BlackBerry – Roll of the dice

Making BBM available elsewhere is a very risky move.

• The launch of the BlackBerry Q5, upgrades and extensions to BBM make it very clear how BlackBerry intends to regain its former glory.
• The Q5 is an interesting looking device sporting two bright colours and a 3.5” touch screen as well as a full QWERTY keyboard.
• However, BlackBerry has not said how much it is going to cost and in order to appeal to the target market, it is going to need to come in around the $200 mark.
• This is because one of the main draws of BlackBerry is the BlackBerry Messenger (BBM) which will now be made available to users of Android and iOS.
• While this substantially increases the scope for growth of the user base of BBM, it means that more and more, BlackBerry devices have to stand on their own merit.
• 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.
• The functionality of BBM has also been expanded to include BBM Channels which is a little bit like following a group or community on Twitter or Facebook.
• The Mercedes Petronas Fomula one team is the first brand to have its own channel on BlackBerry to which users can subscribe and contribute.
• This is all about expanding the functionality of BBM into a more fully fledged ecosystem capable of offering users more scope to live their Digital Lives within BlackBerry.
• If this works then RIM will be learning more about its users and will benefit from greater loyalty resulting in higher share, prices and margins but also from the potential to sell targeted advertising.
• BlackBerry still has more than 70m subscribers of which more than 60m are BBM subscribers.
• This puts the proposition on a knife edge in my view.
• To be sustainable, BlackBerry must increase its subscriber number to over 100m but in order to do that it needs for its devices to be competitively priced.
• It must now achieve this without the draw of DDM to BlackBerry devices.  
• When it comes to counting users, I am not inclined to include those that start to use BBM on other platforms as they are not really part of the ecosystem proposition in the same way that users of BlackBerry device will be.
• Most importantly of all, BlackBerry will be unable to make money from these users for a long time and so for the moment they should be excluded from any economic analysis of BlackBerry.
• Looking at the price of the Z10 and Q10, I am not hopeful that the Q5 will end up being priced at a level that allows it to compete with low to mid-range Android or even Windows Phone 8.
• BlackBerry is doing the right things but I need to see some market traction before I can have confidence in a recovery.
• It’s a cheap stock but Nokia has a better chance of seeing a proper turnaround.