Blackberry unveiled a new smartphone aimed at developing markets. The low-end Q5 smartphone runs its new BB10 OS and features a QWERTY keyboard alongside a 3.1 inch touch display. The new device will launch in select markets outside North America in Q3 2013.
Blackberry also plans to make its Blackberry Messenger (BBM) service available for Android 4.0+ and iPhone (iOS 6+) users in Q3. Blackberry claims 60 million monthly active BBM users globally.
Blackberry also unveiled BBM Channels, a content stream enabling consumers to connect with businesses, brands, celebrities and groups. At launch, BBM Channels, as well as voice and video chatting, will only be available for Blackberry.
Unfortunately for Blackberry, a cross platform BBM is late to the instant messaging game. BBM's previous success was driving smartphone sales, so Blackberry saw no reason to open BBM up until now. The rise of third party messaging clients such as WhatsApp, Facebook Messenger and proprietary solutions from other platforms means that Blackberry will be competing in a very crowded market. It must first maintain its BBM userbase after failing to capitalise on its headstart.
The move will help Blackberry replace revenue from the Blackberry Internet Service. The launch of the Q5 brings a new BB10 device to developing markets, where existing low-end devices subscribe to the (Blackberry Internet Service) BIS. The BB10 operating system removes the need for BIS and so far has only been available on premium devices. The introduction of a budget device running BB10 will further accelerate the decline in BIS revenue, leaving Blackberry needing a new way to monetize its BBM user base.
BBM Channels is how Blackberry plans to address this. Similarly to Facebook's and Twitter's business models, BBM Channels will help brands build strong relationships with consumers through the BBM framework. However, due to established networks and communities on competing platforms BBM Channels is unlikely to find success in the western world. Instead, Blackberry will focus on the developing markets where it has substantial market share. In developing markets, such as Indonesia, where just one in six people uses Facebook, the potential for expansion is large.
This move is a big gamble for Blackberry as the strong network effect of BBM was central to slowing down the decline of Blackberry's smartphone market share. People will have fewer reservations about switching away from Blackberr; they can still maintain their contact lists and messaging client on a new device, giving them an easier transition path off the platform. However, cross platform messaging apps have moved ahead of BBM in terms of traction. WhatsApp boasts more than 200m monthly active users, far above BBM's 60m. WhatsApp is already available on Blackberry devices. One advantage that Blackberry has is its relationships with operators. Blackberry could leverage these good relationships to get BBM pre-installed on many more devices.
IHS Electronics and Media will provide further analysis of the growing market for OTT messaging apps in an insight report to be published shortly.