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RIM scrambles to end BlackBerry outage

New York, October 13, 2011

The company that makes the BlackBerry smartphone is working frantically to end a three-day global service disruption that has frustrated millions of its customers and pumped up pressure on its management to make sweeping changes.

Research In Motion, in a hastily announced conference call on Wednesday, vowed to eventually deliver all delayed email and instant messages to customers in five continents affected by the outage.

It later told some of its corporate clients that it may not clear the huge backlog of messages until Thursday morning on the US East Coast and it apologised to customers in a statement on its Website and on its Facebook page.

"Youve depended on us for reliable, real-time communications, and right now were letting you down," it said, noting that email services were operating and it was clearing the backlog of messages.

The outage - and RIM's sluggish communications with its customers - have fanned rising dissatisfaction with its co-chief executives, Mike Lazaridis and Jim Balsillie.   

Critics have called for a shake-up, saying the top managers have let the company fall too far behind Apple and other rivals in a rapidly changing market.

"The board clearly needs to take decisive action now - they need to draw a line in the sand," said Richard Levick, who runs a consultancy that specializes in crisis management.   

"RIM needs to change its DNA entirely - they need to start thinking like a startup again, instead of a former market leader," he said.

Though RIM's stock dropped modestly on Wednesday, its shares have already tumbled more than 50 percent this year on a series of profit warnings and product missteps - a sharp reversal of fortune for a company that once dominated the smartphone market.   

This week's disruption - the worst since an outage swept North America two years ago - may have damaged RIM's once-sterling reputation for secure and reliable message delivery - perhaps its No. 1 selling feature.   

RIM is unique among handset makers, as it compresses and encrypts data before pushing it to BlackBerry devices via carrier networks. Apple and others rely on the carrier networks to handle all routing and delivery of content.

Even before this week's disruptions, many companies had started to balk at paying a premium to be locked into RIM's service. Some are now allowing employees to use alternative smartphones, particularly Apple's iPhone, for corporate mail, and the outage could accelerate the trend.

"One possibility could be that it encourages client companies to look more at other options such as allowing users to connect their own devices to the corporate server and save themselves the cost of buying everyone a BlackBerry," said Richard Windsor, global technology specialist at Nomura.

DLA Piper, a law firm with 4,200 attorneys worldwide, is a prime example. It is accelerating discussions about switching to iPhones and Android devices, Don Jaycox, its chief information officer, said on Wednesday.

"This has brought it to the front-burner," Jaycox said. "It will cause more people to opt for other choices."   - Reuters  




Tags: RIM | Smartphone | Black Berry | messenger |

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