Apple scores over Blackout

Unexpected boost: A white Apple iPhone 4S. Sales of the new iPhone, the fifth generation of the iconic smartphone, will likely rise thanks to disillusionment over Blackberry's crash, say experts. Picture: Reuters

Unexpected boost: A white Apple iPhone 4S. Sales of the new iPhone, the fifth generation of the iconic smartphone, will likely rise thanks to disillusionment over Blackberry's crash, say experts. Picture: Reuters

Published Oct 17, 2011


Hugo Miller

Research In Motion Ltd, struggling to recover from one of its worst BlackBerry service disruptions, may see more defections as the snag gives users another reason to turn to Apple Inc’s new iPhone, which hit stores on Friday.

The disruptions will trigger some BlackBerry customers to switch to Apple, particularly as the Cupertino, California-based company begins cutting the price of older iPhone models, said Matt Thornton, an analyst at Avian Securities in Boston.

“The timing is absolutely awful,” he said. “RIM is doing some of Apple’s work for them.”

The data failures come at an inopportune time for Ontario-based RIM. It is fending off investor demands for fresh management while trying to move the entire BlackBerry lineup on to a new operating system to stem market-share losses to Apple and devices that use Google Inc’s Android software. RIM also said it would study compensation for the disruption after some wireless carriers offered refunds to BlackBerry users.

In South Africa, the country’s consumer champion, Mamodupi Mohlala, said people were free to sue Vodacom, MTN and Cell C for their losses in business incurred as a result of the service interruption. Numerous communication experts said South Africa’s cellphone companies mishandled the communication crisis by not communicating sufficiently.

Three days after the smartphone’s data delivery first began failing in Africa, Europe and the Middle East, RIM co-chief executive officer Mike Lazaridis apologised to customers in a video posted on the company’s website before joining co-CEO Jim Balsillie on a conference call to answer reporters’ questions.

“We’re very concerned,” Balsillie said when asked about the possible impact of the disruptions on phone sales and what RIM was doing to minimise it. “Nobody’s gone home since Monday.”

Apple and carriers AT&T Inc, Verizon Wireless and Sprint Nextel Corp started selling the iPhone in their stores on Friday. Apple said this week that it received more than one million iPhone pre-orders on the first day, a record.

BlackBerry subscribers across most parts of the world, including the US and Canada, lost data services after a network failure in the UK halted messaging and web-browsing. Balsillie said on Thursday that had been fully restored globally

The disruptions resulted in outrage from customers on online messaging boards and Twitter.

“When you hear people saying online they’re hating their BlackBerry device right now, that’s going to be top of mind to the consumer going into a store to buy a new phone,” said Neil Bearse, who teaches digital marketing at Queen’s School of Business in Kingston, Ontario.

Patrick Spence, RIM’s head of global sales and regional marketing, said he understood customers were frustrated and that RIM needed to look at improving how it communicated the problem.

“We’ll have to work to do to build back that credibility,” he said.

RIM started selling new BlackBerry 7 phones in the US last month, including a touch-screen version of the BlackBerry Bold, which costs $250 on a two-year contract. Balsillie said the phones had an “excellent reception” with consumers. William Power, an analyst at Robert W Baird & Co, suggested initial enthusiasm may have been limited to existing users looking to upgrade their phones, not new customers.

The iPhone 4S went on sale in the US for $199 for a 16-gigabyte model and $399 for a 64-gigabyte version with a two-year contract. The price of the iPhone 4 has been cut to $99. The new version also started selling in Canada, Japan, Australia and parts of Europe.

The new iPhone had sold out for pre-order with Verizon, AT&T, and Sprint Nextel on the eve of its debut, those carriers said yesterday. The robust demand highlights how Apple is thriving while RIM is struggling, and threatens to hurt sales of RIM’s BlackBerry 7 phones, Thornton said.

RIM’s share of the US smartphone market fell to 20 percent in the quarter ended August from 25 percent, according to ComScore Inc. Apple rose 0.7 percentage points to 27.3 percent. Google’s Android platform climbed to 44 percent from 38 percent. – Washington Post-Bloomberg

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