Research In Motion Ltd.’s last remaining stronghold has been shaken.
A major technical glitch affected BlackBerry service across much of the globe Wednesday, delaying e-mails and messages for an estimated 30 to 40 million users – about half of RIM’s customer base of 70 million.
The problems, which began earlier in the week in Europe, the Middle East and elsewhere but have now moved to North America, RIM’s largest market, come at the worst possible time for Canada’s leading technology company.
BlackBerry shipments have fallen two consecutive quarters, it is losing market share in the United States, and it has been stung by a number of executive defections and delayed and botched product launches.
Its share price, which fell 3.5 per cent yesterday, is down 58 per cent this year after a series of profit warnings.
Fixing the problem is urgent for RIM because its has built its reputation on the reliability of its service. The glitch stems from its own network, which the company built to handle e-mail, messages and data securely and which is often touted as one of its biggest competitive advantages against other handset makers, which do not have similar networks.
But as teams of the company’s engineers “worked around the clock” to fix the technical issue and executives fought to contain backlash from millions of outraged customers, the failures continued to spread.
The outage affected BlackBerry-reliant business users everywhere, and had some turning to alternatives, such as products from RIM rival Apple Inc., to satisfy their need for instant communication. Alec Clark, an investment banker in Calgary for TD Securities Inc., said he loaded up his e-mail on to his iPad tablet computer to stem frustration during a meeting Wednesday.
Even though he knew RIM’s devices were out of commission, he could not break his BlackBerry habit. “It is annoying. And I find myself looking at it all the time, even though it is not working ... I look at my BlackBerry once a minute,” he said. “I’m not travelling today. If you were on the road, I think you’d probably be losing your mind.”
On Monday, BlackBerry users in Europe, the Middle East, Africa, India and parts of South America began complaining of interruptions to e-mail and BlackBerry Messenger services. RIM acknowledged on Tuesday that the problem originated at one of its own servers, where a core system and its backup both failed.
In order to fix the problem, RIM began deliberately “throttling,” or slowing down, data traffic in Europe. However, many messages travel in to and out of the continent from other regions. Soon, the backlog of messages had spread to Asia and North America. Business and consumer users in those areas were suddenly unable to access services such as Twitter, surf the Web or receive e-mail on time.
By Wednesday evening, RIM posted a more expansive update to its website, detailing the state of its services throughout much of the world. The update included an apology from the company’s chief information officer.
“You’ve depended on us for reliable, real-time communications, and right now we’re letting you down,” Robin Bienfait wrote. “We are taking this very seriously and have people around the world working around the clock to address this situation.”
At a coffee shop this morning, many BlackBerry users could be seen trying to figure out what the problem was, said one BlackBerry user who declined to be named because her company has a business relationship with RIM. “I just kept seeing people taking the batteries out of their BlackBerrys to reboot them.”
In a hastily-convened conference call with reporters, RIM said engineering teams were working non-stop to fix the problem, but did not say when things would get back to normal. Many corporate IT departments issued notes to users saying there was no estimate as to when the problems would be solved.
As a technical issue, the service outage may well be minor, and eventually forgotten by customers if RIM can fix the problem quickly. But in terms of optics, the timing is poor. As of Wednesday evening, BlackBerry service had been on the fritz throughout much of the world for three days, during a week when Apple’s new iPhone and mobile operating service are being released.
“[It]will take more than just a couple of collapses to persuade loyal consumers of BlackBerry services to look for alternatives,” said Informa Telecoms & Media analyst Malik Saadi. “Having said that, if RIM does not resolve the problem once and for all, the results could be disastrous for the company in a time where it has already disappointed the financial community.”
The outage appears to have started at one of RIM’s “Network Operating Centres” – the company-run servers through which BlackBerry traffic is routed. The company’s NOCs have long been one of its biggest selling points, because unlike other smart phone makers, RIM manages data traffic internally, rather than leaving it up to the individual phone carriers.
Normally, that means a highly reliable and secure means of data transmission, especially for business and government customers. But when a NOC malfunctions, a huge swath of users can see their service disrupted.
This isn’t the first time RIM has suffered temporary service disruptions in the past few years, and no other technology company is immune from such glitches. However, the fact that the service disruptions also affected users in overseas markets such as the Middle East and Asia, where most of RIM’s growth has been coming from, is a problem.
“Inexpensive, fast, private, reliable messaging is one of the primary considerations for BlackBerry buyers in these markets,” said RBC analyst Mike Abramsky, “and the anger generated by these outages could drive some consumers to evaluate alternative smart phones from Android or Apple.”
But not all BlackBerry users were upset.
“On the one hand it’s a relief because I don’t need to look at it every five minutes as I usually do,” said John Bitove, chairman of SiriusXM Canada, the satellite radio service. “Probably the only painful part is no BBM’s [messages on BlackBerry Messenger]– but on the other hand the kids away at university can’t ask me to send more money.”
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