Why RIM’s woes are partly a reflection of Canada’s backward telecom sector

BlackBerries were created for a low-bandwidth mobile world


“This company is not ignoring the world out there, nor is it in a death spiral.”

-Thorsten Heins

Yesterday, RIM’s CEO chose magical thinking as his corporate strategy, stubbornly insisting that “there’s nothing wrong with the company,” despite a 95 per cent drop in the company’s stock, thousands of layoffs, and last week’s announcement of both a $512 million quarterly loss and a crippling delay of the Blackberry 10. Thorsten Heins knows that as bad as all this news was, the perception it created of Blackberry’s inevitable demise is far worse. Who’ll buy a phone that we all know will soon cease to exist? So the company line is that nothing is wrong. But RIM might go belly up whether or not its CEO keeps his chin up.

Clearly, the time has come to point fingers. I blame Canada.

Not entirely, of course–Blackberry has certainly made its share of mistakes, particularly in ignoring the explosion in smartphone usage among everyday consumers. But the larger national context RIM exists in was as much part of its initial success as it is now a factor in its coming demise. Simply put, Canada’s telecom constraints are incompatible with a robust, innovative tech sector.

As far as I know, Michael Geist was the first to point out that RIM was a direct product of the limitations of Canada’s telecom sector: BlackBerries were originally created for a low-bandwidth mobile world, pushing teeny files like text and BBMs quickly. In a world of usurious “overage” charges, “data efficiency” was a key selling point, and RIM also relied on the perception that wireless spectrum was a scarce and finite resource. But fictions like “data roaming fees” have been abandoned in more rational countries. Mobile networks have greatly improved, and will soon rival the high speed connections we have in our homes.  Spectrum isn’t as limited as we used to think, and new technologies are emerging that allow us to use previously vacant “white space” spectrum while extracting far more capacity from the spectrum already in use.   Think of the Blackberry as a homely and humble yet fuel efficient car in a world where gasoline is quickly becoming free and limitless.

The developing markets that Blackberry covets have built mobile networks (using foreign capital) that make ours look pathetically sluggish. Small files matter less these days than phones with cool, data-hogging apps. But RIM missed the boat on apps, and it’s easy to understand why. In Waterloo, as in the rest of Canada, you couldn’t even buy an iPhone until a year and a half after any American could.

It’s remains more expensive to use a smartphone in Canada than in just about any OECD country. And the list of services unavailable to us grows longer and longer all the time. All of this has an impact on innovation. Think that a country that can’t even use much of technology will somehow be on the cutting edge of creating technology? Well, that’s also magical thinking.

Follow Jesse Brown on Twitter @jessebrown


Why RIM’s woes are partly a reflection of Canada’s backward telecom sector

  1. It would seem that the priminister cares less about Canada’s innovations and more about how well he worships himself. There is no “real” federal plan to promote innovation in Canada, especially technical innovation. Just let’s keep living in igloo’s and getting around on dogsleds. Silly priminister, I guess he just doesn’t want our GDP to be more than oil and lumber. Meanwhile in developing Asian countries, technology is the forefront of thier GDP. Can you say mandate to cater to the upper class enterprises, oh wait RIM was one of those, except Harper gets his perks from oil.

  2. Avro Arrow, Nortel, Radarsat, RIM….

    • Corel

      • How could I have missed Corel….thanks!

  3. Blame rests squarely with RIM executives. They missed the turn (poopood touch keyboard 5 years ago and band width expansion for smart phones, didn’t look closely at current and future customer needs/desires and didn’t strategically assess their market and competition). Too focused on other stuff like acquiring a hockey team rather than planning for the future and understanding and acting on the important issues you raise in your article. Relied primarily on their product’s strengths without seeing the points you raise and how their product might be undermined and taking steps to proactively evolve their strengths.

  4. My phone company charged me $10 because someone sent me a 100k jpeg.
    My phone company charges $50 a month for a $20 phone plan.
    My phone company charges $50 a month for 30 minutes of voice use in one month.
    My phone company charges $8 a month for a 40 year old invention (call display).

    I genuinely hate my phone company.

  5. Canada – obsessed with propping up out-dated concepts like the failed multiculturalism and the dying French language. Until this changes and Canadians get with the program – speak English, the global language, and concentrate on a wireless society – we are doomed to backwater status.

    • Multiculturalism and other languages are precisely what globalization is all about…..you must be posting from Mars.

  6. Blame Canada is right. We’re great at coming up with good ideas, and even better at becoming complacent. RIM has had huge problems internally, but none bigger than complacency. The “good enough” is a very Canadian attitude about business. Sadly in the global world of dog-eat-dog, “good enough” doesn’t get you anywhere.

    • I don’t know anyone at RIM well enough to know what’s going on there. However, I firmly believe, because Lazaridis is a clever guy and because he doesn’t crave the spotlight (Note: Lazaridis, not Balsillie) that RIM had their next generation thing halfway through the development phase–but relying on those patents of Nortel. Then they had to sign an agreement that they could only have one patent, and then they found out they couldn’t have the employees who developed those patents (paid to a great extent by R&D tax credits, or the Canadian taxpayer). But, hey, Ericksson can have whatever they’d care to bid on. So, Lazaridis goes to Ottawa because surely a mistake has been made, and the Canadian government will look into it and put everyone on a level playing field. Instead, he is insulted by the Conservative chair of the committee once he has left the witness chair, and the Canadian government throws him–and at least 5,000 RIM employees–under the bus. And we still don’t know why.
      So, yes, blame Canada. In the form of Canada’s government. Now known as the Harper Government. Actually, since Canada is no longer in the name of the government, I don’t see why we don’t just blame Harper.

