Blackberry vs iPhone | App Attack | 3

Hey, business wars fans, have you heard? Audible subscribers can listen to new episodes of business wars early and ad-free. Right now, join Audible in the Audible app, or by subscribing on Apple Podcasts. Summer 2008, Waterloo, Canada, Mike Lazaridis stands inside a small lab with concrete floors and exposed pipes. Wires hang from the corrugated steel ceiling. This is the place where research and motion puts its products through wacky experiments. He watches as an industrial-sized tumbler is filled with the latest Blackberry model. A member of the quality control team starts talking. So at this station, we're testing the phone's ability to withstand horizontal impact. Lazaridis nods. The phone currently being tested is the storm. Rims all glass touch screen device. He's got a lot riding on this model. It's supposed to be Rims' answer to the iPhone. The phones inside the tumbler fly into the air and smash into the edge of the containers. Lazaridis winces, but isn't too concerned. You expecting people to be putting their phones and blenders or something? The employee gives him a look. Well, other Blackberry models survive that test, but Lazaridis cuts him off. What other tests are you doing? The employee leads him to the next station. Here we have the vertical drop test. A handful of storm models are being held above the floor by robotic arms. The quality control employee presses a button. The phones drop to the unforgiving cement floor. Every single one of them shatters. Lazaridis steps closer for another look. He frowns as he stares at the shards that litter the floor. Oh, this looks bad. Blackberries are known for being indestructible. They were made with hearty metal, plastic, and quarry keyboards. A sales rep used to throw it on the floor to show clients how unbreakable they were. But not the storm. This model has an all-glass face with no keyboard. Lazaridis can't believe what he's seeing. He's got a brilliant team. He's sick and to see that they created such a flimsy phone. As you can see, the new phone repeatedly fails test grades. Lazaridis straightens up. Well, that's because these machines are too rough on it. These phones are going to be handled by people not robot arms. We need to test them with real people. The employee starts to protest, then thinks better of it. I'll find some human test subjects. Lazaridis walks out of the lab. Confident that human users won't be anywhere near as rough as robots. But the phone does survive human fingers. Storm may have weathered this test. But dark thunder clouds are gathering on the horizon. If you win your first $5 lineup, you'll get $150 in lineups. On prize picks, you simply pick two to six players, pick more or less on their staff projections, and submit your lineup. Then, sweat it out as you watch your picks play out live. It's the best way to get more locked in on game day. Make all the picks you want. 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Upgrade to a powerful clean without anything extra. Look for 7th generation dish soap and laundry detergent wherever you shop for your cleaning products. From Wondery, I'm David Brown and this is Business Wars. In the last episode, Steve Jobs and Apple delivered a game-changing touchscreen phone that put email and iPod and phone capabilities all in one device. Now, Lazaritas and his co-CEO Jim Balsely are pressing their team to come up with their answer to the iPhone. If that were the only challenge, that would be enough. But while RIM was working to match iPhone's last iteration of the phone, Apple is about to open up a new battlefront, one that RIM is not even dreamed of. This is Episode 3, App Attack. Late 2007, a large-glass conference room at Apple Park in Cupertino, California. Dressed in his signature black turtleneck in jeans, Steve Jobs looks around the table at his board members. Well, thank you everyone for being here. As you all know, we're planning to release the second model of the iPhone next summer. It'll be fully compatible with 3G and we're very excited to make the shift. People have been loving surfing the web on our phones and now it'll be way faster. The board members nod, please, but eager to hear what comes next. They know customers have been smitten by the iPhone because of the ease of browsing the internet on them. Browsing on the blackberries is slow and cumbersome. We sold nearly 1.5 million iPhones in 2007 and were aiming way higher with the new model. Jobs clears his throat and then plunges in. Now, I want to talk about apps. I always thought the killer app of the iPhone should be the phone itself because I was so damn tired of calls dropping and we've done that. As you know, I've opposed developers making apps for our products. I worried that apps would mess up the iPhone, but art has been quite persistent and I'm coming round to the idea. I want to hear what you think. I'll let art explain his perspective. Art Levinson, a biotech executive, turned Apple board member nods. I've been bugging Steve for a while about apps. Honestly, the phone is a thing of beauty. But I think the future of the phone, in