BBM Inc. Probably Should Have Been Done a Year or Two Ago

2 mins read
August 28, 2013

The Wall Street Journal last night reported that BlackBerry is said to consider spinning off its messaging services division into its own subsidiary company, possibly called BBM Inc., amidst talks of selling the entire company outright. The former smartphone giant has been scrambling for ways to keep the company relevant and afloat as competitors lure consumers away.

BlackBerry’s plans for BlackBerry Messenger (BBM) do somewhat resemble the business model of messaging companies, with premium and business/corporate accounts and having made BBM as a platform instead of simply a messaging service. Who’s to say that there won’t be stickers all over BBM?

As a messaging platform though, while BBM can be counted as among the largest on the planet, it still trails significantly behind WhatsApp, Viber, Skype, Line, KakaoTalk, as well as Facebook Messenger all of which have user numbers north of 100 million and growing, while BBM is down from over 70 million in 2012 to 60 million this year as reported by The Journal.

The Journal also reported that BlackBerry had been ready to launch a multi-platform BBM service three years ago. If it had, it may have had a significant head start against all these relative newcomers that are now grabbing attention as well as market share, but of course, the company back then still believed in dominating the market through its own devices rather than offering a strong reason for consumers to ditch them.

In Indonesia, BlackBerry user numbers seem to be down. While the company in 2012 still held the top vendor share of smartphones in the country, as a platform it had been leapfrogged by Android around this time last year. A GfK report from July 2013 shows that Samsung owns 42.8% of the Indonesian 3G phone market while BlackBerry is at 20.4%, followed by Nokia at 10% with its Lumia range.

At the Indonesian launch of the BlackBerry Q5 last week in Jakarta, BlackBerry’s managing director for Indonesia Maspiyono Handoyo refused to speculate or provide guidance as to the direction of the company both globally and locally, saying that, “we’re executors here in the country, the worldwide direction is provided by the decision makers over there”, referring to BlackBerry’s executive management in Waterloo.

Aimed at the mid-range market, the Q5 itself is priced at IDR 3.99 million, or just under USD 400. Public reception to BlackBerry 10 has been mostly muted as consumers shift towards Android devices. While it’s still early days for the Q5, it’s difficult to see the company succeeding with its chosen platform and when you see used BlackBerry Q10 being sold mostly for USD 500 or less at classified sites like Kaskus and Tokobagus, losing over $250 in value after only a few months, signs aren’t good.

Djatmiko Wardoyo, a spokesman for Erajaya group which owns TAM, the largest BlackBerry importer in the country, was quoted by The Jakarta Post recently saying, “People have begun shifting to Android, largely represented by Samsung”. He also admitted that BlackBerry owners had not been “actively replacing their old models with the new ones as they used to”.

At a time when BlackBerry is transitioning away from its proprietary BlackBerry Internet Service (BIS) to the standard data plans, the consumer reluctance to adopt BIS-less BlackBerry 10 is a major worry for the Waterloo-based company as this means they have to maintain support for a legacy service.

Although the company still releases legacy devices which rely on BIS, any growth expected from a possible BBM Inc., must come externally. Maintaining the legacy BIS service will be costly, complicated, and will tie up resources that are better used to push the new venture forward.

Given the troubles that BlackBerry is now facing, this may well be the plan that makes the most sense even though it turns the company inside out and breaks it into pieces. In fact, BlackBerry probably should have refocused itself as a services company a year or two ago, offering its enterprise device management solution alongside its secure messaging platform.

Isn’t hindsight wonderful?

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