U.S. Federal Agency Switching 17,600 Employees From BlackBerry to iPhone: Report

Reuters is reporting that the U.S. Immigration and Customs Enforcement [ICE] agency is ending its contract with BlackBerry maker Research In Motion (RIMM), as it intends to purchase $2.1 million worth of iPhones for its 17,600 employees. According to ICE, RIM’s BlackBerry phones, which have been used by the agency for 8 years, “can no longer meet the mobile technology needs of the agency.”  In ICE’s opinion, Apple’s tight controls of the hardware platform and the operating system on the iPhone provide a better solution for the agency’s operations and its security requirements.

ICE went on to describe how Apple (AAPL)’s iPhones will be used:

“The iOS services will be used by a variety of agency personnel, including, but not limited to, Homeland Security Investigations, Enforcement and Removal Operations, and Office of the Principal Legal Advisor employees”, ICE said. “The iPhone services will allow these individuals to leverage reliable, mobile technology on a secure and manageable platform in furtherance of the agency’s mission.”

ICE made it clear that the iPhone switch will be made soon.

RIM’s vice president of government solutions Paul Lucier said in an emailed statement to Reuters that while the company was “disappointed by [ICE’s] decision,” it was “working hard to make [RIM’s] new mobile computing platform, BlackBerry 10 [RIM’s twice-delayed BlackBerry 10 phones is due out in early fiscal 2013], meets the future needs of government customers.”

It seems as though RIM, whose been loosing market share as a result of the popularity of other devices, notably the iPhone and handsets that run Google Inc. (GOOG)’s Android software, just can’t catch a break these days. Last week, consulting firm Booz Allen Hamilton told Bloomberg News it was dumping BlackBerry and switching to iPhone and Android for its staff of around 25,000.

The client-base deterioration and the ongoing competitive environment is certainly going to have a negative impact on RIM fundamentals and consequently its shares. The challenge of retaining, let alone attracting new customers, developers and carriers is clearly intensifying for the Waterloo, Ontario-based  company, which was once the de facto choice for government employees.

RIM fell 0.90 percent, or $0.07, to $7.69 at the close in New York. The shares are down 95% from their mid-2008 high and have tumbled 45% this year. AAPL gained 3.97 percent, or $24.19, to $634.03.

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