Few gadgets offer as stark a lesson in the propensity of fast-moving technology to leave competitive laggards stranded as the once-ubiquitous BlackBerry.
Six years ago, Webster's dictionary testified to the addictiveness of the smartphone by making "Crackberry" its word of the year; in 2009 after profits rose 84 per cent in three years, Fortune magazine rated its Canadian maker, Research in Motion, as the fastest-growing company in the world. On the train, the beach and the corporate gunslinger's desk, the BlackBerry – which grabbed 42 two per cent of the US smartphone market as recently as three years ago – reigned supreme.
Now the "Crackberry" has lost its grip, outwitted in the ceaseless race for innovation by Apple's iPhone and iPad tablet and the proliferation of Google's Android devices, all of which offer more stylish, instant touchscreen web access.
RIM had to admit the scale of its fall from grace in an apologetic statement to the Toronto stock exchange on Thursday, revealing that sales of the BlackBerry had slumped by 21 per cent to 11 million in its fourth quarter, turning a profit of $934m last year into a loss of $125m – while its smartphone rivals raced ahead.
RIM explained it was taking action, shaking up its boardroom (ejecting former co-chief executive and current director, Jim Balsillie), conceding it might be for sale, and changing strategy: instead of competing with Apple in consumer smartphones, it would go back to basics and concentrate on business users.
The change was dramatic. On taking charge in January, RIM's new chief executive, Thorsten Heins, surprised observers by suggesting strategic tinkering would suffice. But having been in charge for three months, his more drastic prognosis hinted at the severity of its plight. "I did my own reality check on where the entire company is," he said. "It is now very clear to me that substantial change is what RIM needs."
RIM commands 8.8 per cent of the global smartphone market, compared with 14.6 per cent a year ago, leaving analysts to wonder whether it can turn itself around in time. "They're going to scramble around now for the next three to six months, and every poor shareholder that had faith in them is going to be potentially impoverished," warned the managing director of investment bank Jefferies & Co, Peter Misek, who told Reuters that RIM had made poor decisions.
While the BlackBerry remained the boardroom favourite, critics say that RIM stopped innovating, sticking to its cluttered physical keyboard long after the arrival of Apple's touchscreen iPhone in 2007. Unlike Google and Apple, it failed to licence its operating system to programmers – thus missing out on third-party apps which have driven the appeal of the iPhone and Android. BlackBerry outtages last year, delays in the arrival of the new model, and mediocre reviews for its PlayBook tablet have not helped.
"Ultimately, RIM is taking half measures, baby-stepping their way to reorganisation and they're not moving fast enough," said Ed Snyder, an analyst with Charter Equity Research. "They need a wholesale change in the culture and management of the company."
Otherwise, the BlackBerry – which once offered revolutionary mobile access to emails – could join the telex and the fax machine in the graveyard of gadgets.