Cutting Room: RIM woes give Apple a timely boost

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Michael Garwood reckons that following its recent service outage, RIM now has an uphill task in holding off the challenge of Apple

It was always going to be a big task for a handset manufacturer to steal the headlines from an impending Apple iPhone launch. But BlackBerry maker RIM pulled it off in spectacular fashion and in doing so, provided its rival with the kind of publicity money simply cannot buy.

You can only imagine the laughter, high fives and fist clenching at the Apple HQ in Silicon Valley when, just five days before the launch of its iPhone 4S handset, one of its biggest rivals goes into meltdown.

It simply couldn’t have happened at a worse time for RIM, during what has been one of its most challenging years since its formation in 1999.

Damning headlines surround a drop in profitability, lower than expected sales forecasts and redundancies this year, which have shown the first cracks in the Canadian business that has dominated the business sector and was making significant strides in consumer.

The vast majority of the 70 million global BlackBerry users won’t care if 2,000 staff have lost their jobs, or that RIM’s quarterly net profits have dropped from £490 million to £442 million year-on-year.

But a loss of service? That’s entirely different. It affects them personally. After all, what is a BlackBerry without its data services?

As a long-term user myself, not having access to work emails was a serious inconvenience – not to mention my key reason for remaining loyal to the brand.

But it was also my inability to access consumer services such as BlackBerry Messenger (BBM), Facebook, Twitter and even banking Applications that provided a constant reminder of the issues faced.

With so many comparable alternatives in the market, that loyalty is now being strained. It exposed the manufacturer at a level many had not envisaged.

No hiding place
RIM couldn’t hide from its problems. This wasn’t a local issue that could be blamed on the network operator. Although its efforts to alert its customers was pitiful.

But then again, it didn’t need to tell its customers what had happened. When RIM’s data service went down, it hit the headlines across the globe, severely damaging its once largely untarnished reputation.

Just how damaging this will be to RIM is yet to be seen, but judging by the forums and those we spoke with, RIM could be in serious trouble.

When discussing the bad publicity surrounding RIM and BlackBerry, one dealer asked me if I would eat at the same restaurant twice if it had given me food poisoning the first time. He then asked if

I would recommend that restaurant to anyone else considering going. The answer for both was no. And this, he says, will be how the public is feeling right now.

It would be interesting to know just how many of those people who spent hours queuing outside the Apple store this month were replacing their BlackBerry device.

Lack of communication
Ironically it was the lack of communication that appears to have riled BlackBerry users more than anything else. It took its founder and CEO Mike Lazaridis (pictured) four days to address the issue with a rather desperate apology, which drew comparisons to BP’s Tony Hayward following the Gulf of Mexico oil spill.

Forums and social media sites were awash with critics venting spleen over being kept in the dark over what was happening and wondering when things would be resolved. The majority stating they had had enough, and perhaps significantly, singled out Apple as their next destination.

However, it must be said, this was a vast improvement when compared to the late Steve Jobs, who took a staggering 22 days to address issues experienced by some with the iPhone 4 – incredibly dismissing it as a fault at all.

The result of his actions? The iPhone 4 went on to become Apple’s biggest-selling device of all time, while the queues for the 4S follow-up suggest the brand is only getting stronger.

Does RIM have the same brand power to deflect such problems and come out stronger? Time will tell, but it seems unlikely.

Indeed, desperate attempts to soften the blow have been made already with the offer of 12 free applications from BlackBerry World App store worth up to £63.

A free download of The Sims 3 may appease some consumers, but it’s unlikely to satisfy the directors of some of the world’s biggest companies.

Trouble ahead?
And what about the dealers and retailers who actually have to sell them? Dealers say BlackBerry users are increasingly asking about switching to other devices, namely the iPhone.

Those conversations will now undoubtedly be tougher to win. And what if the iPhone was to become the business handset of choice? This could pose a serious issue regarding profit and margins for the channel.

The iPhone offers little to dealers in the way of sterling compared to the BlackBerry, which can be subsidised more easily and is often free with a deal. This may not be as easy as before. And what about those who don’t and can’t sell the iPhone? Will they simply lose customers now? It’s not an unrealistic scenario.

RIM needs to help those people now more than ever. And it won’t come cheap. When Barack Obama become president of the US, he was pictured using a BlackBerry handset. A picture some national newspapers said will have created more than £33 million in marketing.

RIM could certainly do with some positive PR right now. Its future may depend on it.

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