Service Restored, but at What Cost?

Research In Motion's (Nasdaq: RIMM  ) BlackBerry OS ranks third among U.S. mobile platforms. However, a recent three-day network outage caused by a switch failure at its Slough data center in the U.K. might force its customers to seek other options for their mobile lives. Is this the long-awaited death for RIM, or is there still some value in the company for investors going forward?

Been there, done that
BlackBerry has had outage issues before. In 2007, co-CEO Jim Balsillie stated that a shutdown the previous month would never happen again ... until it happened again in December 2009. Yet another outage occurred in March 2010.

This latest outage drove frustrated users to Twitter, causing #DearBlackBerry to trend. User outrage the week of the iPhone 4S release could prompt users to seek it, or other smartphones, as an alternative.

Third place in U.S. mobile
Apple (Nasdaq: AAPL  ) dominates mobile computing in the U.S. with iOS, pumped up by its supremacy in the tablet market with iPad. Google's (Nasdaq: GOOG  ) Android leads the smartphone category with 43.7% of that market. RIM lags behind in both categories, with just over 15% of the mobile browsing market and nearly 20% of the smartphone subscribers.

Worldwide, Nokia's (NYSE: NOK  ) Symbian OS trails only Android, but Nokia will replace Symbian with Windows Phone 7 after teaming up with Microsoft (Nasdaq: MSFT  ) and its favorably reviewed Mango phone. Whether this pairing will help Windows bridge the large gap with Android and iPhone remains to be seen, but it can only hurt RIM's current fourth-place standing.

What's ahead
Research In Motion needs to decide whether it wants to continue to compete in the mobile marketplace. RIM could choose to update its core networking software, instead of simply adding servers, as it has done after previous failures. Otherwise, in my opinion, three scenarios exist for the future of RIM. It could become a target for others looking to acquire patents, similar to the proposed acquisition of Motorola Mobility (NYSE: MMI  ) by Google. It could be taken private and revamped if noted investor Carl Icahn decides to step in. Or it could just continue along its slow death, relegated to the annals of history, similar to the fate of Palm before its acquisition by Hewlett-Packard (NYSE: HPQ  ) .

To keep an eye on all these companies, add them to your free My Watchlist by following the links below.

Foolish contributor Robert Eberhard likes his Android smartphone but owns no shares of the companies mentioned here. Follow him on Twitter, where he goes by @GuruEbby. The Motley Fool owns shares of Apple, Microsoft, and Google. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Google, as well as creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1572111, ~/Articles/ArticleHandler.aspx, 10/22/2014 5:43:09 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement