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T H E G LO B E A N D M A I L P r e s ent s : rim: tHen and now

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T H E G LO B E A N D M A I L P r e s ent s : rim: tHEN AND NOW

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t might be the greatest story of Canadian innovation ever told. Two men, an electrical engineer and an accountant, go into business together. They come up with a new pager that sends and receives wireless messages. One man is the brains behind how it works; the other, its most passionate salesman. The idea takes a few years to truly catch on. Courier companies start using it. Then businesspeople begin to adopt it, and politicians. Soon the BlackBerry becomes more than an e-mail device – it’s a phone and a status symbol, and Research In Motion is selling millions of them every year. A talented U.S Senator named Barack Obama becomes the BlackBerry’s most famous user as he campaigns to become President, and the two men who started it all, Mike Lazaridis and Jim Balsillie, become billionaires. Then it all went wrong. Apple’s release of the iPhone in 2007 gave consumers the first real BlackBerry alternative. RIM’s two CEOs became distracted – Balsillie tried to spend his wealth on buying a National Hockey League team, and the company was hit by a stock-options scandal. But the most important factor in RIM’s decline was that it failed to keep up with the demanding cycle of innovation in its industry. RIM created the smartphone business, allowed competitors to steal its leading position and, as I write this, is trying to claw its way back with the release of its new BlackBerry 10 line of phones. This eBook, a selection of Globe and Mail articles from the past 15 years with an emphasis on the past five, chronicles RIM’s rise and fall as it tries to turn itself around. We hope you enjoy it. Derek DeCloet Editor, Report on Business

T H E G LO B E A N D M A I L

R I M : T hen and now Waterloo firm tries to turn a page on pagers Tuesday, September 8, 1998 KEVIN MARRON RIM hits a major crossroad Saturday, September 18, 2004 SIMON AVERY Apple’s iPhone shakes rivals to the core Wednesday, January 10, 2007 CATHERINE MCLEAN BlackBerry wunderkinds make Forbes’ rich list Friday, March 9, 2007 GORDON PITTS RIM results disappoint but Balsillie still bullish Friday, September 26, 2008 MATT HARTLEY RIM rocks a new tune Saturday, April 4, 2009 SIMON AVERY AND MATT HARTLEY RIM’s Indonesian bonanza Thursday, March 25, 2010 MARK MacKINNON Queen adds BlackBerry to her high-tech collection Tuesday, July 6, 2010 CAROLINE ALPHONSO

T H E G LO B E A N D M A I L

R I M : T hen and now RIM defies doubters with record profit Friday, September 17, 2010 OMAR EL AKKAD RIM co-CEO Balsillie derides Apple’s ‘distortion field’ Wednesday, October 20, 2010 OMAR EL AKKAD and IAIN MARLOW RIM’s big play for its future Saturday, April 16, 2011 OMAR EL AKKAD RIM resets Monday, January 23, 2012 IAIN MARLOW and TARA PERKINS 100 days later Friday, May 25, 2012 IAIN MARLOW Time for a bite, and little else Saturday, August 25, 2012 IAIN MARLOW RIM bets it has salvation at its fingertips with BlackBerry 10 Wednesday, November 14, 2012 IAIN MARLOW

T h e G lo b e a n d M a i l P r e s e n t s : RI M : T h e n a n d n o w

Waterloo firm tries to turn a page on pagers

says David Neale, vice-president of data and emerging technologies at Rogers Cantel Inc., which will soon be offering a nation-wide service based on the second-generation Research in Motion product. The new Inter@ctive pager is essentially a wireless device for sending and receiving E-mail and other text messages. It weighs about 141 grams, has an eight-line, backlit liquid-crystal display panel and can receive text messages of up to 16,000 characters. It would also be able to send messages of the same length, if anyone had the patience to type 16,000 single strokes on its miniature keyboard. (The ability to send long messages could be a valuable feature for anyone who wants to forward E-mail to another address, says Mark Guibert, Research in Motion’s marketing manager.) Each pager has an E-mail address so that messages can be sent and received via the Internet. The device can also receive messages through the telephone network or from another two-way pager, as well as send messages to a fax machine or any other alphanumeric pager. The new two-way pagers are now available in the United States for under $300 (U.S.), less than half the cost of the earlier version. The new model also weighs half as much and has an estimated battery life of three weeks, double that of the previous version, even though the new version uses one AA battery instead of two. BellSouth Wireless Data has just begun offering nation-wide service in the United States for

Research in Motion hopes new product -- smaller, cheaper than previous model -- will be a hit Tuesday, September 8, 1998 KEVIN MARRON Special to The Globe and Mail In the clatter and confusion of rush hour, a bicycle courier pauses long enough to read a message on a tiny video screen and tap out a response on a keypad that fits in the palm of his hand. He is using the Inter@ctive two-way pager, from Waterloo, Ont.’s Research in Motion Ltd., to confirm delivery instructions with a dispatcher at his employer, All Canadian Courier Corp. Steve Zinck, president of the Mississaugabased delivery service, says the pagers are by far the best way of exchanging messages with his couriers, whether they are on the street, in vehicles, in buildings or even travelling on public transit. “I don’t know what they could come out with that is superior to this product.” Well, a smaller and cheaper version is soon expected to hit the streets. While its earlier product proved a boon to courier companies and other niche market groups, Research in Motion is hoping that the second-generation pager is a tool that everyone will want to use. (According to a recent survery, more than 10 per cent of Canadian households have access to a pager.) The new device is “far more than a pager,”

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$24.95 a month. Rogers Cantel will be launching its service soon, but has not yet announced its fee schedule. Mr. Neale says the monthly rate will be “very attractive and, if we take it to a wider market, we have to make sure that the price of the hardware doesn’t act as a curb.” PCS (personal communications services) messaging is one of the key existing systems with which the two-way pager must compete. PCS, to which there are about 378,000 subscribers, is a digital wireless service that is primarily used for voice telephone calls, but also has the capacity to send and, in some cases, receive text messages that are usually limited to about 150 characters a message. Mr. Neale adds that people who rely mainly on voice phone calls and voice mail may be satisfied with the limited messaging functions of PCS phones, while those who communicate primarily through E-mail may prefer to carry a dedicated text messaging device like the two-way pager. David Werezak, Research in Motion’s vice-president of marketing, says that E-mail is quickly overtaking voice mail as a preferred form of business communication. Those who travel a lot are discovering that it’s increasingly important to get easy access to E-mail while on the road. The pager is lighter than any PCS phone, and its battery life is measured in weeks, rather than hours. In most cases, it is cheaper and quicker to send messages by two-way pager than PCS because a two-way pager sends out a message

in a short burst of data and does not have to wait for a connection to be established at the other end. Mr. Neale says the reliability and widespread coverage of two-way paging is another key selling point. Rogers Cantel has recently expanded the Mobitex wireless network, which carries the two-way paging service, so that it now provides coverage to about 75 per cent of Canada’s population. If a pager cannot receive messages because it is switched off or has no wireless coverage, the messages are stored and then re-sent as soon as possible. Despite all these advantages, perhaps the majority of PCS users are unlikely to trade in their phone for a pager, Mr. Neal of Rogers Cantel says, but many may see the advantage of carrying both..

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RIM hits a major crossroad

Investors are clearly buying the pitch, driving the price of RIM shares up almost 30 per cent in the past six weeks. So what could be amiss with this picture? Potentially, plenty. While the company’s founders, Messrs. Lazaridis and Balsillie, have become as rich as Croesus, rivals are finally catching up and RIM now finds itself at a major crossroads: fighting a high-stakes battle to remain the market leader. True, it still owns what is widely acclaimed as the best brand. And it has the fastest and most secure delivery system -- because, unlike its competitors, RIM doesn’t rely on the public Internet. But just as the wireless data market is picking up speed, RIM is facing challenges from a slew of competitors selling popular handheld devices, more open software systems that run a greater selection of programs, and more flexible subscription packages. For all the hurdles Lazaridis, Balsillie and Co. have impressively leaped, the true test of their endurance lies ahead. The company is particularly vulnerable on the hardware side. “It’s unlikely RIM’s hardware will survive the onslaught of Japanese and Korean vendors,” predicts Ken Dulaney, an analyst with Gartner Inc. “[They’re] just incredible at innovating those kind of things.” Recognizing the threat, the company is now making a bold bet to reshape itself, forging

The maker of the BlackBerry handheld e-mail device is in a high-stakes battle to remain the market leader, SIMON AVERY writes Saturday, September 18, 2004 SIMON AVERY TECHNOLOGY REPORTER If business achievement were an Olympic sport, there’s no doubt that Mike Lazaridis and James Balsillie -- co-chief executive officers of Waterloo, Ont.’s Research In Motion Ltd. -- would be standing on the medals podium. Over the past decade, they have presided over one of the world’s most astonishing high-tech success stories: the BlackBerry, the ubiquitous, wireless, handheld e-mail gizmo that hundreds of thousands of corporate executives, legislators and law enforcement officials now regard as an essential business tool. By year’s end, the company predicts, it will surpass two million subscribers -- almost half the global market for handheld e-mail devices -- a customer base growing by an estimated 25 per cent every three months. And its not cheap. Annual fees start at about $500, in addition to the hardware itself; the newest BlackBerry retails for $650 before discounts. Long-term projections are equally bullish. As RIM pushes into new international and consumer markets, some project sales to surge between tenfold and a hundredfold by 2009.

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licensing deals that will let the world’s largest smart phone manufacturers use RIM’s prized e-mail software. But that, too, constitutes a risk. While the licensing gambit may make RIM’s wireless e-mail service ubiquitous around the globe, it could cannibalize the company’s own hardware sales, still the bread and butter of its existence, accounting for about 60 per cent of 2003’s total revenue of $594.6-million (U.S.). So what exactly is RIM’s game plan? Messrs. Lazaridis and Balsillie aren’t saying. They declined to be interviewed for this story, and have remained tight-lipped about whether they intend to transform RIM into a software company. Analysts, of course, are more forthcoming. In their majority view, the company must license its software to stay competitive. “If RIM doesn’t go that way, it may get kicked out [of the market],” says Mr. Dulaney, citing the looming threat from hardware makers. For the moment, RIM is unique in the wireless field because it sells a complete, integrated system: the smart mobile device itself, the software on it, and the various pieces of software required to send and retrieve e-mail and other data to and from desktop PCs and corporate servers. Its competitors sell some or all the necessary pieces. Nokia Corp., for example -- the world’s largest maker of smart phones -- sells the hardware, but is also part of a software consortium called Symbian Ltd.

that markets its own operating system for mobile devices. The problem, most analysts agree, is that the BlackBerry is now being outclassed by similarly priced rival products that boast richer features, including cameras, MP3 players, expandable memory and sharper display screens. RIM, they fear, doesn’t have the capacity to keep up with new designs. Just last month, Bell Mobility Inc., Canada’s largest wireless carrier, added PalmOne Inc.’s Treo 600 to its network, which until now had been mostly carrying RIM’s product. “Our relationship with RIM continues to be a very strong one,” says Ron Cihocki, Bell Mobility’s vice-president of channel and hardware management. “This is just a matter of an alternative.” Gartner estimates that the phone companies pay RIM $10 a month for each BlackBerry customer on their networks. While they owe a lot to RIM for bringing higher-value services to their networks, the carriers want other choices that don’t cost them as much. In short, the very feature that earns RIM’s proprietary software almost universal praise -- it literally pushes e-mail off a user’s desktop account in real time, where competing products can only pull it out in short bursts -- is also a liability. Not only are customers restricted in what handheld device they can use with it, because very few software developers write for RIM’s platform, there are relatively few third-party programs that run with it.

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“A standard is going to emerge, and it won’t be RIM,” says Danny Shader, CEO of Good Technology Inc., a wireless software company in Silicon Valley that entered the Canadian market last month. “It’ll be [Microsoft Corp.’s] Windows, Palm OS, or Symbian, or a combination of all three.” RIM aims to address these issues with its licensing initiative. Since last summer, it has signed deals with Nokia, Siemens AG, Motorola Inc., PalmSource Inc. and others to let them use RIM’s e-mail software. Under the agreements, RIM would be able to sell its software to run on a broader range of devices and on more popular systems. Mr. Dulaney, for one, applauds the licensing strategy and the idea of hiving off RIM’s software operations into an independent business. The company, he says, lacks the resources to develop applications and improve its platform to the same extent as the thirdparty development community. The deals would also allow RIM’s software to run alongside thousands of mobile applications that only run on Palm, Windows or Symbian systems. RIM has been trying to encourage developers to build programs for the BlackBerry platform without much success, because, as Mr. Dulaney says, many programmers deride the BlackBerry as “a calculator on steroids.” In fact, after more than a year of deal making, there are still no devices for sale in North

America than carry the RIM service -- other than the BlackBerry. Nokia has started shipping a BlackBerry-enabled model overseas, but it has put sales on hold in the United States pending resolution of a patent dispute between RIM and NTP Inc., a patent holding company in Arlington, Va. Another development agreement, signed with PalmSource nine months ago, fuelled speculation that RIM’s software would soon be available with PalmOne devices. But that arrangement, too, seems to be in limbo. Todd Bradley, chief executive of PalmOne, says there are no imminent plans to add RIM’s service to its Treo 600 or other devices. RIM recently announced a more ambitious partnership with Siemens, under which it will license not just its wireless e-mail service, but its entire stack of applications. “It appears that RIM is keeping its promise to open up its platform,” Mr. Dulaney says, “so a year from now, RIM could be a lot richer. The real test will be in the next year.” The Siemens deal is more far reaching than the others. Some say it moves RIM into direct competition with Microsoft for control of the operating system on mobile devices, a prospect that pleases competitors like Good Technology. “The industry recognizes that RIM is trying to position itself as an OS alternative to Symbian, Windows Mobile and Palm OS,” says Good’s Mr. Shader. “It’s a very, very coura-

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geous move. But the movie that stars companies trying to compete with Microsoft typically does not have a very happy ending,” Good Technology -- its device pushes e-mail to products running on Symbian, Windows or Palm platforms, but not RIM’s -- exemplifies the risk Messrs. Lazaridis and Balsillie face on the software side. One of its biggest selling points is flexibility. Customers can link more models of smart devices to the service and even switch carriers, so long as the new one supports Good Technology’s software. And Good is just one of several new, well-financed firms in the software race; others include Visto Corp., Seven Networks Inc. and Extended Systems Inc. Bruce Cumming, vice-president of information services for National Money Mart Co., a financial services firm, said he opted for Good Technology’s product over RIM’s because he wanted PalmOne’s hardware. About 40 employees at the Vancouver-based company now use the service and, although e-mail is not delivered in real time, it’s very fast, Mr. Cumming says. “We have not gone back to look at RIM’s systems just because we’ve been happy. As long as we continue to be served well, I can’t see why we’d change.” But Michael Abramsky, an analyst with Canaccord Capital Corp., plays down the software threat. These firms, he says, won’t become serious competitors because they are aftermarket vendors and can’t match the

global presence RIM has built by working directly with carriers to integrate its software into their networks. “It takes longer to work in that distribution fashion,” Mr. Abramsky says, “but the impact is far broader globally, far more integrated and ultimately far more penetrated and sustainable.” At least 60 carriers have engineered RIM’s software into their networks, and that number is expected to hit 100 before the end of next year. The two companies best positioned to rival RIM in the wireless data market one day are Nokia and Microsoft, Mr. Abramsky says. In short, Messrs. Lazaridis and Balsillie have more than earned their high-tech medals. They virtually created the wireless e-mail market in 1999, and have helped it grow to about four million users worldwide; by 2007, there could be 30 million wireless e-mail users, including thousands in the U.S government, RIM’s largest single customer. Any fair description of the company today would call it robust, healthy and growing. But the competitive threats are out there and gaining; the landscape is definitely changing. What RIM will look like a year from now is very much a mystery. Wireless heavyweights The market for smart wireless devices is booming, and the manufacturers’ short product cycle of about six months makes it a challenging task for customers to say abreast of the latest models and their functions. Voice,

