RIM's co-CEO downplays BlackBerry outage

Jim Balsillie doesn't seem too worried about the possible long-term effects of the company's recent 3-hour outage.

BARCELONA--Research In Motion's co-chief executive officer, Jim Balsillie, doesn't seem too worried that the second major outage of the company's BlackBerry service in 10 months could hurt its reputation with corporate customers.

RIM co-CEO Jim Balsillie Research In Motion

"It was an intermittent delay, a couple of hours," he said. "It's old news. It happened days ago."

Balsillie's comments were in response to a question about Monday's outage and how it might impact the company's relationship with corporate customers. Balsillie had just given a keynote speech and participated in a panel discussion at the Mobile World Congress here Wednesday morning. He declined to answer further questions about the situation.

The BlackBerry outage, the service's second major interruption since April 2007, began at about 3:30 p.m. New York time Monday. Service was restored roughly three hours later, the company said in a statement. No messages were lost. Calling and text-messaging services weren't affected.

Research In Motion said in a statement issued late Tuesday afternoon that the outage was caused by "a problem with an internal data routing system within the BlackBerry service infrastructure that had been recently upgraded." The company has been upgrading capacity throughout its server farms to accommodate growing demand for its BlackBerry services.

This recent snafu and the company's previous major outage in April highlight a key weakness of the company's system, which is that it has a single point of failure.

RIM's service is centralized and works by routing all BlackBerry e-mails through one of two main network operations centers, which are essentially large data centers. One center is located in Canada and primarily serves the Western Hemisphere as well as parts of Asia. The other data center, located in the U.K., handles e-mail traffic in Europe, Africa, and the Middle East.

Of course, the world didn't stop on Monday when people were unable to get their BlackBerry e-mail for a few hours. After all, e-mail was still available the old-fashioned way, on desktop PCs. But the outage was an inconvenience. And as mobile phones become a bigger part of people's personal and business lives, frequent outages of any kind could drive these customers to consider other solutions.

It's safe to say that RIM has built a strong reputation as a reliable service provider that has attracted bankers, lawyers and lawmakers as subscribers. But if the outages persist or even become more frequent, the company risks losing some of these very valuable customers to competitors such as Apple and Microsoft, which also offer smartphones with e-mail capabilities.

Microsoft, in particular, presents a threat since most corporate e-mail already runs on Microsoft software. What's more, corporate users are familiar with Microsoft. Its software is also available on a wide variety of handsets offered from almost every major cell phone maker, including Sony Ericsson, which just announced its first Windows Mobile phone this week at MWC.

There's no question the stakes are high for RIM as competition grows. The smartphone market is the fastest-growing segment of the cell phone market. It grew about 72 percent last quarter for a total of 35.5 million phones sold worldwide. This compares to about 13 percent growth for the total mobile phone market.

 

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