RIM Gains Despite Outages

PC World
Saturday, February 23, 2008; 5:19 PM

Consumers and enterprise workers are flocking to the BlackBerry despite recent embarrassing glitches that have shut down service for hours on a few occasions.

Research In Motion late last week boosted its forecast for subscriber account additions in its fiscal fourth quarter ending March 1. Back in December, RIM predicted 1.82 million new accounts, but now it expects that number to be higher by 15 percent to 20 percent. That will mean a total of about 14 million subscriber accounts at the end of the quarter. Final results will be revealed April 2. The company's revenue and profit forecast hasn't changed.

The Waterloo, Ontario, company raised its forecast during a difficult month. Last week, BlackBerry users in North Americalost the mobile e-mail and data servicefor about three hours in an incident RIMblamed on recent upgradesto an internal routing system. Then, some North American users reported the service down on Wednesday morning this week. RIM said scheduled maintenance slowed down delivery of some customers' e-mail. (Another outage in late January was caused by the AT&T Wireless network.)

BlackBerry has gotten black eyes before, namely during an April outage in North America that lasted overnight. In 2006, users lived for several months in fear of a service shutdown in the U.S. sought by NTP, which sued RIM alleging patent infringement. RIM eventually settled the suit in March 2006, agreeing to pay more than US$600 million.

The problems shone a spotlight on RIM's reliance on a proprietary architecture and the fact that all messages have to go through its network operations center (NOC). These factors could make RIM vulnerable to a single point of failure, some analysts said. But in reality, BlackBerrys probably aren't any less dependable than mobile e-mail systems from other vendors, such as Microsoft, Palm and Nokia's Intellisync, they said.

BlackBerry service can be managed through a BlackBerry Enterprise Server within an organization, but RIM is now making a push for consumers with its BlackBerry Internet Service, which can be ordered from a carrier.

In the fourth quarter of last year, RIM had a leading 41 percent share of the U.S. smartphone market and more than doubled its worldwide share to 11.4 percent, according to research company Canalys. Users like the security of RIM's system, its support for IBM Lotus Notes in addition to Microsoft Exchange and the fact that RIM's NOC handles the connections to all mobile operators that carry BlackBerrys, analysts said.

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