Jewishupdates's Blog

December 24, 2009

WSJ: BlackBerry Maker Is Strained by Growth

Filed under: Uncategorized — jewishupdates @ 2:51 pm

WSJ: BlackBerry Maker Is Strained by Growth

The following is a Wall Street Journal report:

The second BlackBerry outage in a week shows how Research In Motion Ltd., the maker of the popular smart phone, is feeling the strain of a ballooning customer base and intensifying competition.

BlackBerry devices throughout the Americas suffered service interruptions from Tuesday afternoon through early Wednesday, telecommunications carriers said. RIM issued an apology and attributed the interruption to a flaw in recent versions of its instant-messaging program.

The glitch caused an “unanticipated database issue within the BlackBerry infrastructure,” the company said. RIM declined to elaborate or make an executive available for comment.

The back-to-back problems strike at one of the biggest selling points for the Waterloo, Ontario, handset maker: reliability. RIM tells customersmany of them big corporations that use BlackBerrys for internal emailthat its services are more secure and more stable than those of its rivals.

But analysts say the outages highlight potential problems in the structure that makes RIM successful. The company pumps all its traffic through its own network-operations centers, giving RIM greater control over matters like security.

But it also places greater demands on the system as more users sign on and makes it more vulnerable when things go wrong.

The outages could signal that RIM doesn’t have enough backup systems in place, said John Jackson, vice president and wireless analyst at CCS Insight.

“It’s a consequence of the architecture that makes RIM RIM,” he said. “They invested heavily in upgrading their backup systems after outages in 2007 and 2008, and made some high-profile hires. So that it’s happened twice in a week, albeit with a limited duration and geography, indicates gaps.”

Ken Dulaney, vice president of mobile computing at research firm Gartner Inc., said all technology companies have occasional failures, which is why it is important to have the option of switching instantly to “failover,” or standby, systems. “If this is due to the fault of RIM not having good failover procedures, then I think we can come after them and say, once again, they didn’t follow proper process,” Mr. Dulaney said.

Outages cause headaches for telecom carriers, which tend to bear the brunt of the customer complaints. Canadian cellphone giant Rogers Communication Inc. said its call centers are deluged when BlackBerrys go down. Rogers handles the rush by sending a message to the screen of each call-center worker saying the problems are RIM’s and are being fixed.

“Anytime something like this happens, it is of great concern,” said Crystal Davis, a spokeswoman for Sprint Nextel Corp. “But it’s not something we’re going to hang over their heads.”

So far, many customers say the problems aren’t serious enough for them to consider changing to another handset. But with rivals like Apple Inc.’s iPhone mounting a charge on RIM’s smart phone, consumers now have many more choices.

“If this continues to be a problem, I will change,” said BlackBerry user Anthony Ma, an executive at J&A Importers Inc., of Vernon, Calif.

An outage last week temporarily knocked out RIM’s BlackBerry Internet Service, which consumers use to access data on their smart phones.

This week’s problem was more widespread, affecting millions of corporate users whose devices run on a BlackBerry Enterprise Server.

An increase in data traffic has coincided with the rapid expansion of the BlackBerry from a basic email device to a mainstream smart phone embraced by consumers and corporate users alike.

Beyond its core messaging devices, RIM has expanded into the consumer market with the touchscreen Storm line and slimmer Pearl products. That has added consumers who send emails, message each other using BlackBerry Messenger and surf the Internet.

For the quarter ended Nov. 28, RIM’s number of subscribers jumped 71% from a year earlier to 36 million.

As RIM moves increasingly into fancier software to satisfy that diversifying customer base, the potential for trouble increases, said Maribel Lopez, principal analyst at Lopez Research. An example of such software is the BlackBerry Messenger application that was at the heart of this week’s interruption.

Meanwhile, “people do have higher expectations from RIM,” Ms. Lopez said. “They’re considered the gold standard, and when the gold standard goes down, people freak out.”

(Source: Wall Street Journal / YWN-32)


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