How Apple’s iPhone and Google’s Android Left BlackBerry in the Dust

Update 5 p.m. December 15 — Research in Motion reported disappointing third-quarter results Thursday after the close of the stock market. Earnings plummeted 71% to $265 million, from $911 million one year ago, though much of that drop was attributed to a $485 million pretax charge due to the company’s large inventory of unsold PlayBook tablets. Overall sales fell 6% to $5.17 billion, down from $5.5 billion one year earlier.
With the dramatic rise of Apple‘s iPhone and Google’s Android devices, it’s easy to forget that just a few years ago BlackBerry was the premier smartphone on the market and a veritable status symbol. Regular people didn’t have BlackBerrys, it seemed, only Wall Streeters, corporate lawyers, and Capitol Hill staffers. The BlackBerry sent a message: “I’m so important that I need to be available by email around the clock lest any crisis break out that requires my immediate attention.”

Times have changed. As BlackBerry-maker Research in Motion prepares to report its latest financial results after the stock market closes Thursday, the device once so ubiquitous in business circles that it gained the moniker “CrackBerry” has been eclipsed. How did happen? In short: innovation, execution, and a near-maniacal focus on the user experience. While RIM was resting on its laurels atop the corporate mobile market, Apple and Google were laser-focused on the consumer market, which they correctly predicted would drive smartphone adoption. But whereas RIM saw the BlackBerry as a fancy, feature-rich mobile phone, Apple and Google envisioned a powerful mobile computer, and worked to make the experience of sending email and browsing the web as consumer-friendly as possible. And crucially, both companies understood that the key to mass adoption would be to create a platform on top of which developers could create applications. Hundreds of thousands of apps are now available for the iPhone and Android devices.

(MORE: 5 Money-Saving Credit Card Tricks for Travelers)

Today, Google and Apple account for a combined 71% of the U.S. smartphone market, and 83% among users who have downloaded “apps” over the last 30 days, according to new data from research firm Nielsen. As recently as 2009, RIM’s BlackBerry was still the top smartphone. Today, BlackBerry market share stands at 17%, well behind Android, which leads with 44.2%, followed by the iPhone, with 28.6%.

Palm and Research in Motion, the companies that pioneered the smartphone revolution, have been left in the dust. Palm no longer exists as an independent company. (It was purchased by HP in 2010 for $1.2 billion.) RIM, for its part, is in dire straits: the company is losing market share, facing calls for new leadership, and suffering embarrassing episodes such as the recent incident in which two company executives were arrested after a drunken melee aboard an international flight.

RIM’s collapse has been particularly dramatic. The company’s stock price has fallen a staggering 75% over the last year. So it’s no surprise that the company faces calls for a change at the very top of its business. RIM has a somewhat unique management structure, with Mike Lazaridis and Jim Balsillie both sharing the roles of CEO, titles they have held for 27 and 19 years, respectively.

(MORE: How to Know When the Euro Crisis Reaches a Tipping Point)

Jaguar Financial, an activist shareholder group which says it represents RIM investors who hold 8% of the company’s stock, has demanded that Lazaridis and Balsillie be shown the door, and that the company put itself up for sale, either as a whole entity, or in parts.

“At this point we believe investors have lost faith in the ability of the RIM management team to carry out a proper game plan to restore value,” Jaguar CEO Vic Alboini said in a statement. “Unless the independent directors push to replace management or change RIM’s strategic focus, Jaguar believes that the road map to value restoration lies in a sale of RIM whether as a whole or in separate parts.”

Investors will get a chance to take the measure of RIM when the company reports its quarterly earnings numbers Thursday evening. If recent history is any guide, the results will be bleak, and will only fuel calls for new leadership.