BlackBerry's biggest fans, particularly at the major US banks, are casting about for alternatives. While BlackBerrys are still considered the most secure smartphone, the brand is swiftly moving from "must have" to "must I have?"
"This outage couldn't have come at a worse time," says Francisco Jeronimo, research manager at analyst IDC. "It harms BlackBerry's brand.
"Corporations, users and mobile operators are now asking themselves: how reliable is RIM?"
Activist shareholders, egged on by financial analysts, are hammering on the boardroom door, calling for Lazaridis and Balsillie to leave. Chief among them is Vic Alboini, who runs Jaguar Financial, a merchant bank which claims to have support from 12 of RIM's top 20 stock-holders for a change at the top.
"Even Amazon is coming out with a mobile platform," he says. "There's a lot of competition out there and there are only going to be three to five players in the next few years. Where is RIM going to be in that environment?"
Alboini believes RIM can be saved with a "transformational" chief executive and more technology expertise on its board. He has a point: of the seven independent directors, only two have technology or telecoms experience.
Balsillie and Lazaridis are the only managers with a position on the board, and they jointly hold the chairmanship, a situation which has drawn protests from other shareholders.
Between 2006 and 2009, the company had no chair at all. It was a period during which critics say Balsillie took his eye off the ball. An avid ice hockey fan, he made a number of unsuccessful attempts to buy US professional teams and relocate them to Canada. The adventure brought him into conflict with the National Hockey League, which declared his US$240 million bid for the bankrupt Phoenix Coyotes of Arizona inadmissible because he lacked the "good character and integrity" needed to own a franchise.
Meanwhile, RIM's competitive advantage was slipping away. In 2007, Nokia and RIM held the market between them. Now the field is more evenly spread, with innovation led by Apple and Google's Android operating system, in partnership with Motorola and east Asian manufacturers like HTC and Samsung. Nokia has imploded, abandoning its own Symbian operating system in favour of Microsoft's Windows Phone in a move that has left it unable to compete for most of this year while it works through the transition.
Worldwide, RIM's market share peaked at 20 per cent in 2009, according to IDC.
At the time, no one except Nokia sold more smartphones. Apple had 15 per cent of the market, but it has continued to grow. By the summer, RIM's share was down to 12 per cent, Apple was at 19 per cent and growing, and Samsung had sprung to 16 per cent.
"Market leaders who have strong and comfortable positions don't see that, from one day to the other, things can change," says Jeronimo. "I haven't seen another company in the tech sector lose market share and stock value as quickly as Nokia and RIM have done in the last year."
Only in Britain has BlackBerry continued to capture hearts and thumbs, remaining the most popular handset-maker.
Apple has had its upheavals in recent months, including the death of Jobs. But pre-orders of its latest handset, the iPhone 4S, have broken records.
The RIM website describes Lazaridis, who famously built a record player from Lego aged 4, as a "visionary, innovator and engineer of extraordinary talent". But while technology's other famous Lego fans, Sergey Brin and Larry Page at Google, have fallen over themselves to develop new products, Lazaridis has not.
Until last year, he believed that touchscreen handsets would never catch on with corporate users, who still mainly needed their phones for calls and to type business messages.
He may have a point: one hedge fund manager who spent her morning queueing for a new iPhone said it would only be for personal use. "Even with the disruptions, I prefer a BlackBerry for work because it's easier to type emails."
A senior banker at Morgan Stanley, who was on the road during every day of last week's outage, said: "My first reaction was to be cross with my IT directors. I'm not going to change my view because of BlackBerry's outage, but I need my bank to have a contingency plan."
He is pleased his employer is trialling iPads, but only wants them as a fallback.
RIM has nonetheless decided to compete directly with Apple. Last spring, it bit the bullet and scrapped its operating system in favour of something more web-friendly, and bought a small company called QNX Software Systems. The QNX handsets will not be ready for some months and RIM shareholders may want to await their arrival before deciding on a management change.
But the omens are not good. In April, RIM launched a tablet computer, the BlackBerry Playbook, based on QNX. It failed to take off, selling 500,000 units in its first quarter and 200,000 in the following three months. Apple has sold more than 30 million iPads since April 2010.
Apple showed that tech companies can come back from the brink. But finding a visionary leader is easier said than done. Finding a cash-rich buyer may be easier. Oracle is thought to be keen to get into hardware and has US$32 billion in cash on its balance sheet. Google had US$36 billion when it announced a US$12.5 billion bid for Motorola.
Apologising for the system failure on video last week, Lazaridis told his customers: "I'd like to give you an estimated time of full recovery around the world, but I cannot do this."
Those hoping for a return to normal service at what was once a pioneering company may have to wait some time.
- Observer
