BlackBerry Outage Comes at Worst Possible Time for Brand

As iPhone 4S Starts Shipping, Frustrated RIM Customers Lash Out on Social Media


For a smart phone struggling to keep its foothold in the global market, Blackberry's service hiccups this week couldn't have had worse timing.

As millions of BlackBerry-maker Research in Motion's customers continue to social-media broadcast trouble with the devices' email and messaging after days of major outages, Blackberry's competitors are flying high and maybe even enticing users away from the now old-hat smartphone. Apple, which will ship its new iPhone 4S on Friday, is raking in record-breaking pre-orders -- more than 1 million in 24 hours -- and is enticing customers with cut-rate older models and less expensive plans on its newest carrier Sprint.

"Dear BlackBerry. Please give me a refund so I can buy an iPhone," said one angry BlackBerry user on Twitter.


This comes on the heels of Research in Motion's global smartphone market share dropping to 12% in the second-quarter compared to 19% for the same period 2010, largely thanks to explosive iPhone and Android-device sales.

Blackberry's trouble began earlier this week when European users began experiencing trouble accessing emails and messages. The problem spread to North America early this morning and now affects users on all continents except Antarctica. As the service outages crossed the Atlantic, so did the tweets and Facebook posts.

"Bye [BlackBerry,] Hello Galaxy," wrote one Facebook user on BlackBerry's wall about a competitive Android-based smartphone. A hashtag for "Other Uses for Blackberry" in Spanish was trending on Twitter globally Wednesday.

It remains to be seen if RIM's crisis response will be enough to keep its shrinking customer base, which includes many business users unable to access work messages this week. So far, the company's done little outside of posting updates to its websites and Twitter to appease those customers, confirmed a RIM spokeswoman.

What's more, the angry BlackBerry users affected by the outages shouldn't expect any consolations such as complementary service or perks just yet. There's no appeasement plan in place at this point. "At this time, I'm just concentrating on getting the system up and running again," said David Yach, RIM's chief technology officer for software.

On a short call with reporters today, the company said fixing the outage, which was blamed on a failure of technology and backup systems in Europe, was its top priority and most likely not due to hackers or a security breech. For a company that's gone after the business community to have outages in the middle of the work week, tweets and a short press conference may not be enough.

"They're doing crisis response the way they're designing their software these days -- it's outdated, slow and not being well-received by their customers," said Gene Grabowski, senior VP-chair of the crisis and litigation practice at Levick Strategic Communications. It also appears to be damaging the BlackBerry brand, which is already stumbling behind such powerhouses as iPhone.

So far, Blackberry has suffered significant declines in brand perception in the U.K., based on survey results from YouGov BrandIndex, which interviews 5,000 people each weekday online. The brand declined from somewhat positive response Friday before the outages to clearly negative Tuesday.

In Germany, declines were less pronounced with only a slight drop in perception. BlackBerry brand perception in the U.S. has remained flat by YouGov's measure because the outage didn't affect North America until Wednesday.

Meanwhile, iPhone brand perception is soaring in all three markets.

Could Combined Data From AT&T, T-Mobile Be Powerful Ad Tool?

On the surface, AT&T’s $39 billion acquisition of rival T-Mobile would not seem to have huge implications for the fledgling but fast-growing mobile advertising space—unless the two companies decide to leverage all that customer data to run more targeted mobile ad campaigns, say industry experts.


Currently, while AT&T does maintain its own in-house mobile ad network (AT&T Advanced Ad Solutions), neither it nor T-Mobile is a major ad seller. A few years ago, media companies and advertisers embarking on mobile campaigns had little choice but to vie for space on each carriers’ "decks," i.e., their walled garden-like portals. But the importance of such positioning has waned. “On deck [advertising] is no longer a force,” said Eric Bader, chief strategy officer at Initiative and former president of the mobile marketing firm BrandinHand.

That’s because with the emergence of smartphones like the iPhone, mobile users surf the Web just as they would on PCs and don’t need their hands held by the wireless carriers the way they might on basic "feature" cell phones. And smartphone users surf the Web way more than feature phone users do.

“Mobile advertising wasn’t really taken seriously until the advent of smartphones,” said Sarah Baehr as svp, director of digital publishing solutions at MediaVest. Now, big media companies with popular mobile extensions, such as ESPN.com, as well as a handful of mobile ad networks, have emerged to take a large share of the estimated $1.2 billion mobile ad market (per eMarketer), including Google’s AdMob and Millennial Media.

In addition, there are companies like appssavvy, which help brands advertise in mobile apps. And there is Apple’s iAds initiative. “Some paid media dollars are going to buy mobile ad network display, but more money is starting to flow into mobile social, in-app, branded apps, deals and shopping,” added Bader. “That's where the center of gravity is moving to.”

That’s not to say that the AT&T and T-Mobile deal doesn’t matter to the digital ad industry. For one, among T-Mobile’s 35 million subscribers, “some will get iPhones,” said eMarketer analyst Noah Elkin. “That gives Apple renewed momentum,” while driving more mobile Web and app consumption.


But an even bigger potential ramification of the deal is data—mobile’s “golden nugget” as Baehr put it. Assuming AT&T wants to go there. “In the past, carriers were dead set against it,” said Phuc Truong, managing director U.S., of the mobile marketing firm Mobext. “Lately they’ve listened more.”

Traditionally, carriers have stayed far away from using their customers' data to better target advertising for fear of fanning privacy fears among consumers or regulators. But Truong theorized that given AT&T’s now massive data footprint—with T-Mobile, it claims more than 130 million subscribers—the company could launch some sort of ad product that would use its customers' data to target ads based on geography, household size and spending habits.

Or AT&T could sell that data to another player, such as a mobile ad network or individual publishers. “They’d have to do it in a way that avoids using [consumers’ actual names]. But that’s the really interesting part of this deal. The carriers definitely don’t want to become just dumb pipes like the ISPs,” said Truong.