BlackBerry's Big Blackout: Time to Dump Your RIM Device?

Blackberry's Big Blackout: Time to Dump Your RIM Device?Phone carriers and handset makers got an uncommon opportunity this week to steal customers away from BlackBerry maker Research In Motion (RIMM).

It began on Monday when RIM's network suffered an outage that spanned continents and cut off cellular oxygen for millions of frustrated customers. The three-day blackout spread like a virus as what started in Europe, the Middle East, and Africa on Monday spread to South America by Tuesday before invading the U.S. and Canada yesterday. Backup systems failed to contain what RIM called a hardware error, leading to the cascading outages that left millions without service.

On Thursday, the company said full email and messaging service had been restored worldwide. But it's a little too late for many customers, many of whom went to the company's Facebook page to vent.

Recognizing the severity of the situation, Research In Motion co-CEO Mike Lazaridis took to the Internet Wednesday night to issue an apology to users. "We've let many of you down," he said. "You expect better from us, and I expect better from us."
Of course, if you're really unsatisfied with your BlackBerry experience, Apple (AAPL) and Google (GOOG) are ready, willing, and able to put your call right through.

The Fix Is In -- or Is It?

Ironically, the apology came as Apple was struggling to fulfill download demand for its new iPhone operating system.
Early upgraders reported errors as millions bum-rushed the Mac maker's servers, causing a traffic spike. The issue now appears to be resolved and shares of Apple stock are rising once more.

RIM, by contrast, was down more than 3% as of this writing. The message? "Restored service" isn't the same as "happy customers."

A History of Switching

We've seen this sort of behavior before, when Microsoft (MSFT) released Windows Vista to resounding jeers from early customers. Upgraders stopped upgrading. Others switched to the Mac or alternative systems. And in perhaps the biggest insult of all, Intel (INTC), Mr. Softy's longtime PC partner, said it, too, would wait for a better version of Windows.

Apple profited from the backlash with a series of ads depicting John "I'm a PC" Hodgman offering silly or nonsensical ways to "fix Vista," including this gem in which Hodgman proposes a massive increase in advertising spending instead of pouring new money into repairing the operating system.

We don't yet know if Apple, Android-licensees Samsung and HTC, or Microsoft partner Nokia (NOK) will attempt to similarly profit from RIM's misery. History says it's a good bet, however.

Why You Needn't Wait

At least one carrier is already preparing for a legion of Android and BlackBerry switchers.

Sprint Nextel (S) has confirmed it will offer an unlimited data plan to those who buy the iPhone 4S for its network, hoping to sway those tied to AT&T (T) or Verizon (VZ) -- both of which offer capped data plans -- to switch service. (UPDATE: Sprint has already sold out of pre-orders for the entry-level version of the device.)

Meanwhile, popular trade-in site Gazelle.com recently said that BlackBerry trade-ins are up 49% from normal volume as users prepare to move to the iPhone. Best Buy's (BBY) FlipSwap site puts the trade-in value for the BlackBerry 9700 at $71. The retailer begins fulfilling pre-orders tomorrow.

And those are just the offers we know about. Rising dissatisfaction with RIM's BlackBerry coupled with rising interest in the new features of the iPhone 4S could unleash still more trade-in deals as carriers battle to lock customers into lucrative multi-year iPhone contracts.

Motley Fool contributor Tim Beyers owned shares of Apple and Google at the time of publication. The Motley Fool owns shares of Apple, Microsoft, Intel, Google, and Best Buy. Motley Fool newsletter services have recommended buying shares of Intel, Microsoft, AT&T, Apple, and Google, as well as creating bull call spread positions in Microsoft and Apple and a diagonal call position in Intel.




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24 Comments

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Brutal

I lubmy BB.

