Blackberry 2012 Annual Report Download - page 59

The Company’s ability to sell the BlackBerry wireless solution is dependent on establishing and maintaining
relationships with network carriers and distributors.
The Company is dependent on its ability to establish, maintain and develop new relationships, and to build on existing relationships
with its network carrier partners, which the Company relies on to promote and deliver current and future products and services, and to
grow its subscriber base, particularly in the United States, Canada and Europe where the Company is dependent on a limited number
of network carriers. In addition, the Company’s ability to establish, maintain and expand its market reach is increasingly dependent on
establishing and maintaining distribution relationships with third party and indirect distributors. This is particularly the case in
emerging markets such as the Middle East, Asia and Latin America. There can be no assurance that the Company will be successful
in establishing new relationships, or maintaining or advancing its existing relationships, with network carriers or distributors. Non-
performance by the Company under its contracts with network carriers or distributors may have significant adverse consequences that
may involve penalties to be paid by the Company for non-performance. For example, in October 2011, the Company experienced a
service interruption which resulted in the loss of service revenue and the payment of penalties in the third quarter of fiscal 2012
totaling approximately $54 million related to the unavailability of the Company’s network. If any significant customer discontinues
its relationship with the Company for any reason, or reduces or postpones current or expected purchase commitments for products and
services, RIM’s business, results of operations and financial condition could be materially adversely affected.
Factors, some of which are largely within the control of network carriers and distributors, that are important to the success of the
BlackBerry wireless solution, future product and service revenue and the growth of the Company’s subscriber base, include:
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• the
q
ualit
y
and covera
g
e area of voice and data services offered b
y
the carriers;
• the degree to which carriers and distributors actively promote or subsidize the Company’s products and the size of the subscriber
base to which these efforts are directed;
• the extent to which carriers and distributors offer and
p
romote com
p
etitive
p
roducts and services;
• the generation of service revenues from billings to BlackBerry subscribers from infrastructure access fees that are charged to a
carrier or reseller, which the carrier or reseller in turn bills to the BlackBerry subscriber, and the willingness of the carriers and
subscribers to
p
a
y
such fees;