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Web browsing and messaging are standard fare in most. Miniature size is no longer the most cherished characteristic, as larger models come stuffed with accessories, including video cameras and digital music players. Here are a few of the most popular products: BlackBerry 7200 Series Research in Motion’s smaller sister product to the popular 7700 series, the device uses one of the best keyboards designed for the mobile market yet. The device runs on RIM’s own software and offers numerous wireless services, including access to email, the Web, calendars and personal organizers. Applications like e-mail can synchronize with programs on a desktop computer automatically. Available for $450 with certain rebates and carrier contract terms. Nokia 9300 It won’t fit in a breast pocket, but this fullsize phone opens like a book to reveal on of the widest screens available on a smart phone. The device runs on the Symbian operating system, offers wireless e-mail, Web access and a host of application including Microsoft’’s word processing and PowerPoint programs. It includes the Bluetooth wireless feature to exchange information with desktop computers and other devices and is scheduled to hit the Canadian market early next year with a sticker process of about $1,000. A slightly larger version, the 9500, which will include a camera and a WiFi capability for con-

necting wirelessly to local networks, will sell for about $1,200. PalmOne Treo 600 Since its launch last November, this device has been tempting many BlackBerry users away from their beloved RIM services. It looks similar to theBlackBerry, but while it has a shaper screen and added features - such as expandable memory - it can’t quite match the BlackBerry keyboard for ease of use, or the RIM software for efficient delivery of e-mail. Available for $550 with certain rebates and carrier contract terms. Sony Ericsson P900 At 149 grams, this hefty smart device outweighs even the Nokia 9300. But it packs a solid punch of features, including not just a camera, but a video camber, a speakerphone, wireless e-mail and a Web browser. It ships with Symbian software as well as Bluetooth and includes handwriting recognition software, a photo album, a picture phone book and photo editing software. Available in the United States for $700.

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Apple’s iPhone shakes rivals to the core

$6.1-billion to its market capitalization. The creator of the Macintosh computer has already turned one consumer market on its head. Apple’s iPod persuaded consumers to download digital songs, television shows and films, rather than running out and purchasing CDs and DVDs. “It’s certainly going to put pressure on people like Nokia and RIM to innovate and try to create a similar product,” said Brian Sharwood, a Torontobased analyst at telecommunications consulting firm SeaBoard Group. One of the biggest changes introduced with the sleek new Apple phone is the absence of buttons, replaced by a 3.5-inch screen that users touch to make a call or send an e-mail. And the iPhone not only includes features such as a camera, but Apple’s popular iPod music device as well. The iPhone’s debut combined with Apple’s plan, also revealed yesterday, to rebrand itself by dropping “computer” from its name are further steps in its dramatic journey from a niche computer maker into a technology trendsetter with widespread appeal among consumers. Apple’s chief executive officer and co-founder Steve Jobs, who rejoined the company in 1997, has spearheaded that makeover. “They always had a neat reputation with computer geeks as having a very elegant product,” said Darren Meister, an associate professor of information systems at the Ivey School of Business at the University of Western Ontario. “They were chic for geeks, and now they’re chic for

Skinny cellphone expected to prompt other makers to revise designs Wednesday, January 10, 2007 CATHERINE McLEAN TELECOM REPORTER Apple Computer Inc. shook up the technology world and stock markets yesterday when it unveiled a skinny cellphone that it says will revolutionize the world’s most popular consumer electronics device. Observers are already predicting the iPhone will be a force to be reckoned with in the cellphone industry that will prompt existing manufacturers such asMotorola Inc., Nokia Corp., Palm Inc. and Research In Motion Ltd. to revise their own designs. Those companies’ stocks took a beating yesterday as investors fretted about a new rival entering a market where competition is already intense. Shares of RIM, maker of the BlackBerry, slid $12.82 to $154.01 on the Toronto Stock Exchange. On the Nasdaq Stock Market, it fell $11.16 (U.S.) to $131. RIM was also hurt because a rumoured partnership with Apple didn’t transpire. Elsewhere in the sector, shares of Motorola dropped 34 cents to $18.26 on the New York Stock Exchange, Nokia slipped 26 cents to $19.38 on the NYSE, and Palm declined 84 cents to $13.92 on the Nasdaq. Shares of Apple, in contrast, climbed $7.10 yesterday to $92.57, adding

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everyone.” Ten years ago, people would have been surprised to hear that Apple was rolling out a cellphone, Mr. Meister said. “Now, it’s like, ‘can you imagine what they’re going to do for cellphone design?’ “ Lawrence Harris, an analyst at Oppenheimer & Co., believes part of the decline in RIM’s stock price can be attributed to disappointment after a rumoured partnership between the company and Apple, which would have created an “AppleBerry” device, did not occur. Still, the extent of the iPhone threat only goes so far, according to Mr. Harris. The new arrival isn’t directed at RIM’s large corporate customer base, but instead will go up against RIM’s new BlackBerry Pearl device in the consumer market. “Corporate CIOs [chief information officers] tend to be a conservative lot,” Mr. Harris explained. “They tend to go with what they know . . . I don’t think any of that is going to change at all, but there could be some impact down the road if the intent of RIM is to move more into the consumer market.” But even then, some observers believe price could prove a barrier. U.S. wireless carrier Cingular Wireless LLC said yesterday it will offer two versions of the iPhone, for $499 and $599, respectively, with a multiyear contract. “It’s not going to revolutionize the industry quickly because of the price point . . .,” Mr. Sharwood said. While the iPhone was in the spotlight yester-

day, it wasn’t the only new consumer product that Apple introduced at its annual Macworld conference in San Francisco. It also launched the Apple TV service that lets users wirelessly play videos and films that they downloaded on their Mac or PC on their TV set. Internet video downloads are still a small market, but Apple wants to be there when it takes off, observers believe. ***** The Apple effect Apple CEO Steve Jobs’, left, introduction of the iPhone yesterday lifted its shares and sent those of its rivals plunging. Apple Inc. NASDAQ Yesterday’s close: $92.57 U.S., up $7.10 Motorola Inc. NYSE Yesterday’s close: $18.26 U.S., up 34¢ Research in Motion Ltd. RIM-TSX Yesterday’s close: $154.01, down $12.82 Palm Inc. PALM - NASDAQ Yesterday’s close: $13.92 U.S., down 84¢ SOURCE: THOMSON DATASTREAM

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BlackBerry wunderkinds make Forbes’ rich list

-- most of which he plans to give away with the help of Mr. Gates. While it was a good year for most of the world’s mega-rich, there were some slips. Galen Weston and family, overseers of the hardpressed Loblaws supermarkets, among other retail assets, actually fell to a tie for No. 93 ($7.9-billion) from No. 59 ($8.4-billion) the previous year. But the rankings are notable for the strong showing by foreign industrialists who have made big moves in Canada, or who hold appreciating Canadian assets. They include steel magnate Lakshmi Mittal, No. 5 worldwide, whose $32-billion in holdings include Dofasco Inc.; Hong Kong titan Li Kashing, at No. 9, whose $23-billion includes control of heavy-oil supplier Husky Energy Inc.; and Saudi Prince al-Waleed bin Talal at No. 13, whose $20.3-billion includes big stakes in the Four Seasons and Fairmont hotel companies. The Canadian ranks are replete with perennial winners from the country’s family fortunes. They include oil and forest kings, the Irvings of New Brunswick (No. 129); telecom magnate Ted Rogers (No. 165); and conglomerate bosses Paul Desmarais (No. 214) and Jimmy Pattison (No. 230). But there are also relatively new players who have Canadian roots but reside in Silicon Valley -- eBay Inc. pioneer Jeff Skoll at No. 204, and Google Inc. investor and technology professor David Cheriton, who is No. 717, with a $1.4-billion fortune.

Thomson family leads 23 Canadian elitists among global billionaires Friday, March 9, 2007 GORDON PITTS They may be mired in accounting woes, but the golden boys at Canada’s Research In Motion Ltd. are coming up big where it really counts -- in Forbesmagazine’s 2007 rankings of global rich folks. BlackBerry wunderkinds Mike Lazaridis and Jim Balsillie have made the Forbes annual billionaire list for the first time, with Mr. Lazaridis, 46, tied for No. 583 on the worldwide rankings, with an estimated net worth $1.7-billion (U.S.). Meanwhile, Mr. Balsillie, also 46, who stepped down from the RIM chairman’s post this week in response to a $250-million accounting charge, clocked in just below that, in a tie for No. 618 with an estimated wealth of $1.6-billion. They were among 23 Canadians or Canadian clans on the Forbes elite list, led by David Thomson and family, who rank 10th worldwide, with a $22-billion fortune. Mr. Thomson is the son and heir of the late Kenneth Thomson, who died last year and whose information and media assets included a large interest in CTVglobemedia Inc., owner of The Globe and Mail. Forbes says the richest man in the world is still Microsoft co-founder Bill Gates, with a $56-billion trove, followed closely by his good friend Warren Buffett, who has accumulated $52-billion

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Forbes 20 richest people 2007 ($U.S.-billions)

1. William Gates III, Washington, 51 2. Warren Buffett, Nebraska, 76 3. Carlos Slim Helu, Mexico, 67 4. Ingvar Kamprad and family, Sweden, 80 5. Lakshmi Mittal, India, 56 6. Sheldon Adelson, Nevada, 73 7. Bernard Arnault, France, 58 8. Amancio Ortega, Spain, 71 9. Li Ka-shing, Hong Kong, 78 10. David Thomson and family, Canada, 49 11. Lawrence Ellison, California, 62 12. Liliane Bettencourt, France, 84 13. Prince al-Waleed bin Talal Alsaud, Saudi Arabia, 50 14. Mukesh Ambani, India, 49 15. Karl Albrecht, Germany, 87 16. Roman Abramovich, Russia, 40 17. Stefan Persson, Sweden, 59 18. Anil Ambani, India, 47 19. Paul Allen, Washington, 54 20. Theo Albrecht, Germany, 84

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Microsoft Berkshire Hathaway telecom Ikea steel casinos, hotels LVMH Zara diversified inheritance Oracle L’Oreal investments petrochemicals Aldi oil Hennes & Mauritz diversified Microsoft, investments Aldi, Trader Joe’s

$56 $52 $49 $33 $32 $26.5 $26 $24 $23 $22 $21.5 $20.7 $20.3 $20.1 $20.0 $18.7 $18.4 $18.2 $18 $17.5


RIM results disappoint but Balsillie still bullish

close.” RIM already commands more than half the market for smart phones in the United States, but it is now steadily gaining ground in the consumer market as well, as it pushes beyond its core business-user base and makes BlackBerry a more prominent brand among women, teenagers and students. About 60 per cent of the 2.5 million new BlackBerry users RIM signed up in the quarter came from the consumer market, which now makes up about 42 per cent of the company’s customer base, Mr. Balsillie said. RIM’s worldwide subscriber base stands at 19 million, almost double the 10.5 million users the company had in the same quarter last year. Analysts were concerned that the company’s gross margin is expected to fall to 47 per cent in the current quarter, which RIM said is because of the increased cost of manufacturing devices such as the BlackBerry Bold, as well as other asyet-unannounced next-generation (3G) devices. RIM is going through a rapid period of expansion that has seen the company begin to overhaul its product line. In addition to the Bold, RIM also unveiled its first flip phone, the BlackBerry Pearl Flip, on Sept. 10. More than two-thirds of cellphones sold in the consumer market in the United States feature a flip or clamshell design. “We’ve never introduced so much new product so fast,” Mr. Balsillie said. RIM is also expected to launch a slate of new

Co-CEO says BlackBerry’s move into consumer market will pay off Friday, September 26, 2008 MATT HARTLEY TECHNOLOGY REPORTER Research In Motion Ltd.’s bid to grow beyond its business roots into the global consumer cellphone market, combined with the higher cost of producing faster BlackBerrys, is beginning to cut into its profit margin. But RIM remains confident that the moves it is making now will pay off for investors in the long term. During a conference call with analysts yesterday to discuss the company’s second-quarter financial results, co-chief executive officer Jim Balsillie was quick to point out that the BlackBerry maker is well positioned to capitalize on the desire by traditional cellphone users to upgrade to multifunction smart phones. He said RIM could have a “sweeter margin for a couple of quarters” by pulling back on spending and slowing its growth plans, but that the company would end up regretting that in the end. “We believe we are entering a time of tremendous opportunity,” Mr. Balsillie said. “We’re in a surge-type situation right now. ... If we give up ground in the short term ... that’s just not in the best interest of our shareholders, not even

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devices in the final months of the year, including a touch screen BlackBerry (Thunder) and a dual-function device known as the Storm, which is said to feature both a touch-screen interface as well as a slide-out QWERTY keypad. Even though the BlackBerry maker’s sales jumped more than 88 per cent in the quarter compared with the same period last year, its results fell just shy of analysts’ expectations. As a result, investors hammered RIM’s stock in afterhours trading, pushing shares of the Waterloo, Ont.-based company down on the Nasdaq Stock Market by more than 14 per cent from its daily close of $97.53 (U.S.). Revenue for the three months ended Aug. 30 were $2.58-billion, with diluted share profit of 86 cents. Wall Street analysts had expected revenue of $2.59-billion and share profit of 87 cents, adjusted for generally accepted accounting principles. For the current quarter, RIM said it expects to add another 2.9 million customers and for revenue to be in the range of $2.95-billion to $3.1-billion, which fell short of what investors had anticipated. Earnings per share are expected to be between 89 cents and 97 cents per share diluted.

