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T-Mobile may recover some data but hit to reputation stings

T-Mobile USA is optimistic that the phone numbers, pictures and other data its Sidekick customers lost due to a Microsoft computer glitch might be recovered, but a lot of damage has already been done to the carrier?s reputation.

Many, but not all, of the 1 million Sidekick users lost data and Microsoft initially doubted that any of the data could be recovered. It has since painted a rosier picture for T-Mobile, but the incident will have repercussions, possibly adding to subscriber churn.

?Prepaid, non-contract and youth segments are the core segments for T-Mobile USA,? said Bonny Joy, analyst at Strategy Analytics, New York. ?The Sidekick is primarily offered as an alternative to typically more expensive smartphone devices [with] plans [targeting] the youth/teen segments.

?The rise of low-cost QWERTY and 3G terminals has already diminished the value proposition of Sidekick devices in the recent years,? he said. ?It is very likely that this incident will have some impact on new customer additions.?

T-Mobile USA is a cellular telecommunications provider and the United States-based subsidiary of T-Mobile International AG, itself based in Bonn, Germany.

The U.S. company was previously known as VoiceStream Wireless or Powertel. In May 2001, VoiceStream was acquired by Deutsche Telekom for $24 billion, and in September 2002 changed the company name nationally to T-Mobile.

Headquartered in Bellevue, WA, T-Mobile USA is currently the fourth-largest wireless carrier in the U.S. market with 32.8 million customers as of the end of 2008.

The types of data T-Mobile customers most-frequently reported lost were phone numbers and photographs saved on the handset.

As part of a damage control campaign, T-Mobile customers who lost a lot of data will receive $100 off their phone bill.

Sidekick phones are produced by Danger, a subsidiary of Microsoft. They are designed to appeal to consumers who send a lot of emails and text messages. Microsoft is responsible for backing up Sidekick users? data.

Microsoft?s servers failed at the beginning of the month, preventing Sidekick users from accessing the mobile Web or sending emails. In some cases, it took a full week to restore those services.

Once service was restored, Microsoft engineers discovered that some data on the backup server had become corrupted.

Microsoft claims to be burning the midnight oil to recover the lost data.

But can T-Mobile and Microsoft recover from the bruised consumer confidence resulting from the incident?

?Since Microsoft largely retained the Danger/Sidekick brands for the service, the impact on the overall value proposition of Microsoft?s product and service offering is likely to be limited,? Mr. Joy said. ?The bigger impact would be on the cloud computing framework for storing personal and critical information.

?Carriers will be critical in evaluating services rendered through third party data warehouses before offering the services to its customers,? he said.