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Having all communication in a region pass through a single third party server is such a big design flaw! If only other companies made decent qwerty keyed phones, picking a successor to my Blackberry wouldn't be so hard.
I don't see anything that says it was a single server (I'm taking your words literally).

Any wildly popular (wildly is debatable, nonetheless they have many customers) service can put itself in to this situation if it does not have failover cases.

If you're taking me literally, do allow me to change that to "datacenter". I'm talking about email! Very little reason for push mail these days. Internet's fast and cheap and IMAP+ is as fast as push. And I've never seen gmail go down. Why tie all blackberries down to the blackberry datacenter in the region?
That would indeed be the biggest issue.

You are right in that not properly having some type of failover and thus funneling all traffic to a single region or datacenter hurts.

I would have thought that a Corp as big as RIM is that they'd be able to hire some seriously good talent which address this issue. Especially since I believe one of the big points they use to sell to business is the 'Enterprise stability' line.

I'm the only one seeing this as the announcement of RIMs downfall? One of the things that really held BBs still going was that it's in almost all corporate environments. But I think a lot of users will jump ship after this. At this point RIM is in serious problems.
They've had outages before and it doesn't seem to change anyone's opinion of them. That keyboard is like crack for some people - no matter how bad the rest of the offering is, they keep coming back for that keyboard.
They got me with the 4 day battery and the sweet sensitive laser pointer. I do have an Android phone on the side though, but I just can't get myself to charge it everyday and when I think of it, it's dead.
As well as the corporate market, RIM also has, at least in the UK, a large teen market. They can't get enough of Blackberry Messenger. You hear it on every bus, tram and train: "What's your pin? I'll BB you..."

It's nowhere near as big as the corporate market but it's there.

The article makes it sound like BlackBerry proxy all EMEA network traffic through their UK servers. Does anyone know if this is correct? If so, I wonder how easily the UK government could get their hands on it.
Isn't that the idea?
Your phone... is now... a phone!