Research In Motion Q2

2008

2007

Profit

$495.5-million

$287.7-mil

EPS

86¢

50¢

Revenue

$2.58-billion

$1.37-billion

All figures in U.S. dollars Source: Company reports

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RIM Rocks a new tune

Mr. Cross couldn’t believe his ears. Was RIM working on a special U2 application that would help the band interact with fans as part of its “U2 360” tour? “You’re not far off,” Bono said, before slipping away into the crowd. A tie-up with Bono and U2 is nothing short of a marketer’s dream. But what’s it worth if only one man in a crowded bar hears about it? And why was Mr. Cross getting the real story - that U2 was tapping RIM’s engineers - from the music icon himself rather than the company that stands to benefit the most from the deal? Therein lies the latest challenge for RIM as it weathers the recession and looks to its next phase of growth. An engineering and design wunderkind, the BlackBerry now needs a brand image and strategy that reach the masses. Or to use co-founder Jim Balsillie’s baseball analogy for RIM - “there’s two down in the second” - it’s time to think about the middle innings. It’s about the brand RIM realizes its future hinges on winning consumers over to the BlackBerry. The company has taken several leads from Apple, the king of consumer technology, that go beyond winning the affections of one of the world’s greatest rock stars. RIM has recently introduced touch-screen technology with the BlackBerry Storm and an online store for games and software known as App World, similar to what Apple has already perfected for using with the iPhone. But RIM has yet to attempt what Apple does best: sell its

The BlackBerry maker has made a concerted push to woo the masses, even securing the services of iPod spokesdudes Bono and U2. But without a clearer marketing strategy, can it really trounce the Apple/iPhone juggernaut? Matt Hartley and Simon Avery report Saturday, April 4, 2009 SIMON AVERY AND MATT HARTLEY Toronto-based radio DJ Alan Cross flew to Boston last month with a plan to find a way into a secret U2 concert at an old vaudeville-era theatre. What he ended up with was an exclusive peek at a landmark business deal between the iconic Irish rockers and BlackBerry maker Research In Motion Ltd. RIM-T After Bono and his band wrapped up their gig at the intimate Somerville Theater, Mr. Cross ended up at a crowded reception at a nearby pub in Harvard Square and came face to face with the U2 front man. To strike up a conversation, he told Bono he had friends who worked for RIM. Then he asked Bono about the new partnership between RIM and one of the biggest rock acts on the planet, which the Waterloo, Ont.-based company announced in a routine press release just two days earlier. “I’m very excited about this,” Bono told Mr. Cross about the RIM deal. “Research In Motion is going to give us what Apple wouldn’t - access to their labs and their people so we can do something really spectacular.”

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brand to consumers. Experts warn that if RIM doesn’t quickly fire up a global marketing machine of its own, the company will be pushed to the wayside by bigger brands such as Apple, Google and Microsoft and will be forgotten by the fickle consumer. “RIM has every right and ability to take on Apple. It’s not the same as Apple, nor should it be. But RIM should have greater confidence,” said Geoffrey Roche, chief creative officer of Toronto ad agency Lowe Roche, who has done some work for the company. “They have every right to be seen as sexy.” RIM has ridden the coattails of U.S. President Barack Obama, a self-confessed Berry addict, and is spending big dollars to back U2’s global concert tour. But for the most part, even as it expanded its reach from CEOs to soccer moms, RIM has left marketing responsibilities to the phone companies that sell its devices. The result is a “schizophrenic message” that will not survive the overwhelming marketing forces of the Apple brand, or those of other emerging competitors, Mr. Roche said. “The thinking needs to change. They have an immense opportunity. RIM has not made any mistakes. They have never positioned themselves poorly. We’re not sitting here with General Motors,” he said. RIM’s marketing expenses have rocketed in recent quarters, as the company begins to emerge from the shadows. To broaden its consumer appeal it is running a TV ad campaign

dubbed “Life on BlackBerry,” which features a handset constructed of everyday items such as a soccer ball, vacation photos and music speakers, to suggest how BlackBerry touches all aspects of people’s lives. The company was a major sponsor of the Major League Baseball playoffs in the United States last year. And it has expanded product distribution beyond phone companies to major retailers such as Best Buy, Wal-Mart and Sam’s Club. The consumer space RIM initially created the BlackBerry to serve customers in business and government. But over the past decade, as those markets became saturated and competitors crashed the scene, it has made a radical shift to the consumer space. Two and a half years ago, it began its march down Main Street with the BlackBerry Pearl, a sleek, candy bar-shaped phone with camera and music player. Analysts were initially concerned that the company’s new emphasis on consumers would erode the fat profit margins it enjoys with its corporate clients, since the consumer market is typically characterized by lower profitability, higher marketing costs and pressure to respond to rapidly shifting tastes. This week, co-chief executive officer Jim Balsillie revealed that RIM’s assault on the consumer market is in full force, telling analysts that consumers now comprise half of its customer base, which more than doubled last year to about 25 million. On Thursday, RIM reported record profits

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and growth in subscribers, 70 per cent of which came from the consumer market. The stock climbed 19.4 per cent, regaining much of what it had lost since it was hit by the recession. It’s hard to argue with that kind of success, which generated $11.1-billion (U.S.) of global sales last year, up from $3-billion just two years ago. Marketing experts say RIM is in the enviable position of “product-driven” success. But long-term viability demands that it dramatically increase its global scale, something that will require better branding and marketing. Apple, which has a much broader product line than RIM, is outspending its Canadian rival on marketing by as much as five to one, said Rob Enderle, president of the Enderle Group, a technology advisory firm in San Jose, Calif. What will happen if RIM doesn’t change its thinking? “They will get left behind,” Mr. Roche said. “I think there is a window, but it’s not a monstrous window. Look at all the great companies gone by the wayside because they didn’t get their message to consumers.” Stealth marketing The significance of RIM’s partnership with U2 should not be underestimated. Not only does it strike a direct blow at Apple, but brings one of the most business-savvy entertainers to RIM’s team. Mr. Cross, the disc jockey, remembers having a long conversation with Bono five years ago shortly after the band made a pact with Apple. Bono’s image was used on iPod packaging and

advertising while Apple built a U2 iPod. “He gave me this long and very eloquent answer about how launching an album and launching a tour was very expensive and that a band or a record label can’t necessarily do it on their own,” said Mr. Cross, who is also a senior program director for Corus Interactive and Integrated Solutions. “He said, ‘We need to find partners who will help us get the word out about what we’re doing and we will work with partners who will create objects or devices or offer services that we really believe in.’ “ But there is more to building a global brand than building great partnerships, and RIM’s approach to communications is still more stealth than storefront. On its website, for example, the company plainly states that information about its marketing plan “cannot be disclosed to the public.” RIM’s marketing executives could not be reached for comment for this story. Ann Nurock, president and CEO of Grey Canada, RIM’s ad agency, politely declined to discuss her work with RIM. “Only RIM themselves can comment.” In contrast, Apple is known for creating and managing its own image of coolness. The company is secretive, but its marketing is not. It is well-known, for example, that for years, chief executive officer Steve Jobs has included creative agency TBWA\Chiat\Day, and the firm’s global director, Lee Clow, in Apple’s critical business decisions. In the long term, the key to winning this

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smart-phone market will be about more than simply branding and adding consumers. Buyers are fickle and the day’s trendy device can be outdated in a matter of months, Mr. Enderle said. Instead, the race will be won by the company that can build scale fastest - and that favours Microsoft Corp. and Google Inc. over either Apple or RIM, he said. “The quality gap between devices will eventually close,” Mr. Enderle said. “The more people you have building, marketing and selling your product the more successful you will be. Then it just becomes a matter of resources.” Google has five manufacturers lined up to build phones for its Android software platform, and both Google and Microsoft have the resources to buy the loyalty of the phone companies, the kingmakers who provide access to the market. Developers always follow the money, Mr. Enderle noted. So far, more than 100,000 developers have downloaded the necessary software to build applications that run on BlackBerry devices. But RIM is playing catch-up in this field and until it opened the online app store this week it lacked a cohesive strategy for third-party BlackBerry software. Although Mr. Balsillie was fond of trumpeting various corporate applications coming from partner companies such as Facebook or Slacker Radio, it wasn’t until Apple created a consumer sensation with its own App Store that RIM recognized the need to create a single destination

where users could purchase and download their own software to customize their devices. Cashing in on a name Research shows that when people buy a car, they pay more attention to ads after the purchase to justify their expense and make themselves feel good. RIM might need to think along those lines, too. “There’s a wonderful coolness quotient to Apple’s work,” Mr. Roche said. “There’s a need for RIM to be there as well. There’s a need for people to feel a great sense of confidence that they got the coolest product out there, and that they are a master of the universe by virtue of the fact.” The question remains whether RIM can cash in on U2’s rock star cachet, and whether BlackBerry can emerge as more than the consummate mobile business tool to capture the attention of a generation of potential customers who grew up on cellphones, MySpace and iTunes. “We used to hold up lighters [at rock concerts]. Now we hold up cellphones,” Mr. Cross said. “What’s going to happen if U2 can, from the stage, instantaneously communicate to each individual person? What form is that interactivity going to take? Are you going to give them a song, are you going to give them a code, are you going to give them an opportunity to text to a screen or meet each other?” RIM engineers are probably working on some of those questions right now. Once they work it out, the company may need to borrow a line

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from Bono and elevate itself yet again. *** THE LINEUP Microsoft Product Windows Mobile 6.5 operating system. Missteps Let competitors get the jump on it. Rivals offer richer features and easier usability. Big wins Expected to come next year with release of Windows Mobile 7, which could close the performance gap once and for all. Challenges ahead Regaining the momentum of the developer community, many of whom have switched to new platforms. Apple Product iPhone and App Store Missteps Very few. Big wins Consumer mindshare. The world loves the iPhone. Challenges ahead Holding off competitors and winning over business customers. Google Product Android operating system. Missteps Very few, but it’s early. Big wins Android has attracted nearly as many developers as Apple in a fraction of the time. Challenges ahead Getting winning handset designs from its partners and critical partnerships with phone companies. RIM Product BlackBerry. Missteps Underplayed its brand with the con-

sumer. Big wins 25 million customers. Challenges ahead Building its reputation among consumers. Simon Avery *** THE APPS STORY Research In Motion Ltd. welcomed its users into a new world this week, with the launch of the BlackBerry App World. Taking a cue from Apple, RIM created an online marketplace for applications such as games, Internet radio feeds and various productivity software programs. The new App World is central to RIM’s new consumer focus and offers customers a chance to customize what they can do with their BlackBerrys. Google launched a competing site last fall, while Microsoft, Nokia and Palm will launch their own app stores later this year. The applications RIM has so far chosen to highlight, however, offer a glimpse of how it expects consumers will use their BlackBerrys to do everything from listening to music, to watching television programs and reading the news. Applications giving users access to social networking sites such as Facebook and MySpace were promoted by the company long before the launch of App World, as were the Internet radio applications Slacker Radio and the RSS news feed service Viigo. RIM also struck a deal with Ticketmaster Corp. that allows BlackBerry users to buy tickets via the device. In a conference call to discuss the company’s

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earnings on Thursday, co-CEO Jim Balsillie highlighted new App World applications such as Shazam, which allows users to identify, buy and share music. At the International CTIA Wireless conference this week, RIM spoke of the soonto-be-launched PrimeTime2Go from Toronto’s QuickPlay Media, which lets users download TV shows to their device or memory card through a WiFi connection. Not to be outdone by Apple’s new push to establish the iPhone as a video game platform, the BlackBerry App World also features more than 200 games, including NFL Football and a mobile version of the popular Guitar Hero. Last May, RIM helped establish the $150-million BlackBerry Partners Fund, with RBC Venture Partners, Thomson Reuters and JLA Ventures, to bankroll companies building applications for BlackBerrys and other mobile devices. Matt Hartley

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RIM’s Indonesian Bonanza

to Nanda Ivens, director of IndoPacific Edelman, which was hired by RIM to handle its social-media promotions in the region. Several million Chinese-made BlackBerry knockoffs - known as “Chinaberries” - are also in use here, openly sold at markets alongside legitimately produced BlackBerrys (which are often smuggled into the country to avoid taxes). A number of factors play into BlackBerry’s success in Indonesia, most notably the expensive, yet patchy, broadband service in this equatorstraddling archipelago. This problematic access drives many Indonesians to use their mobile phones to access the Internet, not laptops or computers. Another key to BlackBerry’s success with Indonesians is the issuing of prepaid scratch cards that allow users to pay a set amount for data and e-mail service each week or month. (It’s the same payment method most Indonesians use with other mobile phones: Once scratched, the card reveals a number the owner uses to activate the account.) “You cannot implement RIM’s campaign for the rest of the world here in Indonesia. We’re different,” said Mr. Arsjad, a software developer. “They changed their strategy for Indonesia.” The gregarious 33-year-old has been a big part of that strategy, designing dozens of applications specifically for BlackBerry users in Indonesia, including a national Yellow Pages directory, local chat services and applications that allow users to order from the menus of restaurants in Jakarta

Research In Motion may be struggling to make major inroads in parts of East Asia, but in this archipelago nation a sore thumb and BlackBerry on your hip are symbols of success Thursday, March 25, 2010 MARK MacKINNON JAKARTA -- Between puffs on his cigarette, Kemal Arsjad pounds out a quick response to one of the hundreds of fresh e-mails on his BlackBerry Bold. On the table in front of him, his second mobile phone, a BlackBerry Pearl, flashes a notice that more messages await. At the next table, another young Indonesian man surfs the Internet on his BlackBerry. Here in the high-end Pacific Place shopping mall, BlackBerrys abound as Jakarta’s young and connected sip their iced cappuccinos on a weekday afternoon. Only one Apple iPhone is in sight and its owner also has a BlackBerry Bold on the table before him. While Waterloo, Ont.-based Research In Motion Ltd. has struggled to make major inroads in China, Japan and other parts of East Asia, its BlackBerry phones are a runaway success in Indonesia. The world’s fourth-largest country population 240 million - is also one of the hottest mobile phone markets. RIM has sold 1.2 million BlackBerrys in Indonesia - many times more than the combined number of iPhones and Google Androids, according

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and elsewhere in the country. In addition to being user-friendly, RIM got into the Indonesian market ahead of competitors. “Indonesia is one of the brighter spots for RIM in the Asia-Pacific region,” said Kevin Restivo, a Toronto-based analyst at research firm IDC. “The vendor has shipped BlackBerrys to the country since 2005, four years ahead of Apple, one of its primary smart phone competitors on this side of the world.” Mr. Restivo said that while Apple’s touchscreen phones have proven more popular in markets such as South Korea, Indonesians prefer the QWERTY keyboards most BlackBerry models use. Partially as a result, Nokia is BlackBerry’s main competitor in Indonesia, he said. “In other [Asian] markets, BlackBerry is for business, and the iPhone is the thing to have,” Mr. Ivens said. “But over here, the BlackBerry is the thing to have and iPhone is only for Apple addict.” Jakarta residents say BlackBerry first took off among Indonesia’s business class with the 2006 launch of the BlackBerry Bold. Quickly, a sore thumb and a BlackBerry on your hip became symbols that you’d made it in Indonesia. “It’s a deal with the devil, because once you have a BlackBerry you can never escape your e-mails,” said Wimar Witoelar, a well-known political analyst and self-confessed BlackBerry addict who was a spokesman for former Indonesian president Abdurrahman Wahid. “But with a BlackBerry, you are a somebody.”

