There’s bad timing and then there’s what happened to Research in Motion (TSX:RIM) last week. Already on the defensive for a declining market share, a less than stellar launch of its Playbook tablet, and a share price that is near five year lows, Research in Motion faithful were further tested by the worst service outage in the company’s history.
A core switch failure at the company’s Network Operations Centre in Slough, England was to blame for the disruption, which began in Europe and eventually spread, over the course of three days, to Asia, The UAE, Latin America, Canada and the US. Last week, with many still not sending or receiving data from their BlackBerrys, the CBC’s Lang and O’Leary Exchange called on Cantech Letter’s Nick Waddell to talk about what this outage means for the Waterloo tech giant. The interview hasn’t been posted yet on the show’s website, but below is a transcript of the discussion.
Amanda Lang: I want to bring in Nick Waddell, Founding Editor of Cantech Letter. Great to have you with us. Nick let’s start with how serious you think this is. How big a blow for Research in Motion?
Amanda, thanks for having me, first of all. It’s very serious. I have been following RIM’s public relations efforts and the reaction to it all day long and people are understandably angry. A lot of people in public relations are saying this is a nightmare for the company. They’re pointing out that the company’s Twitter accounts, for instance, haven’t been updated. One person I talked to briefly today, Alastair Cambell who is famous for having been the communications manager for Tony Blair, who said this is a public relations nightmare and that something has to be done at RIM because this is very, very serious.
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Kevin O’Leary: I guess at the end of the day every technology fails occasionally and I have had outages with RIM before for a matter of hours, but I don’t recall, since I have been using this product, which has been for many years, a multi-day meltdown. Has this ever happened before? I can’t remember it…
There was a more minor meltdown in 2009. But you’re right, RIM is known for having a reliable product and I think that’s why there’s more attention on what has happened in the past three days. I think there is another issue at play here. There is a piling on effect going on in that there is a lot of negativity about Research in Motion right now and there is a confirmation bias in that people are looking for any bad information on the company and bringing it to the headlines.
Amanda Lang: Some would say that given all the bad news about RIM the stock has actually held a floor pretty well. What does that say, in your view, about this business. Is this sort of a bunch of bad news, but it will pass, they’ll weather it?
Well, Kevin alluded to the fact that this is a company that has grown from $6 billion in 2008 to $20 billion in revenue last year. What is often lost to the casual observer of Research in Motion is that the company is still growing at a fantastic rate. Now they’ve hit a bump in the road, which they say is growing pains and happens to companies of this size. i think that perhaps the stock is maintaining a certain level because of its perceived breakup value.
Amanda Lang. Alright we’ve got to leave it there. Nick, great to have you with us for this…