RIM shares plunge: Start looking for your BlackBerry contingency

RIM shares plunge: Start looking for your BlackBerry contingency

Summary: While RIM continues to fall steeply, enterprises are looking for contingencies should RIM sink and takes the crucial data network down with it.

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While Research in Motion's chief executive Thorsten Heins keeps his head firmly in the sand and pretends nothing is wrong amid claims the company is in a "death spiral," enterprise customers are looking for alternatives should the BlackBerry life-support data network crumble.

Bloomberg first reported that in anticipation of a potential buyout, enterprise customers are looking for "contingency plans" to the BlackBerry platform in case of a permanent service outage.

That expected day is edging ever closer. In only thirty days, RIM saw $2 billion wiped off its market cap. It now stands below the $4 billion mark at the time of writing. 

One word: "ouch." Maybe another for good measure: "doomed."

RIM is a tale of two parts: a smartphone making unit, and a supporting data network independent of mobile carriers.

Should a company eventually buy out RIM or acquire the data network, it may not be under any obligation to keep the 78 million BlackBerry smartphones in service

Naturally, the enterprise is worried: without the data network, you can call and send text messages, but there's no secure email for you. In fact, there's no email at all, and certainly no Web browsing. 

RIM's buy-out, split-off, or good ol' fashioned collapse could leave 78 million BlackBerry's as nothing more than expensive paperweights.

Though, switching from the humble BlackBerry to Android or iPhones isn't as easy as one might think. From a logistical point of view, RIM still offers an all-in-one solution that no other company has. 

It offers end-to-end secure email encryption with a reliable service and hardened, highly-secure smartphones. No other smartphone maker comes close to RIM's duopoly in the smartphone--data network tag team.

There are some companies that provide bolt-on technology to existing iPhones and Android devices like MobileIron, used by British money manager Thames River Capital. It opens up the doors for bring-your-own-device ("BYOD") policies in the workplace and enables compatible phones to connect and communicate securely, just as a BlackBerry would. 

Though, RIM has one additional component that enterprises --- including governments --- are keen to keep, and others fall short of: government certification.

Apple and Google are both rumoured to be seeking the government rubber stamp of approval, but BlackBerry's are still the only device to have government's content. Why? It's back to the data network, which provides the back-end secure infrastructure that gives the BlackBerry the edge. It's decentralised and RIM has no access to your enterprise emails (often much to a government's dismay.)

But BlackBerry owners: don't panic yet. Its data network business is generally seen as profitable and highly valuable, and other companies will likely be making their bids in the coming weeks to complement their own services, like Apple's iCloud, Google's Apps for Business, and Microsoft's Office 365 services. 

The Ontario-based company currently generates much of its revenues through BlackBerry smartphone sales to the business and enterprise market. But with many enterprise contracts expiring and RIM's downfall documented seemingly by the second, the company could see its expected second-quarter loss widen even more than expected. 

"RIM’s situation is dire, but even in a worst-case scenario, RIM’s servers aren’t likely to get turned off anytime soon,” said Current Analysis's Avi Greengart in the Bloomberg article. 

RIM has two clear options --- beyond the three sell, split, or sink options already on offer --- and it has to stomach it.

Either it can sell-off the data network to a third-party for whatever price it can under the condition that it will provide lasting support for the existing 78 million customers for two or three years, giving enterprises in particular ample time to make the switch to a viable alternative.... or it could not. 

It really is as black and white as that. And if it doesn't, the company will not only go down with the ship, but will shoot its fellow passengers as it does.

Image credit: YCharts.

Topics: BlackBerry, Government, Tech Industry

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9 comments
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  • Not one mention of Microsoft?

    An entire article about Rimm, secure email and Mobile devices and only a side mention of Microsoft? Really?
    Oknarf
    • Here ya go

      Microsoft! Microsoft! Yay! Yay! Yay!
      Microsoft! Microsoft! Here to stay!
      From the Surface to the Azure Skies
      Through amber waves of grain,
      The Windows of the future
      Open up for Ballmer's brain.
      Robert Hahn
  • Does RIM make money?

    Shares can drop because investors are more interested in short term profits then maybe long term.
    William Farrel
    • RIM makes a lot of money

      Has no debt, over 2 billion in cash.

      But the spin doctors and pundits can't help but kick RIM while they're down. Kind of like vicious kids in a schoolyard...

      Never mind the merits, it's more fun to cheer failure.
      sagec
      • Horsefeathers

        Don't tell people that RIM "makes a lot of money." They just announced a quarterly loss over $500 million.
        Robert Hahn
  • Funny thing about stock price

    It can have little to no relationship to the health of the company.

    RIM could very well have a stock price of $0.01 but be making boat loads of $$.
    itguy10
  • Ironic

    This is posted on day 2 of a (yet another) Good Technology outage. We are seeing email delayed and Good has yet to resolve. Had a good share of angry executives wanting a Blackberry so they can get email.

    I'll tell you know there are millions of goverment and fortune 500 companies still on BES / Blackberry and while some may be getting another solution in place it will take awhile to get them to another platform. You also have wireless carrier contracts, if as alluded totally shuts down - will carriers wave ETF's?

    Someone will keep the NOC running, be it carriers or whomever buys RIM. Thats likely a key thing preventing a sale / merger as while the NOV provides some positives a big negative is you have 78 million (and growing) users who do have a SLA in place and have a wireless contact so this would be a huge legal mess.

    I ran the numbers to move our Blackberry deployment to iPhone and even doing the iPhone 4 we're looking at double the cost we have with BES / Blackberry. And we cannot restrict the mobile device like we are Blackberry.

    Not just RIM is in a tough spot, all it's customers are too as there is really not another solution like Blackberry.
    MobileAdmin
  • Interpreting Graphs

    OK couple of points, yes doesn't the graph look shocking - But come on folks lets not Panic, instead look at other factors that may be around at the time.

    In my opinion it is simply reflecting the trends in the smartphone market.

    Mid 2008, Apple released the iPhone 3G in twenty-two countries - so no longer did RIM have a hold on the smartphone market, so one would expect a drop at this point. Certainly with all the hype around and lets face it really good marketing from Apple, I would expect sales and shares of other things dropped at this point. The world had gone iPhone mad from what I recall.

    Continuing to look at the graph - A recovery back to its original place in the market share for RIM I think would be unrealistic as its not the only kid on the block but still we see a gradual increase again.

    Then what happens, other devices start to appear. Although I have not looked at dates I would be willing to bet that the other drops match with Android and other decices.

    So maybe not the end - just simply a reflection of consumer choice - Interestingly if you look at the Gartner reports you will see that the iphone is not that far ahead of RIM in terms of market share.

    http://www.zdnet.com/blog/hardware/gartner-windows-phone-market-share-crashes/16279
    ATrill
  • Still the best!

    There is something missing here about RIM and that is global communications. RIM is the only company that provides communications wherever you are, whatever the network. The minimum is GPRS and you get connectivity to you mail and internet in the smallest village in India or Africa. NOBODY can do that. I was in a MS seminar about the new Windows Phone and I asked if MS had it. Nope.. and I asked why. MS didn't answer, but the ISP did. They said that RIM had the best data compression in business. The data bandwidth used by RIM is so small and the single cost of international data is so low that is subsided by the ISP's with a worldwide agreement that don't back charge each other. That is tech at it's best and it's really sad that RIM has not advertised their biggest feature against Apple and all the rest.
    ADboy