Laughing, Mr. Witoelar confessed: “I sleep with it on my pillow.” (As he speaks, two of his colleagues pound away on their own BlackBerrys with a speed that would impress the fastest-thumbed Canadian. One posts Mr. Witoelar’s comments on Twitter, while the other tweets about how foreigners seem to be fascinated by Indonesians’ addiction to their BlackBerrys.) The only downside to RIM’s success is that it has inspired a host of Chinaberry knockoffs. Phone sellers in Jakarta estimate that for every legitimate BlackBerry they sell, they move many times more Chinaberries. “Chinese companies make phones that look just like BlackBerry and sell 10 times as fast,” said Mulyadi Setiakusuma, general manager for distribution at the Sellular Shop retail chain. The reason is simple, he said: Knockoffs sell for less than $100, while a new BlackBerry Bold costs roughly $500. For many Indonesians, however, only the real thing will do. Mr. Arsjad, the software developer, said a course called “Java for Blackberries” will be added to the curriculums at five Indonesian universities this year. “There’s only one other place where they have that,” he laughed. “In Canada.” RESEARCH IN MOTION (RIM) Close: $75.85, down 90¢

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Queen adds BlackBerry to her high-tech collection

having lived through a revolution in wired and wireless communication. She was the first monarch to send an e-mail during a 1976 visit to an army base, and in recent years, she issued a podcast of her Christmas broadcast, visited Google and launched the first royal channel on YouTube. She even has an iPod. U.S. President Barack Obama presented her a new one when they first met last year. It was her second one and, by now, could probably have replaced the clunky non-video model she bought in 2005 at the urging of her second son, Prince Andrew. And she reportedly already has a mobile phone, perhaps even an older version of the BlackBerry. A spokeswoman for the Queen wouldn’t confirm whether a royal BlackBerry already exists. But David Yach, chief technology officer for software at RIM, said he was sure it was time for the Queen to discard her older device. “I’m sure hers is well used already and she’ll be ready for an upgrade,” Mr. Yach said. “I’ve heard that the Queen and the whole royal family and the palace are all heavy BlackBerry users. I suspect that has something to do with why they chose to come here.” The Queen’s tour of RIM, a technological giant in Canada, was short, but eventful. As with her royal tour through Canada in recent days, hundreds of onlookers lined the streets and stood for hours in the sweltering heat to greet the Queen and the Duke of Edin-

Queen presented with white BlackBerry Bold while visiting RIM facility Tuesday, July 6, 2010 CAROLINE ALPHONSO WATERLOO, ONT. -- Her position at the top of royal high-tech was sealed when she made the direct-dial long-distance call in Britain. Now, 52 years later, it’s being secured with the latest in wireless technology that allows her to download e-mailed photos of her beloved corgis with unprecedented speed. The Queen, not one to shy away from technology, was presented with a white BlackBerry Bold 9700 while visiting Waterloo’s Research in Motion facility Monday. It remains to be seen whether the always-proper Queen will join the masses of BlackBerry addicts who hunch over their handsets, but a RIM executive assured reporters that she is already an avid user of the device. She glanced at it, held it and appeared to direct questions about the new BlackBerry to RIM coCEO Mike Lazaridis and Ontario Premier Dalton McGuinty, who stood beside her, before placing it back in the box. But one thing is certain: Even at the age of 84, when many of her contemporaries are turning their backs on new technology, the Queen should quickly get a feel for it if she chooses to activate the device. She’s no stranger to advancing technology,

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burgh. She met several dignitaries and also Mr. Lazaridis’s parents. (Jim Balsillie, the company’s other co-CEO, was out of the country, a RIM spokeswoman said.) Inside the RIM facility, in a cavernous workroom with polished floors and immaculately clean workstations, the Queen was guided down an aisle of machines. She wore a white smock to guard against electrostatic charge, but kept her hat and gloves on. At one of the workstations, she was shown a BlackBerry by a RIM employee and appeared to ask a question, pointed to the device, and seemed to take an interest in the conversation. Mr. Lazaridis presented the Queen with her own BlackBerry at the end of the tour, a standard device with no additional applications. The only image loaded was one with a technological twist to an old tradition: A group of local schoolchildren holding bouquets of flowers. Mr. Lazaridis said it was a pleasure to meet the royal couple. He said the Queen was “eager to engage with our employees” and “very inquisitive” about all aspects of the BlackBerry, including the number of countries where it was sold. The Queen and Prince Philip, who have toured Halifax, Ottawa, Winnipeg and Toronto, leave Tuesday for New York, where she will address the United Nations General Assembly.

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RIM defies doubters with record profit

ered by Google’s Android operating system at the bottom end. In recent quarters, RIM has seen its rivals make headway not only in the consumer market, but also in the enterprise section - where the Canadian company has traditionally dominated. The bulk RIM’s new subscriber growth has come from consumers over the last several quarters. RIM executives positioned the most recent results as a strong lead-in to the important holiday shopping season. “We expect a continuation of this momentum in the third quarter as we extend the rollout of new products, including the BlackBerry Torch, into additional markets and benefit from heavy promotional activities and increasing customer demand as we head into the holiday buying season,” RIM co-chief executive officer Jim Balsillie said in a statement. However, it was not all good news for RIM. The company added 4.5 million new subscribers during the second quarter, falling below street expectations of five million. Sanford C. Bernstein Ltd. analyst Pierre Ferragu said one possible explanation for the weaker-than-expected subscriber numbers is that BlackBerry adoption is beginning to slow at a time when RIM is passing a lot more inventory on to its sales partners. “If this interpretation is right, in the next six months, reality catches up,” Mr. Ferragu wrote in a note to clients. “Facing an inventory glut, operators freeze orders of new BlackBerrys,” he

Revenue and share earnings beat expectations, but analysts warn of competitive challenges ahead Friday, September 17, 2010 OMAR EL AKKAD TECHNOLOGY REPORTER Research In Motion Ltd., facing increasingly intense competition, is proving to be a stubborn fighter. Canada’s biggest technology firm posted record second-quarter profits yesterday, beating analyst expectations at a time when many observers were increasingly pessimistic about RIM’s prospects of competing with tech giant rivals such as Apple Inc. and Google Inc. Revenue during the second quarter grew 31 per cent year-over-year to $4.62-billion (U.S.), the company said. Earnings per share jumped 76 per cent to $1.46 over the same period last year. Analysts had expected earnings per share of $1.35 in the quarter and revenue of $4.47-billion, according to a Reuters survey. RIM also shipped a record 12.1 million BlackBerrys during the quarter. By the end of the quarter, RIM said its BlackBerry customer base had grown to more than 50 million. The Waterloo Ont.-based company is under growing pressure to prove it can compete with Apple’s iPhone at the top end of the consumer smart phone market, and a slew of phones pow-

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wrote. “Guidance for next quarter [more than five million net new additional subscribers] may be far too optimistic.” Still, some analysts took a more positive view. Even though Mr. Balsillie said the company hit some bumps in the first part of the quarter such as sales hits in the Middle East and a lack of new BlackBerry models on the market - the company did see a bump later in the quarter with the release of its newest smart phone, the Blackberry Torch. “Some of the channel checks show the Torch is No. 2 after the iPhone at AT&T as far as feature smart phones go,” said Ronald Gruia, a technology analyst at Frost & Sullivan. “I think this is indicative - things were not as bleak as a lot of people were thinking.” RIM shares rose about 3 per cent in after-hours trading yesterday. “Even if shares have a relief rally on results, we remain concerned on the competitive positioning for the company,” wrote BGC Financial analyst Colin Gillis in a note prior to the results. “As an example, we mention signs we see that the carriers are positioning RIM as a secondary [product] in the smart phone landscape.” While there has been no confirmation from the company, many analysts who cover RIM were waiting yesterday for one or more new product announcements leading into the busy holiday shopping season. Perhaps the most anticipated - but highly unlikely - product is RIM’s rumoured tablet computer, the so-called “Black-

Pad.” The company has never confirmed it is even working on such a product - which would rival Apple’s ultra-successful iPad - but several sources have said the company had been. In a conference call yesterday, Mr. Balsillie made no major new product announcements. However he did indicate RIM has an important announcement planned for its developer conference in San Francisco, which kicks off Sept. 25. However, he would only say observers will be “pleasantly surprised” by what they see. Research In Motion (RIM) Close: $47.70, up 99¢

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RIM co-CEO Balsillie derides Apple’s ‘distortion field’

Mr. Balsillie took issue with that statement, and used it to highlight Apple’s own shortcomings in the tablet space - namely, the iPad’s lack of support for Adobe Systems widely used Flash multimedia format. “For those of us who live outside of Apple’s distortion field, we know that 7-inch tablets will actually be a big portion of the market and we know that Adobe Flash support actually matters to customers who want a real Web experience,” he said. “We also know that while Apple’s attempt to control the ecosystem and maintain a closed platform may be good for Apple, developers want more options and customers want to fully access the overwhelming majority of websites that use Flash.” Mr. Balsillie’s response is the most vocal of all the competitors Mr. Jobs named during the conference call. The RIM executive also pointed out that Mr. Jobs’ claim that Apple had sold more smart phones during its most recent quarter than RIM was based on incomplete information. “RIM has achieved record shipments for five consecutive quarters and recently shared guidance of 13.8 million to 14.4 million BlackBerry smart phones for the current quarter,” he said. “Apple’s preference to compare its Septemberending quarter with RIM’s August-ending quarter doesn’t tell the whole story because it doesn’t take into account that industry demand in September is typically stronger than summer months, nor does it explain why Apple only shipped 8.4 million devices in its prior quarter

Delivers counterpunch to Steve Jobs’ tirade Wednesday, October 20, 2010 OMAR EL AKKAD and IAIN MARLOW The high-tech competition between Research In Motion and Apple has become a low-tech contest of insults. RIM co-CEO Jim Balsillie has hit back against Apple Inc., slamming comments by CEO Steve Jobs as a product of Apple’s “distortion field” of misinformation. Mr. Balsillie’s comments came after Mr. Jobs ripped into the BlackBerry maker, essentially describing the company as an also-ran in the smart phone race. “As usual, whether the subject is antennas, Flash or shipments, there is more to the story and sooner or later, even people inside the distortion field will begin to resent being told half a story,” Mr. Balsillie said in a statement Tuesday. In a rare appearance during Apple’s fourthquarter earnings call on Monday, Mr. Jobs went on a 10-minute tirade against virtually every one of Apple’s competitors in the mobile space from RIM to Google and Microsoft. Among his many targets were other tablet makers. Mr. Jobs quipped 7-inch tablets are too small and that users would have to sandpaper their fingers to a smaller size in order to use the touch screens on such devices.

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and whether Apple’s [fourth-quarter] results were padded by unfulfilled [third-quarter] customer demand and channel orders.” The spat comes at a time when both RIM and Apple are preparing to battle for the fast-growing smart phone space. Late last month, RIM unveiled the PlayBook, its 7-inch tablet. The PlayBook will go on sale in the United States early next year - right around the time analysts expect Apple to refresh its iPad. Adding to the competition will be the first slew of tablets powered by a new version of Google’s Android operating system. Canaccord Genuity analyst Michael Walkley said Apple had for years assumed the role of feisty underdog in the shadow of Microsoft. Still, even by those standards, Mr. Jobs was especially harsh in his comments. “It’s somewhat unusual to go after the competition,” he said. “I don’t think he spared anyone, he went in guns blazing.” The timing of his comments, far from being off-the-cuff, was likely strategically timed, said Kevin Restivo with technology consultancy IDC, since it came right after a bout of great publicity for its key rivals and right before the crucial holiday buying season. “Apple’s trying to reiterate its strengths, which have been overlooked to some degree over the last number of months,” Mr. Restivo said. Some iPhone 4 users had complained about antennae problems with the phone. “The talk about ‘Antennagate,’ and how strong Android has been,

and some of the attention RIM has got with its product launches and ongoing strength in the business market. It was well-timed.” Reaction from Google to Mr. Jobs’ rant was decidedly more subtle. The company’s sole response was a single post on Twitter from Andy Rubin, the engineer behind Android. Mr. Rubin’s post was essentially a set of computer instructions - the post was intended to show that all the code necessary for anyone to begin working with Android could be fit into a single 140-character tweet - a comparison of how open Google’s mobile operating system is compared to Apple’s.

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RIM’s big play for its future

Mr. Lazaridis is proud of his role in turning this - RIM, the city of Waterloo, the university, the institutes - into a hotbed of innovation. But he is bothered, too, because he believes people don’t understand how much all of this is really worth. “Maybe we’re just not good at promoting ourselves. Maybe that’s the Canadian way,” he says. He wonders out loud whether he and RIM’s other CEO, Jim Balsillie, should have just taken their show to Silicon Valley. Maybe then they would get the recognition they deserve. “You know, maybe we should have left Canada a long time ago, rather than staying loyal patriots for the country. Jim and I have invested a whole bunch in this country and the community. But our records speak for themselves. Yeah, we’ve have some hard times, but gosh, look at the success.” It is the refrain of a frustrated man - frustrated by a problem he can’t easily solve because it’s not a math or engineering question. It is a problem of perception. Less than four years after it briefly became Canada’s most valuable corporation, RIM is being portrayed by its critics as a company that has lost its edge. One Wall Street analyst calls the BlackBerry “a broken brand,” left in the dust by the design wizards at Apple Inc. and losing market share to hungry foreign competitors - and many investors buy this gloomy line of thinking. RIM’s stock, which is down by two-thirds since mid-2008, is priced as though they believe the company’s profits are about to decline - even though RIM

For Research In Motion, the Playbook represents a moment of truth: A chance to regains its lustre. For Canada, the future of homegorwn innovation is at stake. But can the much-hyped tablet deliver? Saturday, April 16, 2011 OMAR EL AKKAD WATERLOO, ONT. -- Mike Lazaridis, the brain behind the BlackBerry, is staring intently out a window inside RIM 10, a squat, unprepossessing structure on Research In Motion Ltd.’s main campus. Beneath the grey, windswept sky, he sees an empire that he helped create. The five-kilometre radius around RIM Ten is home to one of the greatest single concentrations of talent in math, engineering and science anywhere in North America. RIM occupies nearly 20 buildings in the immediate vicinity, and a large proportion of its 18,000 employees work here. But they are only part of the picture, and at the moment, Mr. Lazaridis has his eyes trained on something else. In the distance, he points out the Institute for Quantum Computing, at his alma mater, the University of Waterloo. Not far away from that is the Perimeter Institute, a world-class research centre for theoretical physics. Both were built with a portion of the billions RIM’s co-chief executive officer amassed from making the most efficient and secure mobile communications devices in the world.

