first voice and data phone, the 5820, to Britain’s BT Cellnet.

RIM wouldn’t succeed with 2.5G cellular, however, unless it won the blessing of its key CIO customers. In late 2000, Balsillie took RIM’s case to a fraternity of chief information officers from the world’s largest corporations. This elite group, known as the Research Board, was preparing a report on the future of wireless. The report’s author, Jim Roche, was convinced, like others, that the future of wireless was all about 3G. But when Balsillie met Roche and later a gathering of Research Board members, the RIM chief convinced them that 3G was far enough away that companies should instead opt for devices that consumed less bandwidth on more limited 2.5G networks that were being deployed. “Jim’s view was spot-on—you have to respect scarcity,” says Roche, whose report to Research Board members in February 2001 largely articulated the RIM party line. Corporate support for 2.5G handsets cleared the way for RIM to join the smartphone race, and opened the door for the likes of Johnson & Johnson and Caterpillar to order thousands of BlackBerrys instead of hundreds.

Building a product for 2.5G was a bigger challenge: RIM would need a new battery, a new radio, and a new operating system, essentially replacing the guts of its BlackBerry 957 to produce the similar-looking 5820. It also needed a new chipmaker, Britain’s ARM, after Intel showed no interest in doing a mobile version of its Pentium chip for RIM, ending what had been a successful relationship. The big difference with the 2.5G device was voice: products that ran on cellular networks had to be able to handle voice calls. Cellphone makers Nokia, Ericsson, and Motorola had been moving into RIM’s backyard for years by adding text and e-mail message applications to mobile phones. Balsillie and Lazaridis mocked their efforts. Mobile phones were getting smaller and more stylish, while utilitarian data devices needed big screens and keyboards. Balsillie figured jamming a phone into a BlackBerry would be as ungainly as Chevrolet’s 1959 El Camino, the boat-sized vehicle with the front of a sporty coupe and the rear end of a pickup truck. The first El Camino was parked after two years of anemic sales. Any time someone pushed for a BlackBerry phone, Balsillie waved them off with two words: “El Camino.”

RIM’s bosses did a U-turn with the 5820, or Project Tachyon, or, if Balsillie and Lazaridis would admit it, their own El Camino. Conlees’s tight deadlines and the office of product management did succeed in getting the hybrid phone and e-mail device out the door in August 2001 to its British customer BT Cellnet. The final product, however, was as awkward as the mutant Chevy. In the rush to deliver, RIM’s engineers had no time to fully integrate phone
hardware. Instead, the 5820 came with a headset that had to be plugged into the device in order for users to make calls. The phone had another bug: it froze so frequently early on that RIM’s British staff and BT Cellnet salespeople had to keep paper clips handy to insert into the device’s small reset hole when needed.

Looking out the window from his Jersey City office, Louis Gutilla rattled off an e-mail on his BlackBerry at 8:58 a.m. to friends under the subject line “Holy Shit”:

“A plane just crashed into the World Trade Center. The building is on fire, I’m staring right at it. I pray to God no one is hurt, but it appears as if the top floors are all on fire.”
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An office worker, identified as Craig, worked his BlackBerry minutes after emerging from the PATH station in lower Manhattan. At 9:13 a.m. he sent a frantic message to his wife:

“It was a huge [Boeing] that crashed right into the wtc, then a second explosion caused something to hit the second tower and its now on fire too!! E-mail is my only form of contact.”
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Bill Kelley, a Bloomberg employee, waited minutes before replying on his BlackBerry to a relative asking: “Bill, are you OK?” At 9:23 a.m. Kelley sent the last message of his life from the Windows on the World restaurant on top of the World Trade Center.

“So far … we’re trapped on the 106th floor, but apparently [the] fire department is almost here.”
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These messages are a sample of a vast collection of e-mails sent on September 11, 2001, and later shared with news media or stored in a 9/11 digital archive owned by the Library of Congress. Many of the e-mails were dispatched by BlackBerrys. For trapped or fleeing workers, BlackBerrys were the only reliable communication link in lower Manhattan. After the first plane knocked out cell towers on top of the World Trade Center, cell and landline circuits were overwhelmed. Paging companies lost many of their frequencies, and phone lines went dead for hundreds of thousands of Verizon customers
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when a call-switching center, several cell towers, and fiber-optic links were smashed by debris from a collapsed building.
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Mobile e-mails got through because data messages required significantly
less bandwidth and BlackBerry had largely fixed its network problems of the previous year. In addition, the Mobitex network had several base stations—radio towers with transceivers for relaying data—throughout Manhattan and nearby New Jersey. Unable to call home, Wall Street workers hammered out messages on BlackBerrys, sending reassuring e-mails to worried family and friends under such subject lines as “I’m alive,” or “I’m okay.” Others used the devices to share information about missing colleagues, arrange meetings in safer locations, or negotiate transportation and lodgings in a paralyzed city. “I had my cellphone in one hand, and it was useless, and my BlackBerry in the other and it was my lifeline that day,” Lynne Federman, a lawyer working three blocks from Ground Zero told the
New York Times.
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While BlackBerrys kept Wall Street online during 9/11, in the U.S. capital it was a different story. RIM had been knocking on Washington’s door for years with little to show for its efforts. The company made headway in 2000 after hiring Anthony LeBlanc, a specialist in government sales hired from the Ottawa-based software company Corel. His big break came in mid-2000 when he targeted Al Gore during his presidential race against George W. Bush. Gore’s staff rebuffed LeBlanc, explaining the candidate was a Palm Pilot user. When LeBlanc proposed a free trial, a staffer returned with terms: Gore would only accept a BlackBerry if RIM made the same offer to Bush. It was no obstacle. Bush’s staff explained he wasn’t big on technology, declining the offer. Two days after dropping the device off at Gore’s New York campaign office, LeBlanc received a call from a campaign staffer: Gore wouldn’t put his BlackBerry down. By the spring of 2001 LeBlanc had made enough headway elsewhere in Washington to start BlackBerry trials at high-profile government departments such as the U.S. Air Force and National Institutes of Health.

Despite the inroads, Washington was in disarray after the World Trade Center attacks. President George Bush, visiting schoolchildren in Florida, and Vice President Dick Cheney, in the White House, were both whisked away to secret locations. Neither man had BlackBerrys. When a third plane attacked the Pentagon, knocking out most cellular and landline phones, communications down the chain of command went dead. Senators and congressional representatives were evacuated with no marching orders. A few talked their way back into their offices; others drove home or visited nearby friends to watch televised news. “[We were] without direction, without purpose,” Democratic senator Jay Rockefeller told the Capital Hill newspaper
Roll Call
two days after the attack.
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