The SMS 2.0 plan was a throwback to RIMs move a decade earlier to form partnerships with mobile providers and share revenues. It was a chance to make BBM the dominant chat messaging service, and would have created a new story for the BlackBerry brand.
A few carriers responded positively to Mr. Balsillies initial entreaties and by mid-2011, he was calling SMS 2.0 the companys top strategic priority.
To round out the strategy, and build a suite of cross-platform services, RIM made a few acquisitions, such as instant messaging firm LiveProfile. The service had about 15 million users and worked on Apple and Android devices, giving BBM the entrée it needed to those platforms.
But the plan deeply divided the company. BBM was still an important driver of BlackBerry sales. Making it widely available to competitors represented an added threat to RIMs faltering handset business, led by Mr. Heins at the time. Many inside the company felt a cross-platform BBM made sense, but only when BlackBerry 10 was out. Mr. Balsillie and proponents of his plan felt that would be too late.
Its fair to say [the risk to handset sales] was a shared concern of everybody I spoke to, said former RIM executive Mr. Spence. But it was hard to deny the fact [carriers text messaging] revenue was declining. These carriers were looking for a solution and this was a potential solution.
One former executive felt Mr. Balsillie was overestimating the revenue potential of his software-driven strategy. As Mr. Balsillie talked up SMS 2.0, Mr. Heins and his team increasingly cast doubt on it internally. He was absolutely canvassing behind the scenes working to kill it, said one company insider.
As for Mr. Lazaridis, he was supportive of launching BBM for rival operating systems, but was concerned about the costs and risks involved in building out the SMS 2.0 strategy, said a source close to the board. We werent in a position to be investing in free services that required massive capital expenditure [and could provide] zero payback for maybe a few years if were successful, the source said. Like others, Mr. Lazaridis worried about handset sales.
But Mr. Balsillie was increasingly convinced that SMS 2.0 was the way to go. After pitching the plan to CEOs of 12 of the largest wireless carriers in the world in late 2011, he believed he could sign up at least one major U.S. carrier insiders say AT&T was interested as well as Telefonica and one or two other European carriers. Thats all it would take, he felt, to convince others to adopt BBM en masse.
But other RIM executives who were part of the growing SMS 2.0 team also encountered resistance.
Mr. Balsillie was pushing to formally launch SMS 2.0 at an industry conference at the end of February, 2013. But with the company under mounting pressure to overhaul its top leadership, he and Mr. Lazaridis handed the reins to Mr. Heins in late January.
A few weeks later, Mr. Heins killed the SMS 2.0 strategy, backed by Mr. Lazaridis.
We had to get the BlackBerry 10 out, and we couldnt be distracted, said a source close to the board. Everything else was shelved. And if that meant getting rid of strategies that didnt fit, or werent complete, or required resources, I think [Mr. Heins] did the right thing.
