Facebook And WhatsApp Might Be Doing BlackBerry A Favor

| About: BlackBerry Ltd. (BBRY)


On the face of it, the fact that Facebook and WhatsApp are dropping support for BB10 looks bad for BlackBerry.

However, this will force BlackBerry to make the transition to Android sooner rather than later - I think eventually BB10 will be history.

This means that Facebook and WhatsApp are doing BlackBerry a favor, because Android might be what just might save BlackBerry in the future.

As you all probably know by now, Facebook (NASDAQ:FB) and WhatsApp will not be updating their apps for the BB10 platform after the end of 2016. Facebook was the first to discontinue support for BB10 and WhatsApp followed a short while ago.

And the reason for this I think is obvious - BlackBerry's (NASDAQ:BBRY) global market share is dwindling into oblivion year after year, and many companies can't justify the cost anymore.

The truth of the matter is that BB10's market share has been dwindling for years, even as many popular apps like Facebook, Messenger and WhatsApp were updated regularly. In other words, the fact that these apps will no longer be updated is not the reason for BlackBerry's market share problems. BlackBerry has been losing market share just fine by itself. It did not need the help of popular apps dropping their support.

However, there might be a silver lining is all this. And that is, users of the BlackBerry Priv will not be affected. Because the Priv runs on Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Android OS, it will not be impacted by what happens to BB10 supported apps.

So how is this good for BlackBerry?

In my opinion, I think BlackBerry will eventually drop BB10 and take one big write-down. I cannot tell you if this will be this year or next year or the year after that, but I think eventually BB10 will be history.

So if BlackBerry wants to continue to sell devices, that will only be Android devices. In fact, we all know BlackBerry will be coming out with more Android devices over the next few quarters. There have been many leaks and speculation as to what these new Android devices might look like or be called. And if BlackBerry is even partially successful selling the Priv, it might pull the plug on BB10 sooner rather than later.

Now in many countries around the world like Indonesia, BlackBerry continues to have a formidable market share of the smartphone space. But now that these consumers know Facebook and WhatsApp will not be updated for BB10 devices anymore, chances are they will avoid buying BB10 devices.

That will make it necessary for BlackBerry to drop BB10 faster and come up with more Android devices soon. If BlackBerry does this, it might have a chance to keep its devoted followers in many markets.

The Priv is a great phone, but...

The Priv is a great device - don't get me wrong. And while I do not think the Priv will be a home run for BlackBerry, it might just sell enough for BlackBerry to break even.

But the reason why I think the Priv will not sell much has nothing to do with the fact that it's not a great device (it is). It's because it's priced as a high-end device that cannot compete with other high-end devices in the same price range.

However, if the Priv were to sell between $400 and $500, I think BlackBerry could sell them like hotcakes. That's right, I think the Priv will be a top seller for $400.

See the Priv has many BlackBerry features that many people would like or have come to expect from BlackBerry, like the HUB, just that the phone is powered by Android and overpriced.

Forget about the specific security features. BlackBerry will not score a home run on security alone. BlackBerry needs to get the consumer on board in order to make money from devices.

Now getting back to the Indonesian market if BlackBerry would offer a $200-$250 device that is of good quality, I think BlackBerry could sell a lot of phones in Indonesia and many other places. Indonesia being one of the few markets where BlackBerry still has a big market share could in theory make the transition to Android without losing loyal followers.

And one of the reasons for this is that almost everyone in Indonesia knows of BlackBerry and uses BBM more than messenger or WhatsApp.

So Facebook and WhatsApp are doing BlackBerry a favor because they are forcing BlackBerry to make the transition to Android sooner rather than later. And if BlackBerry does it fast enough, it might just keep the lead in Indonesia while making the transition.

Because the longer BlackBerry sticks with BB10, the longer it will bleed, the longer revenue will fall, and the more likely it is that at some point in time its losses will be bigger rather than smaller, if it ditches BB10 today.

Bottom line

The way I see it, both Facebook and WhatsApp are doing BlackBerry a favor by not updating their apps for BB10. And the sooner BlackBerry itself realizes this and makes a full swing transition to Android, the better for shareholders.

Please note, this does not mean that BlackBerry will be successful in this transition, or that it will become a major Android device maker. But at least it will give the company a fighting chance.

Because as things stand today, BlackBerry does not have a chance at all if it sticks with BB10 and related devices.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.