  7. I’d add that RIM could have used Android as the basis of it’s new OS, but instead went with QNX. If RIM had gone with Android, it would almost certainly have it’s next generation of phones on the market at this time. Instead it went with an OS that AFAIK has never been used for anything like cell phones. No wonder RIM’s next gen phones aren’t ready.Pride goes before a fall.

    • Read up on the patent troubles with Android and you’ll understand why Rim might be reluctant to find themselves having pay around $60 per device for something that has poor malware controls, poor security controls, and which is susceptible to US law, specifically the Patriot Act when they can instead have their own fairly mature technology known for its security and real-time applications.

      Especially when you consider that one of the few claims to fame RIM has left is the security of its systems.

      • My *belief* (and that’s all it really is) is that the patent issues will be resolved such that nothing like this happens. Worse case scenario, Google rewrites code to not use those patents, and/or RIM pays patent license fees that it would likely have to pay regardless of which OS it uses.

        Re malware and security controls: bringing those up to the level of current RIM phones would be where RIM adds value to their version of Android. This work has to be done regardless of which OS is adopted.

        QNX may be mature technology known for its use in real-time applications (no idea about the security aspect of QNX), but it is not a phone OS (unlike Android), and all the Blackberry goodness that sits on top of the OS would have to be ported/rewritten regardless of choice of OS. Now it could be that QNX is more amenable to this, but it seems quite unlikely IMO.

        As well, BB10 is supposed to support Android applications (requiring some tweaks to the application). This is additional development (and maintenance) work for RIM that would be unnecessary if Android had been used.

        I’m afraid I don’t understand the specific concern with the Patriot Act. Can you elaborate?

        FWIW, my own belief is that this is a matter of not-invented-here syndrome and/or massive under-estimation of the development effort required to incorporate QNX. Re the latter, since RIM is in full control of the hardware and software, it’s hard to understand how this could happen to the level it has.

  8. Greed, myopic leadership, lack of hunting &
    hiring innovators is what will sink RIM. It’s rare that the leadership in the infancy
    of a company has the right skillset to lead & grow it into a multi-billion
    dollar business. Mike & Jim thought they knew everything and that
    everything was just fine. Egos get too big and soon everyone, including the
    board of directors are dinking the Kool-Aid too

  9. I think RIMM hired all the useless powerpoint-producing business school MBA middle management that sunk Nortel.

    • Couldn’t. They were prohibited from doing so.

  10. Jesse Brown’s ongoing dislike for anything Canadian is continuing to lead him to irrational conclusions. RIM has 77 million BlackBerry subscribers worldwide and only a tiny fraction of them are here in Canada. Since RIM’s success comes largely from outside if Canada it is completely illogical to blame Canada’s telecom sector for RIM’s current challenges. That’s like blaming the Regina police department for the crime rate in Los Angeles.

    • @google-c1e9810f5dfe6d270bc8119fbb5b0be4:disqus
      I couldn’t agree more. MacLeans has got to increase the quality control on their blogs. To allow such egregious errors in logic is a huge disservice to their readers. RIM has been competing in a global marketplace in one of the most competitive consumer electronics manufacturing sectors of our time and Canada is a tiny, almost insignificant, piece of their market. To blame Canada’s telecom sector is, quite frankly, naive.

    • Because having an executive board that lives their day-to-day lives in Canada has absolutely no effect on how they see the world?

  11. RIM failed because they fail to execute new product launches. The only “successful” project that they ever launched was a bunch of refreshed products with new names IE BOLD, CURVE ect..

    Every completely new products IE: STORM 1 STORM 2, Playbook failed horribly.

    RIM is an incompetent company why do we need to defend societies rich idiots?

  12. Hi, Jim johannsson here from TELUS. Jesse Brown’s suggestion that smartphones are more costly in Canada is not correct. The link in his story will take you to a 2009 CBC story that appears to be based on a 2009 OECD study for which the data was collected in 2007. Back in 2007, the BlackBerry was pretty much the only real smartphone in the market. Apple didn’t sell their first iPhone until June of 2007 and Google’s Android operating system hadn’t been invented yet. Notwithstanding that a lot has changed in the past 5 years, there were no comparative smartphone pricing studies available back in 2007.
    There are a number of international wireless pricing studies available today and they are quite consistent in concluding that Canadian wireless pricing is on par or cheaper than most developed countries. The 2011 OECD report ranks Canada 5th cheapest for the 900 call bucket and 11th cheapest for the 300 call bucket, and the Bank of America Global Wireless Matrix ranks Canada 5th cheapest of 21 developed countries. The 2011 Nordicity study reaffirmed those conclusions and stated that the average costs in Canada are 12% cheaper (combined voice and data) than the OECD average. The 2011 CRTC Telecom Monitoring report says average Canadian wireless costs are slightly lower than the US and France but slighly higher than Australia and Japan. The CRTC report also states that wireless internet is 35% cheaper in Canada than the US.