RIM Goes From Bad To Worse: First An Outage, Now A Lawsuit

by Gaurav Kheterpal on October 28, 2011

I’m fast running out of adjectives to describe RIM’s dwindling fortunes. The Waterloo giant is an apt example of the golden rule – it can get worse before it gets better. The more RIM tries to pull itself out of the hole, the deeper it sinks. Earlier this month, RIM’s misery was worsened by a series of failures in its private network that disrupted BlackBerry service to millions of customers across four continents.

Though the company quickly went on the defensive offering free apps and technical support, the damage has been done. Even as RIM declined to comment on the extent of monetary loss caused by the recent outage, analysts anticipated the compensation plan could reach into the hundreds of millions of dollars.

And RIM’s legal troubles over the recent lawsuits have just started – the company is facing two class action lawsuits from users of the devices in both the United States and Canada. The lawsuits accuse Research in Motion of breach of contract, negligence and unjust enrichment.

Sad day for a company which once took pride in its high-quality innovative products and unparallel customer service.

The U.S. lawsuit, filed on Wednesday in the federal court in Santa Ana, California has been filed on behalf of all U.S. BlackBerry customers with an active service agreement at the time of the issues, who would have suffered from a loss of access to a number of BlackBerry services. The Canadian lawsuit, filed in Quebec on Tuesday, claims that RIM needs to “properly compensate BlackBerry users who have paid for services that they were unable to use.”

While the lawsuits may have major financial implications, I’m more worried about the diminishing brand value of Research In Motion. Though the company’s co-CEOs had apologized to millions of BlackBerry customers for the four-day outage, a majority of BlackBerry users want to seek monetary compensation for loss of email, BBM, and/or Internet service for up to two business days. They claim that pay a monthly fee to their wireless service providers for data services which they were deprived of, thereby they “paid for a service they did not receive”.

Most enterprises believe that RIM needs to do more than offer a free month of information technology services and technical support for enterprise customers and free access to $100 worth of premium app downloads. Customers want action and fast, gone are the days of sweet talk and PR-centric announcements.

RIM declined to comment on the lawsuit because it had not yet been served with a copy.

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Written by: Gaurav Kheterpal. www.digitcom.ca. Follow TheTelecomBlog.comby: RSS,TwitterFacebook, or YouTube.

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