After a worldwide outage left many BlackBerry customers without e-mail, IM, and Web browsing from Monday to Thursday last week, Research In Motion today unveiled its peace offering to customers: $100 worth of free apps to subscribers and one month of free technical support for enterprise customers. While the free software and services are nice gestures, the outage, which RIM acknowledged was the worst in its history, seems symbolic of the company’s slow downfall. RIM’s troubles are such that free copies of Bejeweled and The Sims 3 won’t be enough to restore the company to its former glory, to say nothing of assuaging fears that the company could have more outages down the road. In the cost/benefit analysis of going all in with RIM (and that's part of the problem, it's an all-in proposition), RIM has given IT shops plenty of reason to second- and third-guess.

RIM’s biggest problem is it is being left in the dust by the consumerization of IT. Business and consumer technology needs have uneasily coexisted for years, but consumerization is winning, and last week’s BlackBerry outage tips the scales even further. RIM has spent the past few years being pounded on the consumer front, and consumer smartphone preferences have brought millions of non-BlackBerry mobile devices into the enterprise. RIM was a hit with large corporations because of its robust enterprise support, uptime and security, and management tools that give IT shops the control they want over mobile devices. And let us not forget: in years past, RIM was the only game in town for quality mobile business smartphones. If you wanted a secure, mobile, scalable enterprise e-mail solution, chances are that RIM was being tapped to talk to your Exchange or Lotus Notes servers.

Times have changed dramatically. Exchange is ruling commercial e-mail rollouts in the enterprise, and ActiveSync has become practically a lingua franca of mobile e-mail. RIM is no longer needed in the same way it once was. At the same time, the iPhone, Android, and other mobile platforms are now good enough for most business scenarios. Then last week happened: RIM fumbled, and fumbled badly. The company wasn’t even able to execute on its top value proposition.

What RIM customers could always count on, more than anything, was a platform that made sense for business. While apologizing to customers last week, RIM CEO Mike Lazaridis said the company had been operating at 99.97 percent uptime over the previous 18 months. That’s a good number, but RIM can’t afford any significant outages, period. For all the benefits RIM provides to IT, its system is another point of failure that can prevent a user from receiving e-mail. Last week, RIM said it suffered a failure in the “dual redundant, high-capacity core switch designed to protect the infrastructure,” and that it is still trying to understand why the system failed in the way it did and what can be done to prevent another such problem.

This won’t help RIM win any new customers and may cause existing customers to jump ship. RIM’s core market is the enterprise, and while the free month of support is nice for budget-conscious corporations, $100 worth of free apps is meaningless compared to an outage that might have left everyone from salespeople to the CEO without mobile e-mail. RIM isn’t even making all of its apps eligible for the free offer. RIM says the selection will grow, but as of now it includes just 12 apps, including five games. While some customers may theoretically be swayed by $100 worth of free apps, the practical implementation could leave others unhappy.

Yes, BlackBerry Messenger is popular, and BlackBerrys have their fans among consumers, particularly those who prefer physical keyboards over touchscreens. Yet key missteps by RIM and the soaring popularity of the iPhone and Android devices put the company’s future in jeopardy even before last week’s outage. RIM has 70 million subscribers, but BlackBerry accounted for just 11.7 percent of worldwide smartphone sales to end users in Q2 2011, down from 18.7 percent the previous year, according to Gartner.

Although RIM quarterly sales grew from 11.6 million to 12.7 million, the iPhone topped that by jumping from 8.7 million to 19.6 million while Android grew from 10.7 million to 46.8 million. The numbers get a lot worse for RIM when you compare its platform to iOS as a whole, because of the success of Apple’s iPad and commercial failure of RIM’s BlackBerry PlayBook tablet. RIM has also been slow to release phones based on QNX, the successor to BlackBerry OS, and by the time that happens, RIM’s share of the market is likely to have eroded even further.

Losing the enterprise

RIM is losing the enterprise to Apple and Google even though Apple and Google haven’t put much effort into marketing their phones as business tools. Consumers are increasingly tech-savvy and know what the devices in their hands are capable of, and are insisting that IT shops provide mobile access to e-mail at the very least. While IT has historically been wary of consumer devices, it’s getting harder for IT shops to say no to the iPhone and Android because both have boosted support for Exchange ActiveSync, the de facto standard for bringing corporate e-mail to non-BlackBerry phones. BlackBerry offers more administration options, but most businesses may be satisfied with the core features available from competitors, like encryption, password unlock, forced PIN entry and remote wipes. The combination of consumer preferences, iPhone and Android becoming good enough for most business scenarios, and last week’s lengthy BlackBerry outage give businesses fewer reasons to stick with RIM.

IT shops may certainly be worried about security threats from smartphones, originating both from mobile Web exploits and malicious apps, particularly given the fact that Google has been forced to remove malware-containing applications from the Android Market. But trusted enterprise names are on the case. VMware, for one, is preparing a virtualization platform for Android that will keep a user’s work environment segregated in a secure bubble that doesn’t touch the user’s consumer apps and data. New technologies are allowing enterprises to build private app stores for iPhones and Android. And while Microsoft has failed to gain any significant share of the smartphone market, Windows Phone is improving and has security features like sandboxing to prevent applications from corrupting system files and applications. If Microsoft ever gains headway against the consumer giants of iPhone and Android, Microsoft’s enterprise experience could provide another alternative to BlackBerry.

While RIM is unlikely to ever regain its former position at or near the top of the smartphone heap, the loyalty of its existing customer base and BlackBerry’s appeal to the most security-conscious organizations may give Lazaridis and crew time to salvage the company. First, RIM must provide a full explanation of last week’s core switch failure. Lazaridis last week declined to say which vendors’ hardware products were involved, because RIM hadn’t finished a root cause analysis. Releasing full details of that root cause analysis upon completion, instead of just a one- or two-sentence summary, will be key in beginning to regain customers’ trust. RIM must also prove to customers that its network won’t suffer any further catastrophes that take days to fix. If RIM can’t keep the network running, its attempts to differentiate itself from iPhone and Android with better business features will be futile.

Beyond the enterprise, RIM will need a killer consumer phone to regain some of the market share lost to the iPhone and Android. Unfortunately for RIM, its failure to attract consumers with the PlayBook tablet and last week's outage give us little confidence in the company's ability to win over consumers, or even to stop its slow descent into enterprise irrelevance.