BlackBerry BBM – Last hurrah?

A big bump up but still a long way to go.

• BlackBerry has gained 20m BBM subscribers in the last week after making the service available on iOS or Android.
• This has taken the number of BBM subscribers to 80m which is a nice bump up but still a very long way adrift of the competition.
• This is all well and good but 80m still remains well adrift of the leaders in this space (see here) and it is unknown how many will now abandon their BlackBerries.
• (I fear that Blackberry device usage will now plummet).
• BBM is the only service that BlackBerry offers that still has any degree of user traction of loyalty.
• E-mail, browsing, gaming, social networking, contacts, calendar etc. are now at least as good and in many cases far better on competing platforms.
• BBM offers a superb user experience as the clients exist within a VPN meaning fast device to device communication, reliable presence information as well as security.
• The problem is that these services are offered for free by most vendors and anyone who thinks that they will be able to charge a subscription for basic service has a rude shock coming.
• Hence, the only way to really monetise IM is through selling media (like LINE’s stickers) or by learning about the user and then monetising that traffic through advertising.
• Instant Messaging is an important but small part of a consumer’s Digital Life and therefore I believe that the revenue opportunity from advertising as just an instant message vendor is limited.
• Where this makes more sense is to provide instant messaging as part of a series of services like Google Talk, iMessage or Yahoo! messenger.
• This is why I see massive consolidation in this space.
• Unless the IM plays can find ways to earn a decent revenue stream on their own, they are likely to be gobbled up by the larger ecosystem players.
• The only one that seems to be close to this goal is LINE which reported good revenues earlier this week.
• Most of this is due to user’s willingness to buy cutsie avatars that they can then send to their friends rather than a silver bullet for monetising IM.
• This is also why I suspect BlackBerry has been seen meeting with Facebook.
• The only part of BlackBerry that Facebook could realistically want would be BBM as it would help Facebook to expand beyond simple social networking.
• Facebook could conceivably want the patent portfolio but given it has no hardware, I think this is a long shot.
• Either way, BBM remains a minnow in this space and I can’t see this business being worth much more than $200m to a large ecosystem player.
• I am expecting Fairfax to heavily adjust downwards its offer for BlackBerry following its due diligence.
• Something around $6.32 looks more realistic.
• With the share price at $8.3, there is only one rational action to take.