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RIM suffers ‘awful’ timing for snag as iPhone 4S debuts

business Updated: Oct 17, 2011 12:38 IST

Research In Motion, struggling to recover from one of its worst BlackBerry service disruptions, may see more defections as the snag gives users another reason to turn to Apple's new iPhone, set to hit stores on Friday.

The disruptions will trigger some BlackBerry customers to switch to Apple, particularly as the Cupertino, California-based company begins cutting the price of older iPhone models, said Matt Thornton, an analyst at Avian Securities LLC in Boston. "The timing is absolutely awful," he said. "RIM is doing some of Apple's work for them."

The data failures, which spread to North and South America yesterday , come at an inopportune time for Waterloo, Ontario- based RIM. It is fending off investor demands for fresh management while trying to move the entire BlackBerry lineup onto a new operating system to stem marketshare losses to Apple and devices that use Google's Android software.

RIM also said it will study compensation for the disruption after some wireless carriers offered refunds to BlackBerry users. Three days after the smartphone's data delivery first began failing in Europe and the Middle East, RIM co-Chief Executive Officer Mike Lazaridis apologised to customers in a video posted on the company's website before joining co-CEO Jim Balsillie on a conference call to answer reporters' questions.

"We're very concerned," Balsillie said when asked about the possible impact of the disruptions on phone sales and what RIM is doing to minimise it. "Nobody's gone home since Monday."

Credibility lost:

Apple and carriers AT&T , Verizon Wireless and Sprint Nextel will start selling the iPhone in their stores on Friday. Apple said this week that it received more than 1 million iPhone pre-orders on the first day, a record. BlackBerry subscribers across most parts of the world lost data services after a network failure in the UK this week halted messaging and Web browsing.

Balsillie said on Thursday that service has been fully restored globally. Lazaridis apologised, saying the company has "let many people down." The disruptions resulted in an outrage by customers on online messaging boards and Twitter.

"When you hear people saying online they're hating their Black-Berry device right now, that's going to be top of mind to the consumer going into a store to buy a new phone," said Neil Bearse, who teaches digital marketing at Queen's School of Business in Kingston, Ontario.

Frustrated customers:

Patrick Spence, RIM's head of global sales and regional marketing , said on a conference call that he understood customers were frustrated and that RIM needed to look at improving how it communicated the problem. "We know we'll have to work to do to build back that credibility," he said.

RIM fell 1.1% to $23.61 at the close in New York on Thursday and has lost 59% this year. Today, the stock gained 1.1% to the equivalent of $23.66 as of 10:36 a.m. in Frankfurt. RIM started selling new Black-Berry 7 phones in the US last month, including a touch-screen version of the BlackBerry Bold, which costs $250 on a two-year contract.