RESEARCH In Motion's (RIM's) appointment of bankers to
advise on drastic options, including an outright sale of the BlackBerry maker,
may only hasten moves by major customers to offer their employees smartphones
produced by rivals.
An increasing number of top companies and government
departments that were once devoted to the Blackberry are instead now giving
some staff the option of using Apple's iPhone or smartphones running off of
Google's Android-operating system.
There is now a real danger for RIM that such switching will
gather pace and turn into a much bigger exodus of customers, mobile phone
industry consultants and experts warned.
The uncertainty surrounding RIM's future, and the
possibility of a sale, is "scary to an end user", said John Hering,
chief executive of Lookout, one of the world's biggest providers of mobile security
products.
Within 12 hours of RIM's announcement, Hering said, he heard
from several corporate technology executives troubled by the news.
"RIM is looking at it as 'How can we maximise the value
of an asset' as opposed to 'How can we solve problems for the customer?'. That
is making customers nervous," he said.
RIM told Reuters in a statement it had not noticed an
increase in enquiries from customers after it disclosed the review.
"RIM is in regular communication with our corporate
customers to share updates and to keep them apprised of our ongoing efforts to
refocus the company and to continue meeting their needs," the statement
said.
"As such, we have noticed no measurable increase in the
number of questions or concerns following (the) update."
On Tuesday, RIM said it had hired deal-making bankers from
JPMorgan Chase and Royal Bank of Canada to help it do a far-reaching review of
its business.
The Canadian company also shocked investors by reporting it
expected a fiscal first-quarter loss, and said it was looking at a significant
number of job cuts.
Sources have indicated it may cut as many as 6 500 of its 16
500 jobs.
The company's share price has collapsed in the past year,
and it is now only valued at about $5.4bn, down from $84bnn at its peak in
2008.
Excluding its cash and the estimated value of its patents,
RIM's device business and its 78 million subscribers around the world are in
aggregate worth less than $1bn to investors.
Lost confidence
Retaining its customers' loyalty is a huge challenge.
"The organisations using multiple devices have lost
confidence in BlackBerry as a platform for the long term," said Alex
Bratton, CEO of Lextech Global Services, a company that creates mobile
applications for companies.
He added that as "people are doing hardware refreshes
they are going in another direction".
Fernando Alvarez, head of mobile solutions for IT services company
Cap Gemini, said the company is rarely asked to do projects using the
BlackBerry platform any more.
The BlackBerry dominated the market for mobile email until
the iPhone was introduced in 2007, but is now third in market share.
General Electric now says about one-third of the mobile
devices it issues to employees are iPhones. Other big companies that have
started to use a range of different devices include Amgen, FedEx, Caterpillar
and Cisco Systems.
A spokesperson for the US department of defence, one of
RIM's biggest customers, declined to comment on RIM's strategic review or
discuss any contingency plans if the company gets into further trouble.
Earlier this month, RIM announced that the Pentagon had
cleared six new BlackBerry models for use on its networks, extending their long
relationship.
The Pentagon has begun small pilot programmes using other
devices, according to Federal Computer Weekly, a publication that tracks US
government spending on technology. It estimates the US military has 250 000
BlackBerrys, 5 000 iOS devices and 3 000 Android-run devices.
Employee demand
The trend away from RIM has been fuelled partly by demand
from workers who crave the usability of devices running Apple's iOS and
Google's Android, and do not want to carry several smartphones.
A massive network outage last October that meant millions of
BlackBerry users lost use of email for many hours also pushed technology buyers
to look at alternatives.
"If it were up to IT managers, BlackBerry would still
be the device of choice, but with employees bringing their own devices there is
no going back," said Dan Croft, CEO of Mission Critical Wireless.
RIM's advantages include what industry experts widely
describe as superior security and device-management features that have made the
BlackBerry appealing to corporate IT managers and a crucial tool for police,
government and military use.
Apple and Google are adding new features in these areas with
each new release of their software but have yet to catch up with RIM, said Dino
Dai Zovi, a leading expert on mobile device security who is chief technology
officer of consulting firm Trail of Bits.
Still, with companies such as Symantec Corp and SAP's Sybase
division offering mobile device management software that secures, monitors and
controls mobile devices, companies are no longer tethered to the BlackBerry for
security reasons.
While those technologies are not yet as advanced as RIM's
offerings, they are sufficient for securing and managing email for many
corporate workers, security experts said.
Apple's iOS and Android are "ready for prime time"
for all but the highest-risk users, Lookout's Hering said.
A company's ability to shift to other devices can sometimes
depend on how much mobile equipment it has on its books.
Throwing out those devices before they have depreciated in
value could have big financial implications, according to Gary Curtis, who
works with financial services companies in his role as chief technology
strategist at outsourcing company Accenture.
But others say it would not be that difficult.
Lynden Tennison, the chief information officer of US
railroad Union Pacific Corp - which is still mainly a BlackBerry customer -
said that he had a plan for a worst-case scenario. "If RIM went away, was
bought or went bankrupt, what would we do?
"We could very easily transition to another provider," he said. If it happened overnight "we would be busy for a week or two provisioning phones, but it's not like it would put us in a serious world of hurt."