BlackBerry blackout could be costly
A shutdown of the wireless email system would have a profound financial impact on businesses.
By Grace Wong, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) - BlackBerry maker Research in Motion faces a possible shutdown of its sales and service, an outcome that could paralyze U.S. businesses and cost them dearly.

Research in Motion (Research) was dealt a setback Monday after the Supreme Court turned down a request to review a major patent infringement ruling against it.

RIM now faces a possible injunction that could result in service disruptions to its more than 4 million users. Hundreds of millions of messages are sent everyday from the wireless device, which plays a key role in the communication backbone of nearly every business and government sector in the United States.

"Pulling the plug on the BlackBerry could cost corporate America millions of dollars. The BlackBerry is more than e-mail but a handheld office, and if you shut down the BlackBerry, you shut off the data that powers American business," said Al Smith, president of Apresta, a company that provides software for wireless devices.

RIM has been preparing a software workaround in case of a shutdown. While the company hasn't publicized details of this plan, it says it will deploy it if necessary to maintain the operation of BlackBerry services in the United States.

But one analyst said RIM's contingency plan, which involves using different software to bridge the patent, isn't ideal because a judge could prevent the company from implementing the plan, if it is found that the technology still infringes on patents held by NTP -- the patent holding company RIM has been battling.

"It's not an elegant solution and it's not even clear if it's a viable solution," analyst Richard Williams of ICAP said.

Also, there could be resistance from customers who may have to deal with service disruptions while the software is rolled out.

"From our point of view, anything that forces a shutdown will speed up a settlement, which we view as a positive event," Williams said.

NTP is scheduled to file a request for an injunction on Feb. 1, although the judge who will rule on that request has not set a timetable on when to expect that decision.

Businesses that rely on the BlackBerry and which are feeling jittery can make the move to a different system, but that could get expensive.

Earlier this month, a technology research firm estimated it would cost a business with 1,000 users $845,000, or $845 a user, to migrate to a new wireless e-mail system.

The report from J. Gold Associates said businesses switching from one wireless e-mail system to another not only have to replace software but the actual handheld device itself.

"Most companies fail to realize the high cost and amount of disruption switching to a new wireless e-mail solution would entail. Companies must weigh the risks in staying put, versus the substantial costs in making a move to another wireless middleware platform," Jack Gold, principal at the company, wrote.

Costs for switching to a new system may run high, but the possibility for a BlackBerry blackout is giving competitors, such as Motorola (Research) and Nokia, more air time.

RIM said it added approximately 645,000 new subscriber accounts in the third quarter. ICAP's Williams said that's a decent gain, but pending litigation is impacting sales overall.

"(The dispute with NTP) creates uncertainty and most enterprise companies respond to that by creating back-up plans," he said.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.