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RIM's new woes seen speeding loss of Blackberry users

RIM's new woes seen speeding loss of Blackberry users

Updated: 5 June 2012 11:11 IST

Research In Motion's appointment of bankers to advise on drastic options, including an outright sale of the BlackBerry maker, may only hasten moves by major customers to offer their employees smartphones produced by rivals.

An increasing number of top companies and government departments that were once devoted to the BlackBerry are instead now giving some staff the option of using Apple Inc's iPhone or smartphones running off of Google Inc's Android-operating system.

There is now a real danger for RIM that such switching will gather pace and turn into a much bigger exodus of customers, mobile phone industry consultants and experts warned.

The uncertainty surrounding RIM's future, and the possibility of a sale, is "scary to an end user," said John Hering, chief executive of Lookout, one of the world's biggest providers of mobile security products.

Within 12 hours of RIM's announcement, Hering said, he heard from several corporate technology executives troubled by the news.

"RIM is looking at it as 'How can we maximize the value of an asset' as opposed to 'How can we solve problems for the customer?' That is making customers nervous," he said.

RIM told Reuters in a statement it had not noticed an increase in inquiries from customers after it disclosed the review.

"RIM is in regular communication with our corporate customers to share updates and to keep them apprised of our ongoing efforts to refocus the company and to continue meeting their needs," the statement said. "As such, we have noticed no measurable increase in the number of questions or concerns following (the) update."

On Tuesday, RIM said it had hired deal-making bankers from JPMorgan Chase and Royal Bank of Canada to help it do a far-reaching review of its business. The Canadian company also shocked investors by reporting it expected a fiscal first-quarter loss, and said it was looking at a significant number of job cuts. Sources have indicated it may cut as many as 6,500 of its 16,500 jobs.

The company's share price has collapsed in the past year, and it is now only valued at about $5.4 billion, down from $84 billion at its peak in 2008. Excluding its cash and the estimated value of its patents, RIM's device business and its 78 million subscribers around the world are in aggregate worth less than $1 billion to investors.

LOST CONFIDENCE

Retaining its customers' loyalty is a huge challenge.

"The organizations using multiple devices have lost confidence in BlackBerry as a platform for the long term," said Alex Bratton, CEO of Lextech Global Services, a company that creates mobile applications for companies.

He added that as "people are doing hardware refreshes they are going in another direction."

Fernando Alvarez, head of mobile solutions for IT services company Cap Gemini, said the company is rarely asked to do projects using the BlackBerry platform anymore.

The BlackBerry dominated the market for mobile email until the iPhone was introduced in 2007 but is now third in market share.

General Electric Co now says about one-third of the mobile devices it issues to employees are iPhones. Other big companies that have started to use a range of different devices include Amgen Inc, FedEx Corp, Caterpillar Inc and Cisco Systems Inc.

A spokesperson for the U.S. Department of Defense, one of RIM's biggest customers, declined to comment on RIM's strategic review or discuss any contingency plans if the company gets into further trouble.

Earlier this month, RIM announced that the Pentagon had cleared six new BlackBerry models for use on its networks, extending their long relationship.

The Pentagon has begun small pilot programs using other devices, according to Federal Computer Weekly, a publication that tracks U.S. government spending on technology. It estimates the U.S. military has 250,000 BlackBerrys, 5,000 iOS devices and 3,000 Android-run devices.

EMPLOYEE DEMAND

The trend away from RIM has been fueled partly by demand from workers who crave the usability of devices running Apple's iOS and Google's Android, and do not want to carry several smartphones. A massive network outage last October that meant millions of BlackBerry users lost use of email for many hours also pushed technology buyers to look at alternatives.

"If it were up to IT managers, BlackBerry would still be the device of choice, but with employees bringing their own devices there is no going back," said Dan Croft, CEO of Mission Critical Wireless.

RIM's advantages include what industry experts widely describe as superior security and device-management features that have made the BlackBerry appealing to corporate IT managers and a crucial tool for police, government and military use.

Apple and Google are adding new features in these areas with each new release of their software but have yet to catch up with RIM, said Dino Dai Zovi, a leading expert on mobile device security who is chief technology officer of consulting firm Trail of Bits.

Still, with companies such as Symantec Corp and SAP's Sybase division offering mobile device management software that secures, monitors and controls mobile devices, companies are no longer tethered to the BlackBerry for security reasons.

While those technologies are not yet as advanced as RIM's offerings, they are sufficient for securing and managing email for many corporate workers, security experts said.

Apple's iOS and Android are "ready for prime time" for all but the highest-risk users, Lookout's Hering said.

A company's ability to shift to other devices can sometimes depend on how much mobile equipment it has on its books. Throwing out those devices before they have depreciated in value could have big financial implications, according to Gary Curtis, who works with financial services companies in his role as chief technology strategist at outsourcing company Accenture.

But others say it would not be that difficult.

Lynden Tennison, the chief information officer of U.S. railroad Union Pacific Corp - which is still mainly a BlackBerry customer - said that he had a plan for a worst-case scenario:

"If RIM went away, was bought or went bankrupt what would we do? We could very easily transition to another provider," he said. If it happened overnight "we would be busy for a week or two provisioning phones, but it's not like it would put us in a serious world of hurt."

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Further reading: Apple, Android, RIM, Blackberry, Google, Research in Motion, Smartphones

RIM's new woes seen speeding loss of Blackberry users

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