BlackBerry’s woes signal black days ahead

October 14, 2011 09:50 am | Updated November 17, 2021 12:54 am IST - San Francisco

A BlackBerry subscriber holds a Research in Motion BlackBerry in Ottawa on Wednesday.

A BlackBerry subscriber holds a Research in Motion BlackBerry in Ottawa on Wednesday.

Overshadowed by the popularity of Android and the iPhone, Canadian smartphone maker Research in Motion was in trouble even before the latest disruptions sparked a Twitter torrent of outrage among Blackberry users this week.

Now the company acknowledges that it let down its more than 70 million users as a wave of outages across the world destroyed Blackberry’s reputation for reliability. The question is, can it win back the trust of consumers and business?

The appearance Thursday of company co-founder and co-CEO Mike Lazaridis didn’t exactly inspire confidence. Appearing in front of a pale background, Laziridis seemed contrite and voiced a humble apology. But with customers already deserting the company in favour of more versatile competitors from Apple and Android, RIM has an awful lot of work to do to win back favour.

Not only did the outage anger existing customers, the huge media coverage means that the company will find it harder than ever to attract new users to its devices.

“Once you have this collision between consumer outrage and this media vortex, you are now dealing with phenomena of physics,” corporate reputation expert Eric Dezenhall told The Wall Street Journal .

Lest you think that he might be exaggerating, bear in mind that a lot of the media coverage was similar to this headline spotted in the Los Angeles Times: “Blackberry outage: Did you survive the Black(Berry) plague?” The article actually poked fun at all the irate Blackberry users, who, it claimed, might in the collapse of the device’s data capabilities be forced to use their smart phones to actually make a phone call. Also poking fun at the company were numerous YouTube videos, including one helpful clip that found ten uses for a dead Blackberry, such as a butter spreader, door stop or drink coaster.

But for Research in Motion, it was no joking matter, nor was it for the millions of people who rely on the devices for work and essential communications.

This was the company, it should be remembered, which in the pre-iPhone days proudly encouraged the use of the nickname CrackBerry to indicate just how addictive its original mobile email service was to many customers.

But since its high in 2008, the company’s stock has slipped more than 80 per cent, and investors’ confidence continues to be shaken by a series of profit warnings, weaker than expected sales and an apparent failure of management to outline a strategy that could help the company compete in a market that is dominated by Apple and Google devices.

In the latest quarter for instance, RIM shipped just 10.6 million smart phones, almost 2 million less than its target, while its PlayBook tablet computer also sold far less than expected. By comparison Samsung shipped 19 million smart phones in the second quarter and Apple more than 20 million iPhones.

Such miserable sales figures have not gone unnoticed by shareholders who are forthrightly calling for a management shake-up or an outright sale of the company.

“It is time for RIM to bring in a transformational leader and a respected independent chairman,” said Vick Alboini, chairman of Jaguar Financial Corp. which owns 8 per cent of the company.

“Everybody is in support of a sale of RIM or another value creative transaction ... like splitting the company into separate public companies -- a network company, a device company and a patents company,” he said.

Whether such a move will help it win back disgruntled customers is another question entirely.

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