BlackBerry outage may cost RIM over $100 million

Oct 14, 2011
7

According to JPMorgan Chase analyst Rod Hall, the nearly four-day BlackBerry service outage may cost RIM more than $100 million. The service went down on Monday due to a hardware failure in Europe that caused a backlog on RIM's servers, which then brought down the service in the Middle East, Africa, India, Brazil, Chile, Argentina, and eventually the US and Canada.

RIM has been very apologetic about the situation and has updated customers with its progress throughout but has not revealed any plans regarding compensation for the downtime. During the press conference yesterday, co-CEO Jim Balsillie announced that the service was fully restored. He was asked about the matter of compensation, but responded that the company did not know at the moment as the focus and priority has been on getting the service back up and running.

Under RIM's service terms, the company is contractually obligated to maintain a certain ratio of up time for its servers. The nearly four-day outage could have breached the agreement and require RIM to pay out punitive fees. However, the company has not confirmed any amounts that it might owe.

Hall's estimate of $100 million is based on the monthly fee that RIM charges its wireless carriers for each active BlackBerry user. Although he admits a large margin of error due to the confidentiality of those agreements, he believes that RIM will indeed have to give a portion of those fees back to the carriers.

[via FinancialPost]


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