BlackBerry crash ‘may sink RIM’

File picture: Enny Nuraheni

File picture: Enny Nuraheni

Published Oct 13, 2011


The widespread outage of BlackBerry’s messaging and browsing services this week could deal the smartphone brand’s Canadian parent, Research In Motion (RIM), “a fatal blow”, according to telecoms analysts.

The outage of BlackBerry’s data service on Monday and again on Tuesday was undoubtedly an embarrassment for the company, which is fast losing market share to competitors in the global smartphone segment and faces corporate action instituted by a dissatisfied shareholder.

RIM’s South African office has declined interviews, saying the company would not be commenting at this stage.

Arthur Goldstuck, the managing director of World Wide Worx, said: “I don’t believe it will kill BlackBerry but it might deal a mortal blow to RIM. It also gives Jaguar (Financial Corporation, RIM’s shareholder) the ammunition they need to force through a change of leadership.”

Craig Cartier, an analyst at global research firm Frost & Sullivan’s UK office, said: “RIM has had network outages in the past, but those have not been as far-reaching as this… the timing does not work to RIM’s favour.

“As Apple and Android smartphones continue to cut into RIM’s market share and enterprise players begin to see those manufacturers as viable alternatives, RIM can ill afford credibility- and reliability-damaging episodes such as the present outage.”

The outage disempowered about 2 million BlackBerry users in South Africa from their Facebook, internet and e-mail connections and free messaging service popularly known as BBM, which are routed on an independent network through RIM’s main centres in Canada and England.

The phone dialling and SMS services, managed by cellphone network operators, remained active.

The system crash was caused by a core switch failure in RIM’s infrastructure, RIM said in a statement issued worldwide. Clients were affected in Europe, the Middle East, Africa, India, Brazil, Chile and Argentina.

Goldstuck said analysts had valued RIM’s shares at $40 (R316) each but they were trading at half of that. “Now is certainly a good time to buy shares in RIM,” he said.

BlackBerry’s messaging platform had become less of a differentiator than in the past, Cartier said.

“Users (are) looking more to intuitive user interface designs and strong applications, two areas where RIM has lagged. In addition to this, employees are more often clamouring for choice in their enterprise devices, and thus enterprises are more closely considering alternatives to RIM.”

He said RIM had taken steps to catch up through its acquisition of TAT to improve user interfaces and acquisition of the QNX operating system used in BlackBerry Playbook tablet and future RIM smartphones.

“The question is will these moves be too little, too late,” Cartier said.

RIM’s competitors, Apple, HTC and Samsung, were expected to target the enterprise space, taking advantage of its weaknesses.

He added: “Of note, Windows (and its Nokia partner) may see the enterprise space as a strategic target, as the Windows brand has struggled to gain traction with consumers. Opportunities for deep software integration with productivity applications like Office may offer Microsoft an opportunity to differentiate in this space.”

Mvelase Peppetta, the staff writer for technology analysts Memeburn, said BlackBerry was a market leader in South Africa, accounting for about 70 percent of smartphones, followed by Samsung and Nokia. - Asha Speckman and Sapa

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