BlackBerry: Why Expanding BBM to iOS and Android Is Smart -- and Hazardous

By Sterling Wong  MAY 17, 2013 9:00 AM

It all depends on whether or not BlackBerry users will remain loyal now that the brand's unique selling point is gone.

 


It’s been a busy week for the mobile industry, with Nokia (NYSE:NOK), BlackBerry (NASDAQ:BBRY), and Google (NASDAQ:GOOG) all having held events meant to hype new technologies.
 
One of the biggest pieces of news to come out of BlackBerry’s Live developer conference on Tuesday was that BlackBerry Messenger (BBM), arguably the company’s most popular service, will now be available to iOS (NASDAQ:AAPL) and Android platforms.
 
Though BlackBerry is far, far away from its halcyon days as the world’s most popular smartphone -- Windows (NASDAQ:MSFT) Phone has just pushed BlackBerry to fourth place in the global smartphone market --  BBM, the pioneer of instant messaging apps and the predecessor to the likes of Whatsapp and Viber, remains popular with loyal BlackBerry customers. The app has around 61 million active users a month, with 51 million of them using the app daily for an average of 90 minutes.

"The time is definitely right for BBM to become a multi-platform mobile service. BBM has always been one of the most engaging services for BlackBerry customers, enabling them to easily connect while maintaining a valued level of personal privacy. We're excited to offer iOS and Android users the possibility to join the BBM community,” said BlackBerry’s software vice president Andrew Bocking at the conference.
 
Clearly, rolling out BBM on iOS and Android will allow BlackBerry to reach a much larger potential customer base. It’s also a move that would allow the company to compete in the services arena, which is looking like the next area of growth for mobile companies.
 
But now that it’s cross-platform, BBM will face extremely tough competition – Facebook (NASDAQ:FB) Messenger and Skype have user bases of 1.11 billion and 280 million respectively, while smaller upstarts WhatsApp and WeChat also have some 200 million and 190 million users. It’s an understatement to say that the real-time messaging market is crowded.
 
The move could also be a double-edged sword for BlackBerry. BBM was always the crown jewel of the company, and by going cross-platform, BlackBerry not only loses its unique identity, it could potentially alienate loyal customers who have stuck with the company and ease the way for them to transition away from BlackBerry devices.
 
“BlackBerry’s new move is like an Emperor's new clothes; in actuality there's nothing new to show. BBM on other devices can no longer be a game changer, considering how well other apps like Whatsapp, et al are doing. On the contrary, by taking BB chat to other phones, BB will lose its USP. Now, one need not purchase a BB phone to be able to chat up with people on the platform. It could well be a thing they might regret in the coming days. Much like their playbook,” Shashwat DC, a mobile industry observer and the former editor of DataQuest and IT Next Magazine, told Light Reading India.

Richard Windsor, founder of the mobile-focused blog Radio Free Mobile and a former tech analyst at Nomura, shares similar sentiments.
 
“A major reason to buy a BlackBerry device has now been removed, meaning that the user experience and hardware specification must now win over users on their own. This is an incredibly risky move as previously locked-in users may now abandon the platform while still being able to access BBM,” writes Windsor on his blog.
 
Not everyone is as bearish on BlackBerry’s move, of course. Forbes contributor Larry Magid believes that making BBM cross-platform helps improve brand equity.
 
"One thing it does do is make BlackBerry more relevant. People are talking about it and thinking about it and BlackBerry users can now use BBM to reach out to their friends who are Android and iOS users,” writes Magid, adding that “it could also serve as an incentive for some to stay with BlackBerry because their BBM product just got a lot more useful.”
 
At Seeking Alpha, Kurt Windibank is also bullish on BBM’s prospects, arguing that the app’s superiority over its competition (BBM has a Channels feature which easily enables brands and businesses to engage with users in a discreet fashion) will allow BlackBerry to monetize it effectively.
 
“The implications for making BBM a cross-platform application are huge. The opportunities to monetize will grow as they have with any other social media application. The key for BlackBerry is to grow [the user] base, and by offering it for free to iOS and Android users, they will do just that. This is a smart move on the part of BlackBerry and fits in nicely with Thorsten Heins' stated goal of putting a slice of BB10 everywhere," writes Windibank.
 
“Active users of the service can effectively become the de facto 'subs' that bears like to point out BlackBerry has been losing," Windibank continues. "By having a large and growing user base actively engaged in BBM, BlackBerry can influence future smartphone buyers to look at the BlackBerry offering directly as a smartphone option while at the same time 'engaging' non BlackBerry users on a daily basis.”
 
Shares of BlackBerry have fallen over 5% since the Canadian company’s developer conference on Tuesday, though the fall is likely due more to Sanford Bernstein downgrading the stock to Market Perform and lowering its price target to $15 from $22.

Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.

Twitter: @sterlingwong

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No positions in stocks mentioned.

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