The Wall Street Journal-20080212-RIM BlackBerries Hit By Large-Scale Outage

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RIM BlackBerries Hit By Large-Scale Outage

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Research In Motion Ltd. experienced a significant outage of its BlackBerry wireless email service yesterday, its second major North American disruption in the past 12 months, signaling a potentially troubling pattern for the wireless email company.

The cause of the outage, which began midafternoon Eastern time and affected customers across wireless carriers and the country for several hours, remained unknown yesterday evening.

Coming 10 months after a similar email blackout, the latest incident could undermine BlackBerry's reputation for dependable service which has won it strong loyalty. While its last widespread outage didn't have a discernible impact on its growth rate, rivals are growing more formidable and RIM can't afford to lose its edge.

The Waterloo, Ontario, company notified its customers of the problem at around 3:20 Eastern time, saying the outage was affecting about 50% of North American customers across all wireless carriers. Wireless carrier AT&T said RIM notified it that problem had been fixed by early evening, although it would take hours for the backlog of messages to clear. Several IT administrators and email-monitoring companies said the problem appeared to be related to the failure of one of the main pathways that connect corporate email servers to RIM's network.

The incident was less severe than last April's outage, which lasted at least nine hours. An explanation for the problem didn't emerge until days later, when RIM said it was caused by an improperly tested software update at the company's data center that handles BlackBerry email traffic for millions of users.

RIM also acknowledged that the outage was aggravated by the failure of its backup systems to perform as planned, raising concerns about whether RIM's infrastructure can keep up with its torrid growth. From November 2005 to December 2007, RIM's world-wide subscriber count nearly tripled to 12 million from 4.3 million.

Both outages point to vulnerabilities in RIM's delivery model, which has also been one of the secrets of its success. All emails sent through corporate email servers using BlackBerry software are routed through RIM's network operating center, where the messages are encrypted and pushed out over the cellular networks. Julie Ask, a wireless analyst at Jupiter Research, says the outage could weaken RIM's negotiating position with carriers and other wireless partners, who are likely to demand assurances that the pattern won't continue to repeat itself.

RIM's shares were up $4.76, or 5.3%, to $94.47 in 4 p.m. Nasdaq composite trading. The shares fell $1.32 after hours.

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Amol Sharma contributed to this report.