Research In Motion's prolonged BlackBerry outage last week was a nightmare for the company, which is struggling to compete with Apple's iPhone and Google Android phones in the market.
The core switch failure that rocked Research In Motion (NASDAQ:RIMM) and left its millions of BlackBerry
users with slow or inaccessible email for up to three days could have cost the
company as much as $350 million, or one month of subscriber fees, according to
financial analysts.
RIM's infrastructure went haywire Oct. 10 in its Slough,
U.K., data center, only to have it spread across Europe, the Middle East,
Africa and Asia, and now includes Brazil, Chile, Argentina, Canada and the
United States. Service was fully restored across all countries by Oct. 14.
RIM declined to out the core switch manufacturer, noting
that it "works with multiple vendors and it is premature to discuss root
cause until a full analysis has taken place."
Declining to throw its gear makers under the bus may be
one of the few things the company did right in handling the situation.
Noting that
RIM's user base is questioning RIM's traditionally rock solid reliability, Jefferies
& Co. analyst Peter Misek said RIM may lose as much as $350 million (but
probably less), as RIM has over 70 million subscribers with an average monthly
fee of $5.
"We believe refunding more than a month's worth of
fees is unlikely," Misek said. Moreover, any monies paid would seem to be
inconsequential in light of the damage to the company's brand worldwide.
"In
our view, this opens the door to competitors as corporate CTOs and IT
departments may now be more open to explore other options besides the
BlackBerry standard," Misek added.
That's good news for Apple's iPhone and Google Android
handsets, which are already gaining traction in the enterprise. Misek
said RIM's new BlackBerry OS 7 handsets, the 9900 and 9930, are already seeing
slow sales in October after early adopters purchased those phones in September.
It doesn't help that Apple is offering
its 3GS iPhone free on contract, or that low-cost Android phones are rising up
worldwide to nibble at RIM's subscriber base and market share.
"While no time is a good time for a massive system
failure, the time of this failure given RIM's position in the current market
with dropping market share and everyone looking at them with a magnifying
glass means that this failure has much higher visibility than it might have
gotten a couple of years ago," industry analyst Jack Gold told eWEEK.
Still, Forrester Research analyst Stephen Mann said RIM
couldn't have mismanaged customers' expectations more poorly if it tried.
"Communications have been lacking and one could
argue that their tone has been terse--a far cry from customer-focused," Mann wrote on his corporate blog. "Surely the modern service-savvy customer, whether
corporate or not, is not prepared to be treated in this way. In many ways, RIM
has not only now fully opened the front door to its competitors it has also
invited them in and provided them with a pipe and slippers."
Against this black backdrop, RIM will soldier on and host
its BlackBerry DevCon Americas conference, starting Oct. 18 in San Francisco.
Susquehanna
Financial Group analyst Jeffrey Fidacaro said RIM is expected to launch a major
upgrade to its QNX operating system, the platform behind the BlackBerry
PlayBook and the company's forthcoming "super" smartphones, as well
as the QNX developer platform.
This upgrade, already delayed from its intended summer
launch, will bring native BlackBerry email, contacts and calendar applications
to the PlayBook and sync them with BlackBerry Enterprise Server. Consummation
of this engineering feat will let analysts know just how credible is RIM's plan to
port QNX to smartphones in early 2012.
It will also signal to potential acquirers that RIM can
handle the technology integration between BlackBerry and QNX, added
Misek, noting that Microsoft, Facebook, Amazon and others may be looking at RIM
as a target.
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