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has posted a series of record quarters, is adding millions of new users, and is prospering in fastgrowing overseas markets. So Mr. Lazaridis and Mr. Balsillie, after guiding their company through a decade of mindblowing growth, are caught in a major fight. And in his hands, the 50-year-old co-CEO is holding RIM’s latest weapon, a rectangular slab of glass, plastic and metal that weighs less than a pound. In the span of just one year, RIM conceived and built the PlayBook tablet, which goes on sale next Tuesday. But unlike smart phones - a category RIM basically invented, and over which it enjoyed a near-monopoly for years - this time the company is following, not leading. Apple has a one-year head start and its iPad dominates the fast-growing tablet market, and for all of RIM’s past success, almost no one gives it a chance of catching up. When Gartner Inc., an IT consulting firm, released a new forecast on the topic last week, it projected that 85 per cent of tablets will run on systems designed by Apple or Google by 2015. RIM will be running a distant third, it said. This is one of the most important moments in the history of Canada’s most important technology company - not because RIM needs to sell millions of PlayBooks or beat the iPad to survive (it doesn’t), but because it must prove that it has a second act. A lot more is riding on the PlayBook’s success or failure than the trajectory of a single company. Since the slow death of Nortel Networks,

RIM has moved to the centre of the Canadian technology sector. It spawns new startups or acquires them, spends a healthy proportion of its $1.3-billion research and development budget in Canada and is the largest employer of co-op students in the country. No other Canadian-controlled business offers as much opportunity for bright Canadian engineers and mathematicians to find meaningful work at home. The PlayBook is a litmus test for innovation in this country. Though not manufactured here, in most respects it is a made-in-Canada device. It was designed in Waterloo; the critical piece of software inside it - the operating system that makes everything else on it run, known as QNX Neutrino - is a Canadian invention. So is its web browser, and much of the technology that encrypts data flowing to and from the device to make messages more secure. Much of this, in particular QNX, will become the standard for every piece of hardware the company makes from now on, including all its phones. “I think we were very successful at combining all this Canadian-built technology into the PlayBook and into our super-phone future,” Mr. Lazaridis says. If the technology works, he sees it as a potential springboard into much bigger things for RIM - an entryway into everything from car entertainment systems to home automation. The PlayBook is a part of the blueprint for taking RIM deeper into the consumer market, as well as finding growth in its traditional base of

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government and corporate clients. It’s an audacious strategy. If it succeeds, RIM just might regain the ground it has lost in the smart phone market, while finding new sources of revenue. And one day the PlayBook may come to replace the universal remote control, as the tablet already has done in Mr. Lazaridis’s own living room. But if the strategy fails, then arguably so does RIM. At the very least, it would relegate it to No. 3 status for a long time to come, a poor cousin to Apple and Google - two companies that five years ago were not even in RIM’s business of wireless communications. It would also damage Canada’s prospects for a more innovative economy. The inside story of how the PlayBook came to be is, depending on how you look at it, either the story of a renaissance or a last stand. A tablet evolution They started out thinking small. For years, RIM has struggled with the challenge of moving beyond the smart phone. Some of its corporate customers had asked for what can be described as a BlackBerry laptop, which would combine RIM’s famous security features with a larger screen and keyboard. But Mr. Lazaridis and the rest of the company’s executive group had many competing priorities. They were developing new products like the BlackBerry Bold to defend their share of the market against an onslaught of competitors, not

just Apple but HTC Corp. of Taiwan and South Korea’s Samsung Electronics Co. Ltd. They were trying to capture a larger share of the consumer audience with phones like the touch screen BlackBerry Storm, which ultimately flopped. Quietly, they were also investigating new avenues for growth, such as embedding RIM products into cars for hands-free calling. By early 2010, though, RIM executives decided to try a tablet. The engineering SWAT team assembled to draw up such a device had originally envisaged modest improvements to existing RIM products - essentially, a souped-up BlackBerry. Users would be able to view documents on a larger screen, but it would run on the same software and perform the same tasks. That all changed with the iPad’s announcement in January. Though the Apple tablet looked a lot like a bigger iPhone, it was clearly something new. Here was a device capable of playing high-resolution video, music, and displaying quality colour photography - a perfect tool for long commutes. Consumers went crazy for it. (Apple has sold more than 15 million so far.) Suddenly, RIM was under pressure to think in more ambitious terms. The PlayBook would need to have a lot more muscle in the hardware, so the user could do more things, faster. It would need new software, too, because RIM’s aging operating system was past its prime. An operating system is the main piece of

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software on a device that allows all other software to function. As such, it’s one of the most important bits of technology in any computer or mobile phone. RIM’s had been designed mostly to handle text-based communication, such as email, the BlackBerry’s original purpose. It didn’t display some content well or at all, such as video and some web graphics. RIM had stumbled on to a solution to this problem in 2009, when it was working on getting into automobiles. Its partner on the project, a U.S. company called Harman Kardon, happened to own a maker of operating systems, called QNX. QNX makes some of the best operating systems on the planet, so reliable that they are used in critical infrastructure such as nuclear power plants, where a software crash would be potentially catastrophic. A version of QNX’s operating system powers the Canadarm. RIM executives asked Harman if QNX was for sale, and for $200-million, completed the purchase in the spring of 2010. “[The iPad] validated what we were doing,” Mr. Lazaridis says. “It gave us extra insight. That’s why we went out and we beefed up the horsepower of the thing to run QNX rather than what we were building ourselves.” With RIM’s army of engineers working on the technical details, it was time for the designers to figure out what the thing should look like. Mr. Lazaridis called Todd Wood, RIM’s head of industrial design, into his office.

“Mike asked me, ‘What would you think of a bigger BlackBerry?’ “ Mr. Wood says. The task was twofold: create something that actually looks different than older BlackBerrys, but sets a design precedent for future ones. Mr. Wood sent his people out into the real world to look for inspiration. They came back with a theme. Many of the things people carried around with them - paperbacks, Moleskin notebooks, DVD cases - seemed to conform to a certain size. If the PlayBook was to be truly mobile, Mr. Wood believed, it would have to be roughly the same size, something a person could hold with just one hand, unlike the iPad. The designers and the engineers agreed a seven-inch screen would meet that goal and still be able to fit the PlayBook’s brains - a high-powered circuit board sandwiched between two batteries - inside. Over the summer, Mr. Wood’s team of industrial designers began to build the first PlayBook mockups, first out of foam, then plastic, and finally the initial working versions, which were in place not long before Mr. Lazaridis took to the stage at San Francisco’s Moscone Centre last September and unveiled the PlayBook to the world. “This is one of the most exciting times in our history,” Mr. Lazaridis told the audience, holding the prototype in his hand. Its size is one of the most remarked-about aspects of the tablet - it is about half the size of an iPad. The fact that the PlayBook, at $499 (U.S.),

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is the same price as the base model of the Apple tablet is a sticking point for some tech experts, and likely will be with many consumers too. But back inside the boardroom at RIM Ten, Mr. Lazaridis is in the midst of a demonstration to show why the smaller size isn’t a liability. Using a single cable, he has hooked up the PlayBook to a giant Panasonic television and is playing a Star Trek clip found on YouTube in high definition. Once it loads, the picture quality is excellent. The CEO’s point: You can hook the PlayBook up to any size screen you like. What matters is how well it works. “Once we realized what we were going to do with this thing, we realized at that point that portability was more important,” says Mr. Lazaridis, who is having frames built at his home “so I can have PlayBooks all over the place built right into the walls.” There are, however, other shortcomings in the PlayBook that will hinder it in the eyes of consumers, at least initially. One of them is the lack of software applications, commonly known as apps. Apple’s iPad can make use of the hundreds of thousands of apps built for the smaller iPhone. But PlayBook owners won’t be able to use even the much smaller number of BlackBerry apps until RIM has a fix ready this summer. A more serious issue is that the first version of the PlayBook can only run certain key tools, such as the calendar, when tethered to a Black-

Berry. It comes without a standalone e-mail program, for example, and can’t connect to cell networks except through a RIM smart phone. The feedback RIM is working on remedies for these problems, too, but the PlayBook’s incompleteness has led to accusations that the project was rushed. Influential technology reviewers such as The Wall Street Journal’s Walt Mossberg have seized on this: “I got the strong impression RIM is scrambling to get the product to market, and that it will be adding other features already offered on competing devices for months, through software patches.” Inside the telecom industry and at RIM’s key corporate clients, some people have been analyzing the PlayBook’s merits and flaws for months. RIM began meeting with some of the companies that are its core partners on the PlayBook as early as last summer. The sales job falls to Jim Balsillie, Mr. Lazaridis’s hyper-competitive partner, whose fame extends beyond the business world in part because of his quixotic quest to bring an NHL team to Hamilton. Though the two men bring very different skills to the job -Mr. Balsillie oversees a separate RIM sales and marketing campus in the north end of Waterloo - they agree on where RIM’s competitive advantage still lies. Over the past decade, the BlackBerry has built an unassailable reputation for the strength of its security features - one of the reasons they are so popular with law

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enforcement agencies and government departments. In building the PlayBook, nothing could come at the expense of security. RIM’s obsession with security comes at a cost. It’s one reason developers make fewer apps for its devices, for instance. But it also carries one major advantage. Unlike almost every other tablet developer, RIM has a ready-made audience for the PlayBook: corporate IT departments. For big customers, Mr. Balsillie would often make the PlayBook pitch himself. “I have to say, it was a pretty slick device,” says Morteza Mahjour, chief information and operations officer at Royal Bank of Canada. (RBC isn’t buying any yet, though it is testing some.) The early adopters include Sun Life Financial, which designed one of the very first PlayBook apps, and plans to purchase between 500 and 1,000 RIMtablets. “It’s really a powerful unit,” says Thomas Reid, senior vice president of group retirement services at Sun Life. “I’ll be using it for my e-mail and for doing presentations with clients and things like that. That’s just going to be the standard that we use from a technology perspective ... rather than lugging a laptop into the boardroom or wherever we go to do a presentation.” The ability to “tether” the PlayBook to a BlackBerry - to use the two together, and run the tablet through the phone’s cell connection - is also a selling point, because it means companies don’t have to pay wireless carriers for extra data

plans. The only cost is that of the tablet itself. Those economics, combined with its security reputation, mean it will be able to sell the PlayBook even to firms that have already adopted the iPad. When the new Ritz-Carlton in Toronto went to buy hardware, the hotel chose iPads for its restaurant menus - but PlayBooks for its checkin system, which handles financial data such as customer credit cards. “The data efficiencies on RIM and the security are so much higher, anyone in financial services or where client confidentiality really matters is going to have a natural inclination to shift toward [it],” says Mark Maybank, chief operating officer at Canaccord Financial Inc. In one respect, RIM’s early strategy with the PlayBook doesn’t resemble Apple’s so much as Hewlett-Packard’s. Last year, HP bought struggling smart phone maker Palm, and this summer the company will launch a line of tablets based on Palm’s software. The idea is to make HP a company that can sell any of the computing devices a business needs, from printers to computers to mobile devices. With the PlayBook and BlackBerry, RIM can now offer their business clients a one-stop solution for wireless communications. “With the PlayBook and its targeted audience of corporations, I think they’ve gone for their comfort zone, and that’s what they know,” says Carolina Milanesi, vice-president of research at Gartner, the firm that authored last week’s

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report projecting RIM as a laggard in the tablet race. “And I think it was, to some extent, a reasonable thing to do.” She describes the PlayBook as being a “completely corporate” device for now. Still, the business market is only so large. With companies like HP and Lenovo also pursuing it, it’s clear the PlayBook will also have to win over consumers if it is going to be a success for RIM, which is why the company lobbied hard to get certain makers of consumer software on board. The company’s executives wooed two major game developers, Electronic Arts and Unity. As a result, the PlayBook will come pre-loaded with two EA games, and the Unity game engine, on which a host of games run, has been incorporated into the PlayBook hardware, making gameplay much more crisp. But perhaps the most important deal RIM secured for the PlayBook was with the company it turned to first - Adobe. Very early on in the PlayBook design process, months before the company made its plans public, RIM decided to work with Adobe. The move made sense for both firms because they share a common enemy - the giant of Cupertino, Calif. Adobe was dealt a huge blow by Apple when it refused to allow Adobe’s Flash-based multimedia on any of its handheld devices. (Flash is a common piece of software that runs interactive features on websites such as video. Its absence on the iPad and iPhone is why many videos on the Internet won’t work on those devices.)

Mr. Lazaridis saw that there was an army of software developers - “it’s over three million people” - who create programs using tools made by Adobe. The Adobe relationship, he reasoned, could become a major weapon for RIM. Not only can the PlayBook run a lot of Internet video and television that the iPad can’t,, but in time, those millions of developers could also help the company close the “app gap” with Apple by building more apps for RIM products. For the same reason, the PlayBook also will include an unusual feature that allows users to run apps that are designed for competing tablets that employ Google’s Android operating system. The move means an infusion of tens of thousands of apps for the PlayBook (this feature also won’t be available until this summer). The app strategy is important not just for the PlayBook, but for making RIM more competitive in smart phones, too. Increasingly, consumers choose their wireless devices not for their design, but for what they can do - for the software. (Apple even touts its 400,000 applications, which include everything from serious business tools to the silliest games, in its advertising.) RIM has only about 25,000 BlackBerry apps, partly because many developers find the process of creating software for RIM’s products as cumbersome. The PlayBook is the closest thing RIM will get to a fresh start with them - a brand new piece of hardware with a new operating

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system that will eventually be used to run all RIM smart phones. High stakes Mike Lazaridis is pleased. The high-definition video on The New York Times website - the one he has been trying to get working for a good part of this 90-minute conversation - is up and running. It looks flawless, streaming through the PlayBook to the huge television screen in a RIM conference room. The process of getting the PlayBook across the finish line has not been quite so flawless. The product was supposed to be out by the end of March, but is more than two weeks late. (RIM officials privately say that March was an early estimate, and they are pleased to have come this close to meeting that target.) With its turn in the spotlight coming up, RIM is working right up to the last minute. When The Globe and Mail visited RIM’s offices in early April for a demonstration, engineers were still refreshing the PlayBook’s software every day to work out bugs. Such are the pitfalls of deploying thousands of employees to make a new product on an extremely tight deadline. For RIM - a company that, a very long time ago, was known to impatient investors as Research In Slow Motion - moving this fast is risky. A slower approach would have been risky, too. In the next few months, dozens of new tablets are due out, including a slew of products powered by Google’s Android operating system.

Apple has been selling its iPad 2 for more than a month. RIM couldn’t afford to delay. Mr. Lazaridis is careful to point out that for all of the focus on the PlayBook, RIM has an ambitious plan for new smart phones. He’s not exactly underselling them, either. “There is a lineup of products this year where there is genuine lust over - like, you look at it and you go, ‘I’ve got to have that,’ It’s just that compelling.” Even if he’s wrong, RIM, which is debt-free and flush with more than $2-billion in cash, can certainly survive a failed product or two. The worry is that if the PlayBook doesn’t catch on, it will further dent the market’s confidence in RIM’s ability to keep pace with the competition. It also wouldn’t augur well for its future smart phones, since the PlayBook’s operating system is the same one RIM intends to put in all of its new devices, starting next year. There is a lot on the line for Canada, too, of course - not because it needs the PlayBook but because the country’s technology sector has come to rest heavily on RIM’s success. The company is at the centre of virtuous circle. Its success has nurtured a thriving community of developers, engineers and entrepreneurs in Waterloo, which has drawn even more talent to the city, which in turn has encouraged foreign giants such as Google Inc. to establish a major presence there. Should the company that put Waterloo on the map begin to weaken, a host of others may also feel the pain. “RIM is the anchor tenant of Canadian technol-

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ogy,” says Bernard Courtois, president of the Information Technology Association of Canada. “Those types of companies, particularly when they are, like RIM, pumping out new products every six months, have a tremendous ecosystem of people who supply components, who support them in areas such as research and development, manufacturing, assembly. “Just their presence facilitates the growth of companies who have great technology but no wherewithal to attack the global market.” RIM, certainly, has been attacking the international market, and has spent the past several years pushing hard into markets like India and China. More than half the company’s revenue now comes from outside North America - a rare example of a Canadian-based company that has succeeded in going global. That is one reason why politicians are keen to ride the coattails of its success: Witness Ontario Finance Minister Dwight Duncan’s ploy to read his budget statement off the PlayBook. “I think that we should be very proud of Ontario businesses that innovate,” he said. If only RIM got as much praise on Wall Street. Mr. Lazaridis struggles to understand why RIM doesn’t get more credit for what it has done. Sometimes, his frustration just boils over. This week, he angrily ended an interview with the BBC after a reporter asked a question about RIM’s ongoing issues with foreign governments that want access to encrypted BlackBerry data. (The BBC clip went viral on the Internet, and Mr.

