BlackBerry faces monster bill over meltdown

BlackBerry could face a multi-million-dollar compensation bill as it slowly recovers from a three-day global meltdown.

Half of its 70 million smartphone users are believed to have had disruption to their email, web browsing and instant messaging following a server crash at the firm's data centre in Slough, Berkshire, on Monday.

Any such payout could be huge, and disastrous for a company which is struggling against fierce competition and has seen its share price fall by 80 per cent in three years.

BlackBerry users, including multinational corporations, will be looking to their mobile networks to provide refunds or a period of free services. These networks will, in turn, put pressure on BlackBerry's Canadian parent company, Research In Motion (RIM) to cover the cost.

The company has ruled out hacking or sabotage at the data centre and revealed that the failure occurred in a 'core switch' computer system which receives and redirects millions of emails and messages every minute.

Last night, BlackBerry said the service had finally been fully restored but that it will take some time for the backlog to be cleared through its systems.

The firm's co-chief executives, Mike Lazaridis and Jim Balsillie, said that there are no current plans to offer compensation to customers, but did not rule it out. Mr Balsillie added: "That is something we plan to come back to very soon. Our priority until this moment has been making sure the system's up and running.'

But BlackBerry's bosses have been accused of mishandling the crisis by failing to fix the problem promptly or explaining to customers what was happening.

Ordinary consumers and celebrity alike, ranging from Jemima Khan to Sir Alan Sugar and Alastair Campbell, have taken to Twitter and the web to highlight the company's failures and vent their fury.

And the meltdown could not have come at a worst time, as Apple will be launching its updated rival handset, the iPhone 4S, in the US, Britain and many other countries today.

Investment analyst Will Draper, of Espirito Santo, said the mobile networks may find it difficult to force RIM to cover the compensation bill. He said: "This was a three-day outage - that is 10 per cent of your working month.

"So there will be compensation claims, and I'm pretty sure they'll try to pass it on to RIM, but my feeling is that it will be very difficult to make them stick.'

Just before the firm claimed that its server problems had been fixed, Mr Lazaridis took to YouTube to apologise. In his video message he said: "We have let many of you down. But let me assure you we are working around the clock to fix this. We are now approaching normal service levels in Europe, the Middle East, India and Africa. We expect to see continued progress and possibly some instability as service levels come up to normal levels everywhere. I would like to give you an estimated time of full recovery around the world, but I cannot do this with certainty at this time.'

Professor Gita Johar, of Columbia Business School in New York, said the failure was "pretty bad' for the company's reputation.

"Once you lose consumers, it's hard to get them back or to get back their trust,' she said.

"RIM's users will think about switching and smartphone users who might have bought a BlackBerry are unlikely to do so now.'

- DAILY MAIL