RIM glitches hurting struggle to retain market share

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The newly launched Blackberry Curve 9360 'smartphone' is seen during its unveiling. RIM unveiled its new Blackberry Curve 9360 'smartphone' supporting the new Blackberry 7 Operating system, a 5 megapixel camera , GPS and is Wi-Fi enabled. Photo - Manan Vatsyayana/AFP/Getty Images

RIM seems to follow the famous epigram Murphys Law. For the BlackBerry maker, the crisis have just begun. The disruptions have triggered BlackBerry customers to switch to other smartphones and created turbulence in it’s already challenged North American turf.

The data failures come at an inopportune time for RIM. The company has already lost 59% in stocks this year. The investors are demanding fresh management to improve its market-share that is being eroded by Apple’s iPhone and other smartphones.

The latest crisis triggered at RIMs Slough data centre in the UK when systems designed to failover to a back-up switch did not function as expected, leaving millions of users without email, web browsing and much-vaunted Blackberry Messaging (BBM) services. Though its service was restored on Thursday, the users, especially corporate executives, are turning to other smartphones such as Apples iPhone and those powered by Googles Android operating system.

RIMs co-Chief Executive Officer Mike Lazaridisapologised to customers in a video posted on the companys website soon joined by co-CEO Jim Balsillie on a conference call to answer reporters questions,three days after the failure of smartphones data delivery in Europe, Middle East, and Africa.

Balsillie saidwere very concerned and apologised, saying the company has let many people down. RIM also said it will consider compensation to BlackBerry users.

LOST CREDIBILITY

The recent disruptions resulted in an outrage by customers who vented their spleen on online messaging boards and Twitter. Apple confirmed it received more than 1 million iPhone pre-orders, which is a new record.

RIM started selling new BlackBerry 7 phones in the US last month, including a touch-screen version of the BlackBerry Bold, which costs US$250 on a two-year contract. Balsillie emphasised the new phones received an excellent reception from the consumers. However, analysts suggest that the initial enthusiasm may have been limited to existing users looking for an upgrade of their phones, and not new customers. RIM reported two consecutive quarters of slipping BlackBerry shipments.

COMPETITION

The iPhone 4S went on sale in the US for $199 for a 16-gigabyte model and $399 for a 64-gigabyte version with a two- year contract. The price on the iPhone 4 is now reduced to $99. The new version is also on sale in different continents – Canada,Japan, Australia and parts of Europe.

The new iPhone has been sold out at Verizon, AT&T, and Sprint Nextel on the eve of its debut. The robust demand highlights how Apple is thriving while RIM struggles.

According to report by ComScore, RIMs share of the US smartphone market fell to 20% in the quarter ended August. It added that Apple’s fortune rose to 27.3% and Googles Android platform devices to 44%.

RIMs US revenue dropped 50% last quarter to $1.11 billion while sales outside the US, UK and Canada jumped 38% to $2.33 billion.

Sources: WSJ, Bloomberg

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