But then came a new generation of competing smartphones, starting with Apple's iPhone in 2007. The BlackBerry, that game-changing breakthrough in personal connectedness, looked ancient suddenly.
Although BlackBerry was once Canada's most valuable company with a market value of $83 billion in June 2008, the stock has plummeted from more than $140 a share to less than $9, giving it a market value of $4.6 billion, just short of Fairfax's offer.
Anaylsts say that although BlackBerry's hardware business is not worth anything, its service business and patents are still valuable. At the end of the second quarter, the company also had total cash and investments of about $2.6 billion and no debt.
The deal follows a $7.2 billion offer that Microsoft Corp. made this month for the phones and services business of another troubled phone maker, Nokia Corp.
Fairfax head Prem Watsa, who owns 10 percent of BlackBerry, stepped down as a board member because of potential conflicts when BlackBerry announced it was considering a sale last month. The company would no longer be traded publicly once the sale goes through.
"We believe this transaction will open an exciting new private chapter for BlackBerry its customers, carriers and employees," Watsa said in a statement. "We can deliver immediate value to shareholders, while we continue the execution of a long-term strategy in a private company."
Watsa is one of Canada's best-known investors and is founder of Toronto-based Fairfax Financial Holdings Ltd. BlackBerry founder Mike Lazaridis recruited Watsa to join the company's board when Lazaridis and Jim Balsillie stepped aside as its co-CEOs in January 2012.
BlackBerry shares plunged 17 percent after the company announced Friday a loss of nearly $1 billion and layoffs of 4,500 workers. It gained 9 cents, or 1.1 percent, to $8.82 Monday.
BlackBerry said the general terms of the deal have been approved by its board and a special committee set up to look at options. The company said it will negotiate and execute a definitive transaction agreement with Fairfax by Nov. 4.
During that time, BlackBerry is entitled to continue to find other buyers, but if BlackBerry backs out of the deal, it would owe Fairfax about $157 million.
"The special committee is seeking the best available outcome for the company's constituents, including for shareholders," BlackBerry chairwoman Barbara Stymiest said in a statement.
Watsa is likely to keep current CEO Thorsten Heins in the job. He said in April that he's a big supporter of Heins and has called his promotion the right decision. He also said he's excited about the company's new BlackBerry 10 operating system.
This year's launch of BlackBerry 10 and fancier devices that use it was supposed to rejuvenate the brand and lure customers. But the much-delayed phones have failed to turn the company around. At their peak in the fall of 2009, BlackBerry's smartphones enjoyed global market share of more than 20 percent, says Mike Walkley, an analyst with Canaccord Genuity. That is now just 1.5 percent.
BlackBerry said Friday that it will lay off 4,500 employees as it tries to slash costs by 50 percent and shift its focus back to competing mainly for the business customers. That will bring its global headcount to 7,000. The company cut 5,000 jobs last year.
A week earlier than expected, BlackBerry surprised the market by reporting Friday that it lost nearly $1 billion in the second quarter. The company is booking over $900 million in charges to write down the value of its unsold smartphones.