Surprise Hits: BlackBerry -- the phone nobody knew they couldn't live without

If imitation is the highest form of flattery, then the executives of Waterloo, Ontario–based Research In Motion (RIMM) have been blushing for a decade. Since the company first released its BlackBerry handheld device in 1999, it has competed against a growing army of handset developers, including Motorola (MOT), Nokia (NOK), Palm (PALM), Google (GOOG), and Apple (AAPL), that all want to create smartphones that mimic the BlackBerry.

It wasn't always like this. When RIM's electronic organizer and e-mail device first came on the market, no one knew why they needed one -- but everyone quickly realized they couldn't do without one. While most business types who needed to be in constant touch already had two-way pagers, the BlackBerry allowed them to be more efficient: to answer their e-mails while getting lunch, waiting for a flight, or going to the restroom. It was also easier than lugging around a laptop.

At the core of its success was BlackBerry's server software, which was synced with corporate internal e-mail systems and was based on "push" technology, which continuously routes e-mail to the handset. Other handhelds used the more cumbersome "pull" technology, which required users to log onto a site and download their e-mail. In addition, the BlackBerry later offered wireless data and voice services available from most major wireless network providers.

As the BlackBerry became a must-have device in companies around the world, co-CEOs Jim Basillie and Mike Lazaridis quickly turned their focus from Wall Street to Main Street. But cynics, who couldn't see why consumers would need such a device, forecast the demise of the BlackBerry. Forbes magazine warned in November 2000 that "bigger rivals threaten to eat BlackBerry alive" and went on to say that "you can practically hear the lip-smacking over at Motorola," which had just rolled out a translucent cobalt blue two-way pager called Talkabout T900.

But the only lips that were smacking were those of the executives at RIM. With slick TV ads, a strategy of licensing its software to competitors, distribution ties with hundreds of phone carriers around the world, a big push to promote consumer applications, and more sophisticated business applications, Research In Motion managed the unthinkable and quickly nudged ahead of Motorola and Nokia to become the leading provider of smartphones in the world -- used by everyone from high school students to Wall Street executives alike.

What does the future hold for the BlackBerry? A lot more flattery. While cell phone sales are expected to fall by 10 percent this year, sales of smartphones will rise by 13 percent with strong players such as Nokia, Samsung, Palm, Google, and Apple -- all trying to create their own BlackBerry killer.

Nikhil Hutheesing is an editor at dailyfinance and writes about wireless. But he is still waiting to get his first BlackBerry. You may follow him on Twitter at Nikhil212

Be sure to check out all 20 recent products that became Surprise Hits.


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