fact, the company, is in the apps. The board members glance at each other. There's a fleeting feeling of worry, but mostly they're excited about what comes next. Levinson has their full attention. I'm talking about different applications. Tools that solve problems are make using the phone more fun. Say, a map or a game. The key is to give the users applications they may not even know they want or need yet. And to do that, we crowdsource the apps. Levinson gives them a second to absorb what he's telling them. He knows while some are keen to push boundaries. Others see this as opening a Pandora's box of problems. If we crowdsource developing apps, and by this I mean allowing other outside developers to create software, we'll expand the universe of apps exponentially. The board members not along, as Levinson continues. Outside developers can make all sorts of programs more than we'd ever be able to make on our own. And there's a clear demand for it. We've already seen hackers jailbreak the iPhone and start building their own apps for it. This is an opportunity to take that demand and channel it. Some board members nod. A venture capitalist named John Doerr speaks up. I completely disagree. We should be building the apps ourselves. Why would we allow apps to be developed by outsiders? It would dilute our brand and spawn competitors. Levinson speaks up again. Think of the potential scale of this thing. I'm talking thousands, maybe millions of apps. We'd never be able to reach that. I just know customers are going to love the variety, and it'll draw them to buy our phone. Jobs nods. They'll do things we never would have thought of. It's not like we'll just allow any app to be used. We'll make sure Apple has final say in what goes in the store. No poorener any of that stuff. Oh, absolutely. Another board member speaks up You could make sure that all the apps are tested and approved by your own guys Jobs nods again Another board member pipes up Well, you already have the iTunes store, right? Why don't make a version of that a sort of app store that way all the apps are centralized Door frowns. Are we just going to let them use our platform for free? I mean, we're giving them access to all iPhone users. Why would we just give away such jobs in erupts? We could charge developers or work out some sort of revenue sharing. Maybe we take a cut of any sales the app makes Levinson snaps his fingers Exactly think of these apps and the app stores another revenue stream. It becomes passive income for Apple It's a win-win for outside developers and us and the users Jobs has heard enough All right, we're officially opening up the iPhone for apps Despite some board members concerns Jobs team quickly gets to work readying the iPhone for apps It's another gamble the jobs hoax will pay dividends March 2008 a dark auditorium on the Apple campus Steve Jobs stands on stage with a giant image of the iPhone on the screen behind him Also on the screen are icons of existing apps messages calendar photos camera weather and notes He's just announced that the iPhone's new version 3G will go on sale in July and Now he's hitting the next major news item, so you're a developer and you've just spent two weeks or maybe a little bit longer Writing this amazing app and what is your dream your dream is to get it in front of every iPhone user But jobs and his audience knows that the hard part is getting the app in front of users Well, we're going to solve that problem for every developer, and the way we're going to do it is What we call the app store? Just then the screen behind him disappears Up pops a square blue icon with a big A on it Jobs explains that the app store is an application written to deliver apps to the iPhone apps that can be made By anyone including the people sitting in his audience By giving developers access to iPhone users Apple will keep 30% of any revenues made by the apps What a developer wants to distribute their app for free. There is no charge for free apps at all There's no charge for you the crowd breaks into applause Allowing free apps in the app stores a huge boon for developers who want to make fun and accessible products Having access to iPhone users is an even bigger deal His audience is ecstatic before jobs has even finished his keynote. The first patent for an app has been filed When Apple publicly launches the app store developers flood it with apps Apple's bet pays off Now people want the iPhone not just for ease of use, but the cool and silly apps that are catnip for users Apps are the latest topic of conversation from late-night talk shows Workers compare apps over the water cooler The app store quickly boosts sales of the iPhone Meanwhile over at rim Lazaritas and Jim Balsali would be worried about Apple's panoply of apps If they didn't have a bigger fire to snuff out And if they don't do it quickly It will soon enough engulf them Spring 2009 Verizon headquarters in basking Ridge, New Jersey Balsali tugs it his collar He looks across the table at the grim faces gazing back at him He's here to meet with Verizon's executives about storm the phone they released to the public a few