Research In Motion's BlackBerry could lose its iconic status in the eyes of corporate and retail subscribers alike if it doesn't manage to stem service issues like the ones that led to two major outages in less than a year, analysts say.
A three-hour service problem left subscribers across the Americas with spotty or non-existent access to wireless e-mail on Monday. RIM remained unable to explain the problem on Tuesday, saying it needed more time to find the root cause.
The outage hit RIM's most important market, with about two-thirds of its roughly 12 million subscribers in North America.
The region was also the epicenter of a longer outage that snarled wireless e-mail last April. That time, RIM blamed a new storage feature which hadn't been properly tested.
Research Capital analyst Nick Agostino said that in previous years, there was "relatively little" disruption to RIM's service, used by executives, politicians, lawyers and other professionals to send secure e-mail to and from handsets.
Now, two major outages have occurred in the space of 10 months.
"Obviously, if this sort of frequency and pattern continues, then it'll certainly start to turn people off longer term," Agostino said.
Like last year, most observers agreed the latest service problem probably doesn't mean corporate and retail consumers will give up on the BlackBerry immediately.
However, even without outages, information-technology managers should be looking for alternatives, said Avi Greengart, research director at Current Analysis.
"Any outage is a cause for concern, particularly if you're an IT manager," Greengart said. "Your job is to ensure service availability."
While many IT managers have some fallback options in place, the latest outage could spur more to find alternatives, he said, but added that handing employees two different devices could be impractical.
Despite last year's service disruption, investors remained enamored with Waterloo, Ontario-based RIM for the rest of 2007. The company's shares more than doubled in the year amid impressive growth in its subscriber base and profits that beat analyst expectations.
However, the stock has had a rough start to 2008, falling about 18 percent so far amid worries over a possible U.S. recession and its potential impact on BlackBerry orders.
RIM shares were down $1.17 at $93.30 on Nasdaq. They fell $1.40 to $93.22 on the Toronto Stock Exchange.
And while problems with service may not add to concerns over RIM's fundamentals, they certainly aren't helping.
"We have some gnashing of teeth, and we move on," said Iain Grant, managing director at SeaBoard Group in Montreal. "If another one happens relatively soon, I think ... some harder questions will be asked."