Blackberry 2014 Annual Report Download - page 47

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BlackBerry product line to coincide with the launch of its new platform, BlackBerry 10. The move consolidated the Company’s
brand into a single cohesive global presence. The new corporate name was approved by shareholders at the Company’s Annual
General and Special Meeting in July 2013. The Company also made significant investments in marketing in cooperation with
its U.S. carrier partners and its other global customers to promote and support the launch of BlackBerry 10. However, the
“BlackBerry” brand may be negatively impacted by a number of factors, including service outages, product malfunctions,
product performance not meeting expectations, a user experience which does not compare to that of the Company’s
competitors, data privacy and security issues, and perceptions of the value and future success of the Company’s products and
services. In addition, the Company believes that uncertainty relating to the Company's recently completed strategic review
process and a loss of market share, particularly in the United States, have adversely affected the perception of its brand and
efforts to implement and realize the benefits of the Company's strategic initiatives may not be successful in maintaining and
enhancing the brand. If the Company fails to maintain and enhance the “BlackBerry” brand, or if the Company incurs
excessive expenses in this effort, the Company’s business, results of operations, and financial condition will be materially and
adversely affected.
Network disruptions or other business interruptions could have a material adverse effect on the Company’s
business and harm its reputation.
The BlackBerry service is provided through a combination of the Company’s network operations and the wireless networks of
its carrier partners. The Company’s operations rely on a significant degree on the efficient and uninterrupted operation of
complex technology systems and networks, which are in some cases integrated with those of third parties. The Company’s
networks and technology systems are potentially vulnerable to damage or interruption from a variety of sources, physical or
logical, including damage or interruption by fire, earthquake, power loss, telecommunications or computer systems failure,
cyber attack, human error, terrorist acts, war, and the threatened or actual suspension of BlackBerry service at the request of a
government for alleged noncompliance with local laws or other events. The increased number of third party applications on the
Company’s network may also enhance the risk of network disruption and cyber attack risk for the Company. There may also be
system or network interruptions if new or upgraded systems are defective or not installed properly. The Company continues to
work to develop, implement and test its Business Continuity Plan and there can be no assurance that the measures taken by the
Company to date, or measures implemented by the Company in connection with its Business Continuity Plan, to manage risks
related to network disruptions or other business interruptions will be adequate or that the redundancies built into the Company’s
systems and network operations will work as planned in the event of a disaster.
As the Company’s requirements to handle more data traffic driven by new service offerings increases, additional
strain has been placed on the technology systems and networks, thereby increasing the relative risk of a network
disruption or other business interruption.
The Company has experienced network events in the past, and any future outage in a network or system or other unanticipated
problem that leads to an interruption or disruption of the BlackBerry service, could have a material adverse effect on the
Company’s business, results of operations and financial condition, and could adversely affect the Company’s longstanding
reputation for reliability, thereby resulting in end users purchasing products offered by its competitors if reliability is no longer
considered a differentiating factor of the BlackBerry wireless solution. As the Company moves to support more applications or
services, the expense to establish and maintain a resilient and secure network services capability may significantly increase.
In addition, poor performance in or any additional interruptions of the services that the Company delivers to its customers could
delay market acceptance of its products and services and expose it to costs or potential liabilities, including under service level
agreements (“SLAs”) with certain customers. The SLAs specify the events constituting “down time” and the actions that the
Company will take to rectify or respond to such down time, including in certain cases, the payment of financial penalties. For
example, as a result of the service interruption that occurred in October 2011, the Company lost service revenue and was
required to pay penalties in the third quarter of fiscal 2012 and continues to face class action suits.
The Company is subject to risks inherent in foreign operations.
Sales outside North America represented approximately 73% of the Company’s revenue in fiscal 2014, which was comparable
with fiscal 2013. The North American market, particularly the United States, has become increasingly competitive and the
Company intends to continue to pursue international market growth opportunities, such that international sales are likely to
continue, at least in the near future, to account for a significant portion of the Company’s revenue. The Company has
committed, and intends to commit, significant resources to its international operations and sales and marketing activities. The
Company maintains offices in a number of foreign jurisdictions, and could potentially open additional offices in other
countries. The Company has limited experience conducting business in some of these jurisdictions outside of North America,
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