months ago It was a touchscreen phone that could text call email and browse the web But it didn't have any apps But that's the least of their problems Verizon's chief marketing officer John Stratton kicks things off Jim we've been experiencing sky high returns on storm Users have said they found the clickable screen unresponsive And we're hearing that it's unbearably slow Well you know some teething problems are to be expected with new technology Stratton's expression darkens These aren't just teething problems Jim Virtually every single one of the first batch of storms you ship needs to be replaced I'm talking about one million phones Balsali's jaw draws He knew they fumbled storm but he hadn't realized it was that bad Balsali starts to protest But John come on now that's ridiculous Stratton cuts him off You're gonna make us whole on the money we've spent fixing your storm product problems Or we'll revisit our whole supplier relationship with you This is your responsibility We expect you to step up because this is your fault not ours Balsali box But he knows rim can't survive without Verizon Question is whether this relationship is salvageable How much are we talking? We need 500 million dollars Balsali's eyes widen a figure that big would entirely wipe out rim's profit for the quarter There's no way he can afford it I can't write a check like that come on now be reasonable What if we offer free repairs and upgrade programs and a whole slew of complimentary blackberries Stratton grimaces It's not what he wants But he knows that Verizon is stuck with the units it's already committed to buy from rim Balsali keeps going Look John we're gonna make things right and fix this with you guys You've been great partners over the years And we want to continue to be good partners to you The pair reluctantly shake hands And rim goes about replacing the one million busted phones The fix costs rim 100 million dollars But it's still better than being out 500 million Balsali heads back to Waterloo Lazaridas knuckles down on developing the new and improved storm two Verizon commits to selling storm two because it's still in a contract with rim But when storm two launches in October 2009 It isn't much better rims sales start plummeting In the fourth quarter of 2009 they miss their target sales goal by more than 650,000 units No one wants storm or storm two rims sales figures are in a tail spin It's spring 2009 in the Apple Design Studio Johnny Ive Apple's industrial design chief leads Steve Jobs over to a large table covered with a velvet cloth Ive grabs one end of the cover and quips it off with a flourish Revealing 20 different size touch screen devices Jobs smiles at the sleek array of devices They're bigger than the iPhone but not quite as big as a laptop All of them are rectangles with curved edges But they have varying heights and widths Jobs picks up one of the tablets and begins swiping Hmm, I like this one. It feels like a good size Ive peers over him. Ah yes, that's the 9.7-inch screen a four to three aspect ratio Jobs nods He's been meeting with Ive every day for the last few months to work on this new project It takes the multi-touch technology of the iPhone into a big screen He's calling it the iPad This is looking good Johnny. How's the app store coming along on this thing? Ip picks up a different size device and navigates to the app store icon It's great. I think people are going to love using apps on the iPad even more This is perfect for reading books on drawing taking notes any number of work related things Jobs nods The app store has been a huge success by January 2009 only six months after the app store launched There were already 15,000 apps for download and users downloaded them a whopping 500 million times Jobs knows that apps are drawing users to the iPhone It's only a matter of time before they bring users to the iPad Hmm, that's good. I can see this appealing to business people and to students Ive nods in agreement. So shall we go with this size then Jobs looks at the tablet in his hands one last time Yes, this is the one They put the iPad into production and that spells more bad news for rim The iPad is perfect for making presentations in meetings Armed with the iPad Apple is coming after rims core business, companies. And that would be bad enough, but RIM is also under attack from its partner, Verizon. RIM has failed to give Verizon an iPhone killer, so Verizon doesn't put as much marketing behind Storm 2. Instead, Verizon throws money behind a phone that's about to create problems for Blackberry and Apple. Being a serious business owner takes hard work, patience, and a drive to keep moving forward. So it's important to find a serious business card that goes the extra mile. With a Venture X business card from Capital One, you earn unlimited double miles on every purchase, and with big purchasing power, you can spend more and earn more. This is your sign to take your business to the next level. The Capital One Venture X business card. What's in your wallet? Terms apply. See Capital One dot com for details. With the Venture X business card from Capital One, you earn