Balsillie had to do damage control during his own subsequent TV appearances.) “I think we’re underappreciated in what we’ve been able to do and what we’ve accomplished as we’ve become a global player,” Mr. Lazaridis says. “[RIM is in] the fastest-growing market in the world and we’re right up there, and when you sit down ... how many players come to mind in this [wireless] space? Do you really think of more than five? Not really. “I think it’s an excellent position to be in. I really do.” With files from reporters Iain Marlow, Tara Perkins, Tim Kiladze, Grant Robertson and Boyd Erman

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THE EVOLUTION OF RIM / FROM PAGERS TO TABLETS AND BEYOND At a time when many critics believe the company is losing ground to its rivals and will soon be a niche player in the smart phone market it invented, RIM has some audacious expansion plans. The company that started out making smart pagers soon wants to be in your car, your living room and at the centre of your mobile entertainment. 1995 Pagers RIM’s first big success came with the Inter@ ctive Pager, a device that let users send and receive wireless data messages. The hardware not only introduced RIM to the largest telecom carriers in North America, it also kicked off the company’s dominance of the enterprise mobile communication market. 2002 Smart phones The first BlackBerry made its debut almost a decade ago, and introduced what became perhaps RIM’s most lucrative invention, push e-mail. The ability to instantly and securely send e-mails proved a hit with business and government. For years, until Google and Android joined the market, RIM essentially had the industry to itself. 2011 Tablets The PlayBook marks the first major hardware

evolution for RIM since it moved from pagers to smart phones. This time, RIM isn’t inventing the category, but rather playing catch-up to Apple’s iPad. However the tablet market itself is still young, and represents a lucrative new revenue source for RIM. The PlayBook is also the first device to run on a new operating system RIM hopes to eventually migrate to all its products. 2012 Super phones Some time next year, RIM will begin launching faster, more powerful phones that run on the same operating system as its PlayBook. The move is part of an attempt to build multiprocessor mobile devices that can match laptops and desktops in computing power, and provide a tempting alternative to customers thinking about buying an iPhone. Beyond 2012 Car entertainment RIM’s next frontier is the car stereo. The company originally bought QNX - the firm that designed its PlayBook operating system - to gain a presence in the car entertainment market, and it still hopes to follow through on that strategy. The idea is to sync a user’s media and communications data from their home to their mobile devices to their car entertainment dock using RIM’s software and hardware. With most new cars coming equipped with more and more powerful computers, the market is a lucrative one.

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Home automation Using devices such as the PlayBook and its successors, RIM hopes to one day replace the universal remote in the living room. The company would like to see consumers turn to their tablets (or wall-mounted units by their front door) to do everything from changing the channel to drawing the curtains. The PlayBook’s added advantage - the ability to hold and stream a user’s multimedia - gives it an added advantage, but RIM is nonetheless a long way from reaching its goal of becoming a major living room presence.

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Anatomy of a Canadian tablet For RIM, the PlayBook represents the convergence of years of internal research and external partnerships. In many cases, the various technologies powering the company’s tablets were developed right here in Canada. In others RIM bought startups from as far away as Scandinavia. Browser: Torch Mobile An upgraded version of the Torch Web browser, which made its BlackBerry debut on RIM’s latest smartphone, itself named the Torch. The browser was designed by a Toronto-based firm called Torch Mobile, which RIM acquired in the summer of 2009 in order to rejuvenate the much-criticized Web-browsing experience on most BlackBerrys. User Interface: The Astonishing Tribe Some of the graphical flourishes in the PlayBook’s user interface came courtesy of Swedish firm The Astonishing Tribe. TAT has spent years working on custom user interfaces, including research on 3D interfaces. Their work can now be found, for example, on the touch-screen photo gallery menus in the PlayBook. Operating System: QNX Perhaps the most important acquisition RIM has ever made, QNX designed the software that powers the PlayBook. The Ottawa-based firm, purchased by RIM a year ago, used to design crash-proof operating systems for computers running medical equipment and nuclear power plants. Eventually, RIM hopes to make all its smart phones run on QNX’s operating system too. App development: Adobe App designers can build software for the PlayBook in a number of ways, including taking advantage of QNX’s own programming environment or developing in the Java language. But RIM has specifically targeted the more than three million programmers who rely on Adobe technology such as Flash. By partnering with Adobe, RIM not only gives that massive programming talent pool a tablet to write apps for, but also does something Apple’s iPad can’t - work with Flash. Productivity: DataViz The PlayBook runs a suite of Microsoft Office-like software called Documents To Go. RIM purchased the software’s creator, Connecticut-based DataViz, last year. The suite includes word processing, spreadsheet and presentation software that allows users to view documents on a screen about twice as large as the one on their BlackBerrys.

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PlayBook at a glance Screen 1,024 x 600 pixels Network WiFi and Bluetooth. Access to BlackBerry secure servers. Tethering to BlackBerry smart phone enables 3G capability Internet HTML5 browser supports Java, OpenGL and - unlike iPad - Flash Camera 3MP front-facing for video-conferencing, and 5MP rear-facing, capable of HD recording Operating System Uses QNX Neutrino - proven mission-critical OS used on space station and in-car systems Processor Dual-core 1GHz ARM processor with 1Gb RAM Connectivity Micro-USB to attach accessories and micro-HDMI for large screen Sizing up the screens BlackBerry PlayBook / 18 cm Apple iPad 2 / 25 cm Samsung Galaxy Tab 10.1 / 26 cm Motorola Xoom / 26 cm

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RIM resets

75 million active subscribers around the world, but RIM has struggled of late with dwindling market share and fierce competition from Apple Inc.’s iPhone and an array of devices running Google Inc.’s Android operating system. The catalyst for change appears to have been the entry of a new personality: reserved but revered investor Prem Watsa, CEO of Fairfax Financial. Mr. Watsa, who has been called Canada’s Warren Buffett for his business acumen, has been quietly buying RIM stock for some time. Fairfax is now one of RIM’s largest shareholders, and Mr. Watsa is being appointed to the company’s board of directors after playing a role in key discussions in recent weeks. Critics of the company’s performance may not be immediately impressed by a management shakeup that involves so little fresh blood. Mr. Heins, a former executive at Siemens, is simply moving up the ranks, while Ms. Stymiest, who once headed stock market operator TSX Group, has been a director since 2007. But RIM’s new leadership - including Mr. Watsa, Mr. Heins and Ms. Stymiest - suggested in interviews with The Globe and Mail on Sunday that they are content with the company’s strategic direction and products. “There’s no need for me to shake this company up or turn it upside down,” Mr. Heins said at RIM’s Waterloo headquarters. “We are not at a point where we try to define a strategy. That’s done.” Mr. Balsillie and Mr. Lazaridis have been

The men who changed the way the world communicates and built Research in Motion into a Canadian technology giant have stepped down over the firm’s flagging performance. Can new leadership - including one of the country’s savviest investors - find a way to reboot the BlackBerry? Monday, January 23, 2012 IAIN MARLOW and TARA PERKINS WATERLOO, ONT. -- Research In Motion leaders Jim Balsillie and Mike Lazaridis are stepping down as executives and co-chairmen of the board in the biggest shakeup in the history of the Waterloo, Ont.-based startup turned global smartphone giant. The sudden move follows a year of decline in which RIM lost three-quarters of its market value, botched the launch of its PlayBook tablet and watched rivals eat into the BlackBerry’s market share. In the most dramatic change since the company was founded 27 years ago, the new chief executive will be Thorsten Heins. Recruited by Mr. Balsillie and Mr. Lazaridis five years ago, he came to be a trusted adviser and their handpicked successor. Barbara Stymiest replaces Mr. Balsillie and Mr. Lazaridis as chair of the board of directors Calls for radical change at the company have been mounting in recent months. Its BlackBerry device blazed the trail for smartphones and has

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grooming Mr. Heins as a successor for some time and say they decided to act as the company enters a new phase. RIM’s newest BlackBerry 7 devices are now out in the market, its PlayBook tablet is receiving a software revamp in February and its next-generation operating system - BlackBerry 10, which is meant to save the company - is launching later this year. “Jim and I approached the board and we told them that the time is now,” Mr. Lazaridis said. The board agreed, both with that decision and the suggestion from Mr. Balsillie and Mr. Lazaridis that Mr. Heins was the best candidate for the role of CEO. In addition, the directors decided to try to recruit Mr. Watsa, a prominent and respected outsider, at a time when the company was under fire for a co-CEO, co-chair governance structure that critics felt was contributing to RIM’s growing problems. Mr. Lazaridis and Mr. Watsa were introduced in 2009 by David Johnston, who is now Canada’s Governor-General but at the time was the longstanding president of the University of Waterloo. Mr. Johnston decided that he wanted to try to recruit Mr. Watsa as the school’s next chancellor, and he sought the help of Mr. Lazaridis - who famously founded Research In Motion while he was a student at Waterloo - to make it happen. While Mr. Lazaridis and Mr. Watsa had not met before, Mr. Johnston asked Mr. Lazaridis to call Mr. Watsa and persuade him to take the job. Mr. Lazaridis did so, telling the Fairfax CEO that accepting the position would be the best thing he

would ever do. Mr. Watsa agreed, and was later happy he made the move. Three years later, the two were talking again - this time about the future of Mr. Lazaridis. Mr. Watsa’s Fairfax had become RIM’s fourth-largest shareholder, after PrimeCap Management, Mr. Lazaridis and Mr. Balsillie (who each owned roughly 5 per cent of the firm). Mr. Watsa, a value investor who tends to buy into companies that have fallen on hard times, was a fan of the company’s products and accomplishments. Again it was Mr. Lazaridis who reached out to Mr. Watsa, this time on the subject of joining the RIM board of directors. Mr. Watsa does not normally accept board nominations, citing the demands of Fairfax. But he agreed to meet with both Mr. Lazaridis and Mr. Balsillie to talk it over. “Mike and Jim said, ‘We’ve made this decision and we’ve taken it to the board,’” Mr. Watsa recalled. “I am a great fan of Mike and Jim,” he said. “This is exactly the right decision for both of them.” Mr. Watsa likens the relationship between Mr. Heins and the two former co-CEOs to that between Tim Cook and Steve Jobs at Apple, where Mr. Jobs was was the visionary and Mr. Cook was seen as bringing discipline to the firm. Mr. Heins has long been considered a crucial link in RIM’s executive chain, with broad responsibilities for the global expansion of the BlackBerry brand. He was promoted in July, 2011, and became the overall authority for planning, products and sales.

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In a recent interview, one former RIM executive described Mr. Heins as “hugely influential,” adding that as the only one in RIM’s senior management who could truly say no to the technologically knowledgeable founder Mr. Lazaridis and the forceful Mr. Balsillie on issues of significance, Mr. Heins increasingly found himself in a “gate-keeping” role at the company. As Mr. Heins takes the reins, both Mr. Lazaridis and Mr. Balsillie will remain on RIM’s board, and Mr. Lazaridis is taking on the new title of vice-chair of RIM’s board and chair of the board’s new innovation committee. The two men declined to say what they would do next, but it is clear they both could use a break. “I think this has been the hardest working year of my life,” Mr. Balsillie said, adding that he had 24/7 responsibility in multiple time zones, and has been working 80- to-90-hour weeks. Mr. Lazaridis said he looks forward to spending more time with his children. “Obviously, we’re looking forward to having more free time,” he said. While there has been much talk of tension and disagreements between the two former co-CEOs, both men denied that, suggesting that the last year has been about hunkering down together. Ms. Stymiest suggested that while she welcomed their decision, she is not worried about RIM’s strategic direction. “The board truly admires Mike and Jim for making what I think is a tough decision for

founders to make, but one we are totally supportive of, and think is the right decision,” she said.

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100 DAYS LATER

nior executives. Some will say they are shocked; some won’t be around for much longer. But everybody, in a broader sense, already knows what has happened up until this point: RIM, once a seemingly unstoppable industry leader, has slipped to pitiable laggard. The company has suffered one embarrassing strategic misstep after another, consistently releasing unsexy products, with glitches, behind schedule, to little or no acclaim. The share price has fallen by almost 90%, from an all-time high of $150 in 2008 to about $17 in January, erasing much of Balsillie’s and Lazaridis’s vast wealth in the process. The postures around the table are telling. Lazaridis, who will remain vice-chair after this shakeup, leans forward, as if anxious to explain himself. Balsillie, who will stay on the board as a director, at least for the time being, appears impatient, fidgety - though I’m told this is how he usually looks. Their long-time PR rep, Tenille Kennedy, sits quietly beside them, as Mike and Jim explain how they went to the board with their succession plan. On the other side of the table, Heins sits comfortably, hands clasped together, leaning back in his chair. Seated beside him is a new face, Michael Sitrick, founder of an American PR firm that specializes in, among other things, “crisis management,” “criminal indictments,” “environmental controversies” and “bet-your-company/bet-your-life situations.” A little hired help for a not-so-average day. Heins, a mild-mannered former Siemens executive from Munich with a stiff salt-and-pepper side

...and the one thing Thorsten Heins can say about Research In Motion is that things can’t get much worse Friday, May 25, 2012 IAIN MARLOW DAY ZERO January 22 On a brisk Sunday afternoon in late January, Thorsten Heins towers over a long boardroom table in RIM 10, one of the many sprawling low-rise buildings in Waterloo, Ontario, featuring Research In Motion’s logo. The lanky, 6-foot-6 Bavarian physicist is about to officially replace two of Canada’s most famous businessmen. He fiddles with one of the company’s PlayBook tablets as he waits patiently for them to arrive. “I love this system,” he says. Mike Lazaridis, the man who founded RIM in 1984, appears shortly after, his hair, as usual, combed into an immaculate silver wave above his distinctive heavy-set features. Long-time co-CEO Jim Balsillie, the driven, globe-trotting salesman, arrives last, removing his BlackBerry earbuds as he enters. Including PR reps and two Globe and Mail reporters (I’m one of them), there are seven of us in the room. Even other C-suite executives are said to have no idea that “Mike and Jim,” the men who built the country’s most valuable technology company - a firm that, in 2007, was worth more than the Royal Bank of Canada - are stepping out of the picture. Most will find out later today in an e-mail sent to se-