October 14 2011 at 10:16 PM Report abuse rate up rate down Reply
Lady Marmalade

I had very little trouble with my blackberry a couple days ago. Nothing I couldnt deal with and it was only partially down for about 3 hours. I like my blackberry a lot. I do not care for the iPhone (which my daughetr has) or any of the touchscreen phones. I'll keep my blackberry thank you very much!

October 14 2011 at 7:30 PM Report abuse rate up rate down Reply
Lee

Don't have one don't need one and neither do most people!

October 14 2011 at 6:13 PM Report abuse rate up rate down Reply
1 reply to Lee's comment
dragondancer1814

Same here. Don't have one, don't want one, don't need one.

October 14 2011 at 6:41 PM Report abuse rate up rate down Reply
MILES

Just got my blackberry 9930 for sprint, LOVE IT, TIRED of the ALL worthless touch screen phones! YUK

October 14 2011 at 4:42 PM Report abuse rate up rate down Reply
jenbrown0224

My Blackberry never went down, and even if it did, I would not trade it for any of the touchscreen phones. I love my Blackberry and the fact that it has an actual keypad! You can have any other phone on the market, I will keep my Blackberry!!!!

October 14 2011 at 4:32 PM Report abuse rate up rate down Reply
brus35

My Blackberry never quit and it is the only phone I have . this Author (Tim) must have a material interest in trashing Blackberries. Shouldn't he be banned from writing ariticles . what a fkn scam.

October 14 2011 at 2:21 PM Report abuse +2 rate up rate down Reply
pops

Just received my new Blackberry Torch 2/4G - it is awesome and dropdown keyboard is wonderful. Choose it over the Android and IPhone because of Blackberry reliability and the new phone has the latest chips, great screen and the email/text service is just as fast as my home system. No one else does that -- real important for our engineering and coatings businesses. The big screens are great but only so many touches in them per my engineering friends who work on these things -- so again, do not be so fast to count them out. Reliability, functionality, reliability.

October 14 2011 at 1:27 PM Report abuse +2 rate up rate down Reply
atx888

Only an idiot would trade their Blackberry with an iPhone. Obviously, the writer is one of them.

October 14 2011 at 4:41 AM Report abuse +7 rate up rate down Reply
mesager42

C'mon folks, 3 days without Blackberry service? Boo hoo. I grew up living out in the country during the 1950's through the 1970's with land line phones on partylines in which lots of different residents shared the same phone line.

I lived for almost 40 years of my life without having a cell phone, because they didn't exist. Believe it or not, you do not need to have access to a cell phone 24/7 unless it is your only phone.

We have cell phones, but we kept our landline. Guess what? It seldom ever loses service. It was still working when the earthquake struck the East Coast and all of the cell phone service bit the dust. Government offices still have landlines. Emergency services still have landlines.

The phone companies may be claiming that land lines are becoming obsolete, but they are still more reliable than cell phones, because you do not have to worry about keeping them charged in emergencies. Relatives know that their message will always be relayed through our land line. We always check those messages, and they are not subject to SPAMMING.

October 14 2011 at 4:32 AM Report abuse +3 rate up rate down Reply
1 reply to mesager42's comment
dragondancer1814

And people wonder why we keep our land line! Unlike cell phones, you never have to worry about a landline going down during a power failure (unless you have nothing but cordless phones in your house), they still work when the cell towers go down during storms (which in our mountain region happens with some regularity), and they're a heck of a lot less likely to be swiped, dropped, or otherwise lost/damaged. Obsolete, my foot.

October 14 2011 at 6:44 PM Report abuse rate up rate down Reply
tropicsilk

I've had plenty of problems with AOL. Don't remember seeing "TIME TO DUMP AOL"? Headlines. This just shows what a bunch of suckers they think we are and unfortunatly to a certain point we are. This headline is just ment to damage an excellent company. It shows how low they will go.
P.S. I have an iphone so no dog in this fight. It's inention is to help short traders. Wonder what Timmy got for his rant.

October 14 2011 at 3:29 AM Report abuse +1 rate up rate down Reply