BlackBerry's BBM Head Start

| About: BlackBerry Ltd. (BBRY)

BlackBerry (NASDAQ:BBRY) reported over 10 million downloads of its BBM Messenger app for Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android operating systems within the first 24 hours of availability. While that's a very big number for one day, it remains to be seen if interest in BBM will continue.

Although technically BlackBerry is just getting its feet wet in the world of social messaging services, the truth of the matter is it already has a very big head start.

BBM is very well know throughout the world because it has been a very popular messaging service long before Google's Android came along and long before many other similar social messaging services became available. Please remember until recently BlackBerry had more than 50% of the smartphone market in countries like Indonesia and South Africa. The reason for the popularity of BlackBerry in these countries was BBM itself.

Since calling on a cellular phone was never a cheap proposition in many developing countries, people bought a BlackBerry and used BBM for a big portion of their communications. For most users around the world, BBM messaging service was the main attraction of BlackBerry and not the secure email features. BBM was (and still is) a very popular service among teenagers in many countries for the same reason.

BlackBerry has been losing ground in many of its key markets over the years. BlackBerry's market share in Indonesia for example has gone from 39% a year earlier, to 21% today according to IDC. Chances are BlackBerry's market share will be further reduced in the future, unless something can be done to stop the slide.

But contrary to many companies that started in the social messaging space from ground zero, BlackBerry's advantage is that all these people who use Android devices today, know of BBM and probably used it when they had a BlackBerry device. Also, while many BlackBerry users have switched over to Android, many of them (if not most) still have friends and family that still use BlackBerry devices.

And until today, the only way for them to message one another for free -- or almost free -- is to use some other messaging service. Now they have the option to use to BBM again. Especially since they once used it and are very familiar with it and many of their friends and family still have BlackBerry devices. The question is will they? To a great degree I believe so.

BlackBerry also has another head start advantage. Many people in the enterprise today carry two phones. Since most companies have not yet upgraded to BlackBerry's newer devices, they carry around an old BlackBerry device for business and usually a second more modern device like an iPhone for personal calls.

These people are also familiar with BBM because they have been using it at work for many years. Chances are they will also be using it on a personal basis on their Android or iPhone device, since most of their friends also know the service.

Never having used BBM myself, I downloaded it several days but I had no one to chat with. I tweeted my BBM pin and in no time several friends followed me and we exchanged smilies. However it was not until I told several personal friends to install the app that I actually started messaging. Before I knew it, i was texting my friends several times a day without even thinking about it. I had never used text messaging before, but BBM came as a natural fit.

At the moment BBM for Android and iOS does not offer all of the features that you can get with a BlackBerry device. For example BBM channels, video chat and screen sharing are still not offered, but BlackBerry has said they will be offered in futures updates.

I personally think that when all these features will be available, BlackBerry will have one of the best -- if not the best -- text and video messaging apps in the smartphone space. I also think BBM is more of a direct competitor to Skype for mobile devices than other messaging apps out there.

Bottom line

To what extent people in the U.S. will use BBM remains to be seen. And while I think BBM will become a very popular service overseas, it also remains to be seen if BBM can surpass in popularity some of the other very popular social messaging services that have gained a lot of ground over the years.

BlackBerry has started off with 60 million users, and we have to assume there were at least 20 more million downloads since the introduction of the cross platform version of the app. And since BlackBerry is not a new kid on the block and BBM has been used by many millions of users over the years, it does have a head start compared to other services that started from scratch.

Microsoft (NASDAQ:MSFT) has said Skype has about 300 million users. However Skype is also a desktop app that BBM is not (not yet anyway). Microsoft paid $8.5 billion for Skype and to date has not made a dime. But like everything else, Microsoft has probably benefited buying Skype in many ways that are not measurable in absolute dollars.

How Blackberry will monetize BBM is still a mystery. But at the very least BBM should expose more consumers to the Blackberry brand. Sometimes it is difficult to place a value on an asset, and this is definitely one of those cases.

However, if over the next twelve months BBM manages to attract 150-200 million smartphone users on a daily basis, then it is definitely worth something. Coupled with the Blackberry brand itself, that can only add value to Blackberry.

I don't think 150-200 million users is a far out number and definitely something that is achievable. And due to that BBM is the original text messaging platform, I think Blackberry has a head start, even if it is starting a little late in the game.

Disclosure: I 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.

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