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part, insists that RIM is not broken, that it has the ingredients for success, and that he is the man to lead the company at this time. “I know how to do this,” he says. “I have the skills to do this.” He promises to hire a chief marketing officer. “There’s no need for me to shake this company up,” he says confidently. “Our product is great.” If anything, he adds, “we just need to talk about it more.” In the next 100 days, Heins will have the toughest job in corporate Canada, if not the world. While it may be unfair to analyze the reign of a CEO based on a single fiscal quarter - after all, much of what Heins is shovelling through now is the managerial detritus of the previous administration - it’s also the case that RIM may not have much time. (Remember how quickly Palm disintegrated?) From Day One, Heins will be tasked with maintaining momentum in the company’s overseas strongholds emerging markets such as Brazil, Indonesia and Nigeria - while working to stem market share losses in North America, where the handset maker’s failures are magnified by an unforgiving competitive landscape that includes Apple and Google. And, more importantly, he needs to release a flawless new BlackBerry 10 device, with a rich application and content portfolio, ideally before kids go back to school. If he doesn’t, well, RIM may never recover. DAY 1 January 23 Around 10 a.m. the following day, Heins takes to a stage within RIM 4 - another

squat company building, this one near the University of Waterloo campus - to address the staff he’s now meant to lead. There are about 100 people in the room, and roughly 14,000 employees tuning in from around the world. Lazaridis makes introductions, and stresses how difficult this is and how much he loves the company. Balsillie says much the same, then demands the staff show fealty to a new regime: “I want your word that you will give Thorsten 100% support. Do I have your commitment?” Heins, who has been with the company since 2007, steps forward. Without a jacket but with a BlackBerry holster secured to his belt, he seems to personify the split messaging that has dogged RIM in the iPhone era, when it has become unclear exactly what a BlackBerry brand stands for: Work? Play? Both? Neither? In one sentence he stresses the need for “flawless execution.” In another he proclaims that “we rock in Asia-Pac.” He addresses the idea that RIM’s internal processes have been “bipolar” - less a nod to the recently strained and dysfunctional co-CEO structure than an admission that RIM needs to be more decisive about its strategy. “It just gives me hurt feelings if we have such great ideas and then we get kind of criticized in the public because we miss it by three months, or we’re not complete when we really want to launch something,” Heins tells the crowd. “Let’s just go rock ‘n’ roll it,” he concludes. “And, you know, we will all be having a lot of fun together. And a lot of success. Thank you.”

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For a company long ruled by two men with serious cases of founders’ syndrome - who often responded to criticism of their management with wide-eyed innocence and denial - this level of clarity about the need to tinker with RIM is refreshing. “I’ve been at the company for over 10 years,” says Wes Nicol, who manages RIM’s presence in the Caribbean and the Andean region of South America. “[Heins brings] a fresh energy, and a fresh approach to working together. It really, sort of, energized the company.” The pep rally was also a chance to help paint a more relatable picture of Heins, who generally plays up a stereotypical Germanic love of efficiency and process. Heidi Davidson, senior vice-president of communications, lobs him questions e-mailed from staff. Asked how he likes to spend his spare time, Heins mentions a hobby not exactly unknown to computer engineers. “I actually love race simulations on the PC, so I race Formula 1,” Heins says. Perhaps because people might get the impression Heins is not a man of action, Heins adds quickly, “I’ve been in a real car, also, but that’s a different story.” Outside of RIM 4, Heins’s appointment has not brought an end to the cycle of negativity surrounding the company. Earlier in the morning, following a conference call with analysts, the chorus of “Thorsten who?” has already begun. The Wall Street Journal’s Marketplace editor, Dennis Berman, points out on Twitter that Thorsten Heins’s name doesn’t even autofill in a Google search (it does now). Whereas a

day earlier, Heins wanted it known that RIM’s marketing troubles were his top priority, now it seems Heins himself has become a marketing problem. The company’s already-battered stock sinks more than 9% in heavy trading when markets open. On Day One, at least, the bleeding continues. DAY 5 January 27 While Heins’s appointment does little to shift the narrative in North America that RIM is sliding into irrelevance, the company’s momentum in emerging markets is another matter. Last year, in Africa, for example, RIM saw 741% growth in handset shipments. It’s Heins’s job to provide fresh clarity, direction and resources to managers of these mystical growth areas, places where very few people use iPhones and the BlackBerry is king. On the Friday evening after the shakeup, Greg Wade, RIM’s managing director for Asia-Pacific, walks into his Singapore office and finds the place buzzing. He stops to take in the scene. “Wow,” he thinks. “If you could bottle up this vibe - and it’s a true vibe - just imagine what we could accomplish.” DAY 11 February 2 Around 4 p.m., Heins walks into the lower level of Toronto’s historic Harbour Sixty Steakhouse to meet with a group of Bay Street analysts. In this era of austerity, there is to be no $58 rib-eyes and certainly no $125 double porterhouses - drinks only. There is harsh questioning, and one senior RIM execu-

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tive exchanges terse words with a respected Big Five bank analyst. Still, BlackBerrys outnumber iPhones in this room by a ratio of 15 to 2, according to Byron Capital Markets’ analyst Tom Astle. The BlackBerry brand, while certainly bruised, retains some cachet with this crowd. And, for some of the audience, Heins’s humble but assertive tone strikes the right note. These analysts may not think RIM has much chance of turning itself around, but they seem to respect the new CEO’s approach, a quiet confidence tempered by a willingness to be more frank about the company’s failings. “His style was much lower-key than Balsillie’s,” says Astle, who points out that Heins demonstrated strong resolve. “I think his personality has brought more transparency to investors, and likely even internally in RIM.” Let’s face it: Heins was never going to get anything resembling a honeymoon in North America, where RIM’s downfall is generally depicted as assured, but, judging from the crowd at Harbour Sixty, the mood seems like it has the potential to shift - at least a bit. DAY 16 February 7 Heins is in Amsterdam today, addressing a crowd of European app developers at the behest of Alec Saunders, RIM’s evangelistin-chief, who’s tasked with attracting third-party software developers to the BlackBerry platform. Saunders, who joined RIM as a VP during the summer of the 2011 shakeup, has a tough slog ahead of him. Apple’s iOS operating system has more than 500,000 apps, including hits like

Instagram and Draw Something; the Android app market is not far behind. By comparison, BlackBerry App World (70,000 apps) has been shunned by some developers, who see bigger profits on other platforms. One such developer, YouMail, has gone so far as to issue a press release announcing it will cease development for BlackBerry, a sure way to garner attention from click-addicted news sites feeding on BlackBerry failures. (In April, Saunders will use his personal blog to call out the CEO of YouMail, telling him that from “one entrepreneur to another - I think it’s time to hang up the spurs, cowboy.”) One long-standing complaint is that it’s too time-consuming to tweak software to run on each of RIM’s many devices, a costly annoyance that turned to strategic indifference as BlackBerry sales waned over the past year. Heins’s job in Amsterdam is to trumpet the impending arrival of RIM’s BlackBerry 10 platform, which will run across all new phones and tablets. “It’s always great to be back home,” he opens. “I consider myself a European kid.” He shrugs his shoulders and raises his hands to cue applause. The casual vibe is quickly subsumed by managerial-sounding bravado as Heins goes on to list the countries in Europe where BlackBerry is the No. 1 smartphone. He starts with the Netherlands, which garners polite applause from the crowd, and continues: “The United Kingdom. Spain. Saudi Arabia. United Arab Emirates. Kuwait. And South Africa.” Besides the U.K., where BlackBerry market share is slipping, these

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are not global economic powerhouses. RIM’s list of corporate bragging points is dwindling - as its rivals’ lists are lengthening. But right now, it’s worth Heins’s time to play up BlackBerry’s global success, over and over again; Saunders needs some good news. Without it, he won’t be able to persuade app developers to bother. In that case, Saunders and Heins might as well hang up their own spurs. DAY 30 February 21 RIM releases a software update for its PlayBook tablet. This sounds kind of dry, but the original device - which has great hardware was hugely criticized for its lack of e-mail, calendar and contact-list functions that BlackBerry phone owners already enjoy. To call this update crucial would be an understatement. RIM has been deeply discounting the PlayBook at retailers since November - reducing the price from as much as $700 to as low as $200 - and the general consensus has been that the product is lacking. Early reviews are favourable, if you look past the obligatory “it would have been nice if it had this at launch” comments. One Toronto-based market analysis firm releases an encouraging report saying the PlayBook now accounts for 15% of the Canadian tablet market. Pay no mind that PlayBooks make up an infinitesimal portion of both global tablet sales and the total hardware RIM sells, or that the discounting led RIM to take a huge writedown of nearly half-a-billion dollars on revalued inventory in December - this type of

incremental progress qualifies as full-blown momentum, and provides proof that people are still interested in the very latest BlackBerry experience. It’s also a sign of hope for RIM’s next-generation operating system, BlackBerry 10, which is a direct descendant of the PlayBook’s sleek multi-tasking software. DAY 67 March 29 Few can honestly say they didn’t see the cliff coming. Throughout March, bearish industry analysts lobbed increasingly gloomy predictions for RIM. Jefferies & Co.’s Peter Misek said the chance of a negative pre-announcement was greater than 50%. A Barclays analyst titled his RIM note, “Grim and Getting Grimmer.” On the morning of March 29, the day the company will report its fourth-quarter earnings, it’s hard to see any silver lining in the carnage. The depth of how bad things have gotten is still startling. The first real inkling comes about an hour before the earnings call, when a source tells me that a bunch of senior managers are being let go in another “big shakeup.” On the call, the company reports its results, which miss earnings estimates for the fifth straight quarter, and announces the departure of at least two senior executives. A “strategic review” of the business is promised. We learn that Balsillie, too, is resigning from the board. All this, and still no chief marketing officer appointment. (RIM will fill the position on May 8.) I am told that this veritable torrent of bad news, particularly on the earnings call, is deliberate: Get it all out now, a former RIM execu-

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tive tells me. Set a low water mark and create a positive halo around every single bit of progress from this point on, regardless of how incremental (say, a product being delivered on time, without glitches). The call is also meant to be a bit of a bridge to investors, some of whom have been clamouring for RIM to break itself apart and sell. Heins outlines on the call that his review will consider licensing RIM’s software to third parties, and when asked about selling the company, he doesn’t rule it out. “There’s no guarantee of success,” Heins says. One analyst, who doesn’t want to be identified, calls me to say with a hint of sadness in his voice: “This is the beginning of the end.” DAY 94 April 25 Shortly after noon on April 25, Thorsten Heins waits at RIM 10, in the Quasar boardroom, which sounds like it might have been named by Lazaridis. The room is identical to, but exactly one floor above, the boardroom in which we all met in late January. This time it’s just Heins, myself and Tenille Kennedy. The vista looking out over Waterloo’s quiet streets is much the same, though the snow has melted. Without prompting, Heins launches into a highly compressed summation of his priorities. He chops the table with his hand when he’s accentuating a negative point (denying reports that RIM might abandon the consumer market) and jabs the table with bunched digits, like a pickaxe, when he’s elucidating a priority (like the importance of the release of BlackBerry 10). Over

the past few months, he says, he has been busy “providing focus to the company, making clear what counts, what everybody needs to work on.” Of his company, Heins asks rhetorically, “What’s our purpose? Why are we here?” These are intriguingly existential questions from the CEO of an established company that, despite all of its problems, pulled in revenues of nearly $20 billion in each of the last two years. Heins tells me he has spent the last three months trying to figure out the answers. He’s travelled widely, meeting with employees across North America and Europe. “You see tons of BlackBerrys out there,” Heins says. He has been interacting with divisions that he previously had little contact with, such as sales. He’s met with the CEOs of many of RIM’s carrier clients, and launched a worldwide survey of BlackBerry owners analyzing how people use their devices throughout the day. From the outside, Heins says he’s hearing that people want RIM to survive, that security is still important to them. “Sharpen your saw, be good at what you’re good at,” they tell him. “Don’t let go on enterprise. This is your core.” That, of course, is the quintessential view of RIM: the security-focused corporate wireless service provider. But that doesn’t mean Heins thinks RIM doesn’t have to change structurally, in big ways. One of Heins’s great advantages is that he does not owe his career to RIM, that he sees few sacred cows among those likely coming to the slaughter. “It kind of allowed me to get a clearer view of what fits,

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and what doesn’t fit,” he says. “Think of it like a jigsaw puzzle. I kind of figured out a few pieces that I don’t need in my puzzle to be successful.” DAY 100 May 1 At 9 a.m. on his 100th day as CEO, Heins climbs another stage, this one at the Orlando World Center Marriott. It’s the annual BlackBerry World conference, and the mood is upbeat. After thanking developers in the audience for showing up, Heins unveils a new touchscreen BlackBerry 10 device, a prototype both in software and hardware. While an employee shows off the sleek functions - like a camera that lets you zoom in and wind back the frames to open a subject’s eyes - Heins looks like a father at his kid’s recital. “I’m so excited to have this in my hand and show it to you, because I know how much work has gone into it,” Heins says. As the demo continues, he can’t help himself. “I love, I love it,” he gushes. “This is so cool.” While Heins is on stage - receiving generous applause - Twitter lights up with glowing BlackBerry 10 praise. The markets open, too, but RIM’s shares begin to sink. By the end of the day, shares are down 5.8% on the Toronto Stock Exchange. Two days later, they will dip to an eight-year low of less than $12. People are trading on the fundamentals - the company’s deteriorating metrics. They’re digesting the idea that, barring a takeover or something equally dramatic, RIM has a slow, punishing climb ahead of it. If RIM is to mount a comeback, it will be based

largely on software - an area in which it has traditionally lagged. But it can be done. There was a time in North America when the Big Three automakers looked like they had rusted away; they have since clawed their way back, reinventing themselves. And if you ask Heins what RIM needs to do now to reinvent itself, he lands on an anecdote about the high-powered CEOs whom he meets with regularly. Many of them now carry two devices: their reliable and utterly indispensable work BlackBerry (the Bold is a popular model) and an iPhone they use for fun. “My job,” Heins says, is to “make them carry one device.” The question is, which one will they choose. ***** Jan. 22 Hello, my name is Thorsten... Jan. 23 RIM stock drops 9% Jan. 24 Apple Inc. announces quarterly profits of $13.1 billion (U.S.) - more than RIM’s market cap Jan. 30 RIM issues an official report that recommends separating the co-CEO and co-chairman roles. Done and done. Feb. 2 Heins meets Bay Street analysts at a Toronto steak house. The expression “all sizzle, no steak”? RIM’s delivering neither Feb. 6 Energy giant Halliburton reveals it will replace

