What Jammed Your BlackBerry

The service outage prompts questions about whether the company infrastructure can support growth.
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Research In Motion (RIMM) finally has an explanation for the BlackBerry blackout that left its 8 million subscribers in the cold Tuesday night, unable to access email.

After two days of diagnostics, RIM blamed the "service interruption" on a new feature designed to improve the system, and said there was no lapse in its network security or problems with its network capacity.

Though RIM's reassurances that the BlackBerry outage was not caused by any security or hardware failure or a fault in its core software infrastructure should be comforting to users, the company still has questions to answer.

For users and investors, the issue is whether RIM has what it takes to ensure that its infrastructure can keep pace with its growth, says Tony Rizzo, an analyst for the 451 Group.

"The company expects to grow its base more than 50% over the next 12 months, and they do need to provide strong indications and evidence that scalability is not an issue," he says.

RIM may be blazing ahead, adding 1.8 million subscribers

last quarter, but without proof that its backup systems can perform as expected and its operations can scale, RIM could be tripped up by its own success.

Shares of RIM were off 3 cents to $132.46 midday Friday. The stock has been up about 6.5% in the three months since Jan. 19 and is trading about 11% off its 52-week high of $148.95.

RIM has said the outage was triggered by the introduction of a new "routine" that was designed to improve the system's cache.

The system routine was not expected to affect the real-time operation of the BlackBerry infrastructure, but it malfunctioned because the pretesting proved to be insufficient, the company said in a statement.

To add to RIM's troubles, its backup system and failover process -- or plan B -- which had been "repeatedly and successfully" tested in the past, did not kick in as expected.

To RIM's credit, says Rizzo, the company had restored the service in less than 12 hours with almost no complaints from users that they had lost emails.

"Technology does hiccup every once in a blue moon, and with RIM it certainly requires a blue moon to find any evidence of service disruptions historically -- a fact that is much more important than this service disruption," he says.

Still with increasing competition, RIM cannot take its subscribers for granted.

Motorola

(MOT)

, which bought one of RIM's biggest push-email rivals -- Good Technology in November -- could capitalize on fears that RIM may be growing too fast.

RIM needs to needs to address publicly what its plans are for building ongoing infrastructure that can match its anticipated growth, says Rizzo.

And it may have to shape up quickly. With immense investor interest, and rivals waiting to pounce, RIM can't afford to get sloppy.