The Wall Street Journal-20080213-BlackBerry Outage Leaves Sour Taste- RIM-s Partners Not as Forgiving As Its Customers

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BlackBerry Outage Leaves Sour Taste; RIM's Partners Not as Forgiving As Its Customers

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Many BlackBerry users may have already forgotten Monday's three-hour email outage. But Research In Motion Ltd., maker of the popular email device and service, may soon learn that its business partners aren't as forgiving.

The email blackout that affected the company's North American subscribers could create friction between RIM and the growing network of businesses that support and promote its service, from wireless carriers to mobile software companies. Keeping those relationships intact is critical to the wireless company's ability to expand.

RIM said yesterday evening that the failure was related to routine expansion work on its network infrastructure and noted that similar upgrades had been successful in the past. The company said it would share additional information as it was available. RIM shares fell 3.1% in 4 p.m. Nasdaq Stock Market composite trading to $91.50, although the stock was up in after-hours trading.

RIM has been upgrading its infrastructure to keep up with rapid subscriber growth. RIM had 12 million subscribers world-wide in its fiscal third quarter that ended in December, up 1.65 million from the previous quarter. Roughly eight million of those subscribers are in North America.

The company has long argued that its delivery system, which ties back to a central network-operations center, improves the security and reliability of its service. But the center is a choke point that can create massive problems, with wide ramifications for its partners.

The businesses most heavily affected by the outage are wireless carriers such as AT&T Inc. and Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, which sell BlackBerry devices to consumers. RIM can't afford to alienate these companies, which have a growing number of options for wireless email services to offer subscribers. At least one major phone company receives compensation payments from RIM when outages occur, a person at that operator said, although the amount of such payments isn't clear. "When someone's BlackBerry stops working, they call our customer service, not RIM's," said this person.

Software companies expressed frustration that RIM hadn't divulged more about the problem sooner since similar concerns had surfaced after a more severe outage 10 months ago.

RIM said it has "made significant investments to improve its system recovery infrastructure and processes over the last year, which enabled service levels to return to normal quickly."

Todd Christy, co-founder of Pyxis Mobile Inc., says he has asked RIM to consider creating an online monitoring system along the lines of those used by other major technology companies like Salesforce.com Inc.

Such a system would allow a company's information technology employees to track the status of the BlackBerry network in real time, as opposed to waiting for email status updates from the company. "They have been successful on so many fronts," says Mr. Christy.

During this week's outage, RIM customers were still able to communicate via text messaging. Depending on the scope of the outage, BlackBerry users may also be able to send notes to other BlackBerry users by entering the unique personal identification number, or PIN, associated with the recipient's device.

RIM has been keeping some customers in the loop. Soon after the outage, RIM hosted conference calls to update some of its most- important corporate customers on the disruption. On the calls, RIM representatives assured customers that the company was working to fix the problem, according to one person who listened in, but said that a full explanation probably won't be ready for a few days.

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Amol Sharma contributed to this article.