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employee BlackBerrys with iPhones Feb. 21 RIM releases a much-needed software update for PlayBook Feb. 22 Mike Lazaridis talks to the Canadian Marketing Association about Albert Einstein and... horse manure? Feb. 29 Heins hits up Mobile World Congress, the wireless industry’s annual shindig in Barcelona. RIM “underwhelms,” says one UBS analyst Mar. 29 RIM reports terrible, terrible fourth-quarter earnings. Balsillie resigns from the board. Heins does not rule out a sale Apr. 1 York University’s Osgoode Faculty Council votes to refuse a $30-million donation from Jim Balsillie Apr. 3 RIM launches BlackBerry Mobile Fusion, a product that allows IT departments to manage non-BlackBerry devices (like iPhones) on corporate networks Apr. 4 At a BlackBerry party in London, England, a man is bottled in the neck. What does this say about RIM’s situation? Nothing. Everything Apr. 5 RIM shares hit a low of $12.53 on the same day that Apple hits a record high of $634.66 (U.S.) Apr. 22

An anti-Apple flash mob descends upon an Australian Mac store chanting, “Wake up.” RIM admits responsibility Apr. 26 Fairfax CEO and newly appointed RIM board member Prem Watsa says he sees a RIM turnaround taking three-to-five years May 1 Heins brandishes a BlackBerry 10 prototype in Orlando. While the software looks good, RIM shares dip another 6%

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Time for a bite, and little else

“I’d do the same thing if I were in their shoes,” says RIM’s German-born chief executive officer, refusing to comment specifically on Samsung, IBM or any other of RIM’s alleged suitors. “The stock price is at a certain level. RIM has a great value proposition that is still in demand ... not just given where the price is, but the potential and value of RIM in the future. That’s what drives - if it would be there, let’s assume it - that’s what’s driving the interest.” RIM’s board is of the view that a turnaround is possible, so it’s not necessary to sell the company. But the market will only wait so long to see proof, which is why Mr. Heins is in a hurry. “There’s no time for wine during lunch at the moment,” he says. He has insisted on limiting the discussion to 30 minutes, which is why I have arrived bearing coffee, which he takes black, and fresh apple strudel from Sproll’s Fine German Bakery in nearby Kitchener - a town called Berlin until anti-German sentiment during the First World War forced a change. “That’s where my wife buys bread,” he says. “It’s fantastic.” Though I have not come with the warm vanilla sauce and ice cream that are served as toppings in his native Bavaria, Mr. Heins, a lanky, 6-foot-6 man with an athletic build, rimless glasses and a stiff side part in his salt-andpepper hair, is nevertheless delighted, especially after he spies the raisins that are apparently the hallmark of fine strudel. Pastries aside, Mr. Heins has little cause to be upbeat. He probably has the toughest corporate

RIM’s CEO is in a hurry - he’s trying to get a new product to market as rivals steal his customers and takeover rumours swirl Saturday, August 25, 2012 IAIN MARLOW WATERLOO, ONT. -- TECHNOLOGY REPORTER The sky outside is ashen and rain is streaking the windows of RIM 10, one of the larger low-rise buildings that make up Research In Motion Ltd.’scampus in Waterloo, Ont. Inside a boardroom there, I am waiting for a man facing a much more fearsome storm. Thorsten Heins has a task that now seems far more difficult than it appeared when he was given it just seven months ago: to save RIM from irrelevance. Everyone knows that time is RIM’s enemy. Everyone knows about the interminable delays in its next product line, BlackBerry 10, which have cost it not only credibility but millions of potential customers. The longer it takes to get it to market, the more ground RIM loses to Apple, Samsung Electronics and other competitors. Many wonder whether the company can even survive; in the days leading up to our meeting, the media pounced on two more takeover rumours, a grim testament to how far RIM has fallen. But Mr. Heins suggests that rivals, if they are sniffing around, are doing so for a reason. He seems cheerful.

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job in the country. While he tries to counter the BlackBerry’s vast market share losses in the United States, and growing pressure from Chinese competitors, Mr. Heins is also trying to shave $1-billion from RIM’s operating expenses in part by laying off 5,000 employees, after the painful exodus of 2,000 last summer. In 2008, RIM seemed unstoppable, its stock price peaking at about $148. After several poorly received products, the shares are now $6.88. And they have fallen by 56 per cent since Mr. Heins took over in January from long-time coCEOs Mike Lazaridis and Jim Balsillie. At that price, RIM is worth $3.6-billion, less than half of Apple’s quarterly profit. For years, the company has proved that Canadian corporations can do more than extract minerals from poor countries and run safe banks - that they can innovate, disrupt and change the way the world works. Conversely, RIM’s decline has fed into paranoia about the state of the country’s competitiveness. Does Mr. Heins feel the weight of Canada’s expectations? “Yeah, and rightfully so,” he says. “RIM has proven that out of Canada you can build an iconic, global Top 10 brand, that Canada is capable of pulling high-tech technology and making it into a meaningful product. Yeah, there is this expectation out there. But, by the same token, though, there’s also a lot of support.” Those who know him describe Mr. Heins as an intense, thoughtful and demanding technologist,

a true believer in RIM who is close to his executives, has high standards and likes a good debate. He hikes and rides a BMW motorcycle, but has quirkier pursuits too: In a town hall meeting the day after he took charge, Mr. Heins told RIM employees he enjoys Formula 1 race simulations. “I’ve been in a real car, also, but that’s a different story,” he said. Mr. Heins was unknown in North America before being thrust into the CEO’s suite. He joined RIM in 2007 after a lengthy career at Siemens AG, the German conglomerate. As a senior executive there in the early 2000s, he was sent to save the company’s aging optical networking division in Asia-Pacific from cheaper upstarts. “It was an old portfolio - kind of riding this horse, riding this horse - and then the Chinese came in and, just, bam, they hit us on price, everywhere,” Mr. Heins told me previously. “It happened in [telecom] infrastructure 10 years ago with Huawei, ZTE and UTStarcom, and it’s happening with smartphones again.” Judging by the present state of the telecom infrastructure business, the analogy to smartphones is as unfortunate as it is apt. Just as Nortel Networks is now bankrupt and gone and industry stalwarts such as Ericsson and AlcatelLucent are fading, so it is with mobile device makers. Old-guard innovators like Palm, Motorola and Nokia are dead or struggling. Smartphones have become a commodity. Volume and scale matter. RIM is slashing a work force of about 16,000 employees. South Korea-based

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Samsung has around 220,000. The math is not that complicated. Lothar Pauly, who rose to become CEO of Siemens Communications in 2005, worked with Mr. Heins for about a decade, later providing Mr. Lazaridis and Mr. Balsillie a reference. Mr. Pauly said Mr. Heins gave Siemens’ optical networking group three directives: Take the lead back in innovation, become profitable again and reclaim market share. That involved “cutting heads,” as Mr. Pauly puts it. Not only was Mr. Heins’ strategy successful, it was valuable training for a similarly dire situation at RIM. Mr. Pauly, now at a venture capital firm, said Mr. Heins’ later appointment to lead Siemens’ mobile phone unit did not go nearly as well, and the unit was eventually sold. “He tried to turn it around,” Mr. Pauly said, noting the unit was likely doomed anyway. “He has seen the good days and he has seen the bad days. He’s a more balanced manager than a manager who has seen only growth.” After seven months on the job, Mr. Heins is more willing to be critical of RIM’s errors. Looking back, he says, the BlackBerry rose to prominence on four key pillars: typing, security, wireless data compression and battery life. As the company grew, Mr. Heins admits “we missed ... paradigms.” One such paradigm shift, he says, was ignoring the move to fourth-generation (4G) wireless networks in the United States. RIM’s engineers thought 4G was a fluffy marketing term and

didn’t build any devices, ending up sidelined as carriers such as Verizon mobilized vast advertising budgets to promote RIM’s rivals. Another mistake was underestimating the popularity of touchscreen phones such as the iPhone. “If you have a great touch interface, people are actually willing to sacrifice battery life ... which we thought wouldn’t happen,” Mr. Heins says. “Same thing with security. Some companies decided that, ‘Maybe I can let go on some security a little bit.’” This is what the industry calls the BYOD phenomenon - bring your own device. Corporations, banks and government departments that were once BlackBerry-only are now BlackBerry-optional. There are valuable holdouts, though. Wherever he goes, the CEO always pays attention to who’s using what phone; at a recent business conference in London, “most of them used BlackBerrys,” Mr. Heins said. “It’s all about security, reliability, typing.” Corporate and political leaders and celebrities who don’t have time for Angry Birds embody the image RIM is trying to sell: BlackBerrys are for busy people. Mr. Heins points to Jamaican sprinter Usain Bolt: Asked about his first gold medal, Mr. Bolt said he had to “thank a few people on my BBM,” referring to RIM’s BlackBerry Messenger application. But BBM, RIM’s popular messaging platform,

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is unlikely to save RIM in a world of increasingly advanced applications. For that task, RIM is relying on BlackBerry 10, software that has been delayed several times. I ask Mr. Heins repeatedly what he thinks is the best-case scenario for the company - whether BlackBerry 10 is simply meant to stabilize RIM’s global base of about 78 million users, or whether it’s intended to take on larger rivals such as Apple. “It needs to expand market share, there’s no doubt,” Mr. Heins says. “Today, let’s be frank, I’m participating mostly in the QWERTY [keyboard] market. ... I’m not really participating in any meaningful way in the [touch-screen] segment. So with BlackBerry 10, I will maintain and stay the leader in [devices with physical keyboards]. On full-touch, I’m in attack mode.” Tough words. Tough situation.

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CURRICULUM VITAE BEGINNINGS Born in 1957 in Gifhorn, Germany. Earned a master’s degree in science and physics from the University of Hanover in Germany. HOME LIFE Lives in Waterloo, Ont., with his wife, Petra, and two children, a 23-year-old daughter, Svenja, and 22-year-old son, Soren. CAREER Joined RIM in 2007 as senior vice-president of the BlackBerry handheld unit. Named chief operating officer of product and sales in July, 2011. Appointed president and CEO of RIM in January, 2012. Prior to RIM, Mr. Heins had a lengthy career at Siemens AG. PASSIONS/HOBBIES Cycling, woodworking, motorcycling, hiking, and playing racing simulation games. EXTRA-CURRICULAR Serves as a member of the board of directors of the Canadian German Chamber of Industry and Commerce Inc. VERBATIM On RIM’s strategic review “It’s prudent when you run a company like this, such an important and successful company, that you look at any options that you can to satisfy shareholder interests. This company is here to create long-term shareholder value. That’s what we’re trying to do. And there are various options for how you can get there. It’s just prudent for management and the board to consider all available options.” On rumours that RIM is being bought “You read them daily. Actually, I found it shocking how much those rumours move the stock up and down. I think it’s still a risk in our entire financial system. This is very, very short-term oriented. And sometimes it strikes me how reactive the market is to, really, just rumours.” On his CEO friends at the Canadian German Chamber of Industry and Commerce “They’re all using BlackBerry. Some of their wives had iPhones, I admit.” On BlackBerry 10 “We want to be the best tool for people to achieve their success. That doesn’t mean business. It means artists, working moms. Hundred-metre sprinters. You name it. That’s what we’ll be centring around. That’s why we had this idea of a whole new [user interface] workflow concept on BlackBerry 10, where you’re actually not ‘application aware’ anymore - you actually flow across applications and you just do what you need to do.”

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RIM bets it has salvation at its fingertips with BlackBerry 10

he drags his thumb down from the top of the screen that shows his inbox, which unveils his next appointment without changing applications. Typing, he shows how the digital keyboard on the touchscreen device predicts his words, which he flings, one by one, into his message with his thumbs. “It’s super cool,” Mr. Tear says with a big grin on his face. It’s also important to RIM’s future. The BlackBerry 10 is designed to stabilize the stunning loss of market share that the company has suffered over the past few years, particularly in the United States. Mr. Tear is one of a new crop of senior executives, along with chief legal officer Steven Zipperstein and chief marketing officer Frank Boulben, that have been hired by chief executive officer Thorsten Heins to execute that turnaround plan. They are an assortment of global wireless and telecommunications executives whose jobs are to sort out the organizational dysfunction that led to numerous delays and product glitches, fix the stodgy legal culture that sometimes hampered innovation, and craft a coherent marketing message that will make consumers want to own a BlackBerry again. Mr. Tear, taking on the COO role that Mr. Heins himself held before his promotion in January, has a crucial position on that team. Formerly with Sony-Ericsson and Sony Mobile, he has

Wednesday, November 14, 2012 IAIN MARLOW WATERLOO, ONT. -- TECHNOLOGY REPORTER Kristian Tear picks up his sleek-looking BlackBerry 10 smartphone and looks at it closely, careful not to reveal any e-mails from other executives atResearch In Motion Ltd. that might expose the company’s private information. As the newly installed chief operating officer, Mr. Tear is in charge of RIM’s vast research and development efforts, its global supply chain, and the painful layoffs of 5,000 employees at one of Canada’s few global corporate champions. His e-mails are probably pretty interesting - not to mention confidential. But the Swedish executive can’t help but indulge a request to show off the smartphone that is meant to save RIM. “Let me fire it up so it looks a bit more lively,” Mr. Tear says, opening software applications and windows on the device as he stands in the Quasar boardroom at RIM’s headquarters in Waterloo. While still in one application, he sweeps his thumb up and to the right from the bottom of the screen, showing a sneak peek of his inbox just enough to show his unread messages, and who they’re from. And then, while careful to show only Google Alerts from his Gmail account,

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seen good times and bad. “There are necessary steps to be taken, and I’ve seen them taken before,” he says. “Thorsten has a lot of experience with turnarounds, and so do I.” RIM, of course, has lost huge ground to Apple Inc.’s iPhone and devices running Google Inc.’s Android mobile software. Both rivals have annihilated RIM’s market share in the United States. Globally, Samsung Electronics is putting pressure on RIM’s growth in emerging markets, where cheaper Chinese competitors such as Huawei Technologies are coming in at the low end of exploding smartphone sectors. But Mr. Tear, who says regaining U.S. share and doing better in China are priorities, seems extremely confident, personifying a corporate narrative that has shifted gradually over the past few months from hopelessness to cautious optimism. After showing the new phones off to wireless carriers on a global road show, RIM recently said it has begun sending them off so that carriers can test BlackBerry 10 on their networks. On Monday, RIM announced that the company would hold a global launch party for the fulltouchscreen BlackBerry - as well as a touchscreen model with a physical keyboard - on Jan. 30, with commercial availability of the devices likely coming soon after. Mr. Zipperstein, who inherited a legal department that has been viewed as too controlling, comes to his new role from Verizon Communications Inc. RIM, despite its successes, has

a history of legal embarrassments - from the $612-million patent settlement with NTP Inc. to prematurely announcing that its new operating system would be called BBX, when that name was already legally held by another company. RIM’s lacklustre standing in China has also been blamed partly on legal issues, including concern in Waterloo about Chinese joint ventures and local partnerships that might threaten RIM’s lucrative, existing business with securityconscious governments, according to some former executives. “We’re going to do everything we can to help make RIM the easiest company to do business with,” Mr. Zipperstein said, stressing that the department was now operating under four official buzzwords: urgent, efficient, practical and creative. RIM (RIM) Close: $8.40, down 41¢

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T H E G LO B E A N D M A I L P r e s ent s : rim: tHen and now

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