unlimited double miles on every purchase. Plus, big purchasing power means you can spend more and earn more. Terms apply. January 2010, Apple HQ in Cupertino, California. Jobs strides across a stage in front of his employees, looking down and not speaking. It's the company's regular town hall. Employees are expecting to celebrate the iPad, which he just announced a few days ago to great acclaim. When Jobs lifts his head and faces the audience, he looks slightly irritated. He opens the floor up to questions. When Employee raises his hand, Jobs points at him. Yes? I wanted to ask what you made of the Android phone that Google just released. The employee doesn't know it, but he's just touched the raw nerve that is the source of Jobs irritation. Apple's Nexus 2, and Verizon is heavily promoting the phone. They'd been hoping someone would ask about it. Jobs eyes flicker with anger. We did not enter the search business. They entered the phone business. Make no mistake. They want to kill the iPhone. We won't let them. Google was an early partner with the iPhone. The first iPhone came fitted with Google Maps. Now, Google and Apple have fallen out. Jobs keeps going. We are going to deliver aggressive updates to the iPhone. Android and Google won't be able to keep up. Another employee asks a question on another topic, and Jobs begins to answer. But he can't let Google go. I want to go back to that other question first and say one more thing. Google's company motto, don't be evil. It's ****. At the moment, BlackBerry feels like it's in Jobs' rearview mirror. But Google? Well, that's another matter. They do have the engineering power and the money to put a hole through Apple. February 2010, a hotel meeting room in Barcelona, Spain. Lazaritas looks around the bland business center. He's with a slew of rim executives and Verizon heads for the phone industry's big annual convention. Verizon had already told handset makers that it's investing billions of dollars into the latest network technology, 4G. Verizon wants its suppliers to be ready. But Lazaritas doesn't have a 4G prototype to show them. Instead, after some pleasantries, he launches into a lesson. I want to take a moment to educate you all on 4G and the shortcomings of the technology. I don't think Verizon can pull off its 4G plans. It'll be difficult to upgrade the network because the existing technology doesn't support it. That means suppliers will have to heavily invest to develop it. The Verizon team exchange impatient looks. There are rims, minis, stumbles. They can hardly believe this is his move. Lazaritas doesn't notice and keeps going. Blackberry works perfectly well on 2.5G. Any upgrade to the network is costly, complex, and takes time. From a value proposition standpoint, 4G just doesn't make sense. When he's done, Verizon's marketing vice president, Jeff Dietle, speaks up. Respectfully, we've made our decision. Lazaritas's brow furrows. He looks confused. Dietle continues, "I don't think you realize quite how far along we are. We will be launching 4G and heavily promoting 4G phones. It's what customers want, and it's what we're going to give them. So do you have a 4G phone to show us or not?" Lazaritas is stumped. One had been working on a 4G phone, but Lazaritas was disappointed in its battery power. Fearful of presenting yet another substandard product, he had stopped the project. "No, we don't. Well then, thank you for your time." With that, the Verizon executives get up and leave the meeting. Lazaritas realizes he's made a huge mistake. With Storm, they try to play catch-up with Apple and failed. But by not making a 4G phone, Rim has taken itself completely out of the running. On the next episode, Rim gets a lifeline when a cheaper version of its phone begins to do well in the developing world. To hold on to its dominance, Apple will have to fight both Rim and Google. From wondering, this is Episode 3 of Blackberry vs. iPhone for business wars. A quick note about recreations you've been hearing in most cases we can't know exactly what was said. Those scenes are dramatizations, but they are based on historical research. I'm your host David Brown, Natalie Robomed wrote this story, "Giaran Low is our senior producer and editor, edited and produced by Emily Frost, sound designed by Kyle Randall. Our producer is Dave Shelling. Our executive producers are Jenny Lauer Beckman and Marshal Louis, created by Ernan Lopez for "Wondering." James Arthur Ray was a charismatic self-help guru, who promises followers a path to wealth and enlightenment by becoming the best versions of themselves, but not all who followed him finished their journey. After Ray appeared on Oprah, thousands flocked to his events, but what many people didn't know about were his more extreme methods. Methods that push his followers to their limits, giving some the transformative experience they envisioned and killing others. For the Best Bingeable Series, like the one I just told you about, listen to the Audible True Crime Podcast wherever you get your podcasts. Global subscribers can get all episodes early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts.