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The rush for the new BBM app is a welcome moment for the Waterloo, Ont., company, which has been clobbered by competitors in the smartphone market. (ROBERT GALBRAITH/REUTERS)
The rush for the new BBM app is a welcome moment for the Waterloo, Ont., company, which has been clobbered by competitors in the smartphone market. (ROBERT GALBRAITH/REUTERS)

‘Incredible demand’ for BlackBerry’s BBM service Add to ...

Finally, some good news from BlackBerry Ltd.: Its popular instant messaging app appears to be a hit among Android and Apple smartphone users.

The company said more than 10 million people signed up for the BlackBerry Messenger service in the first 24 hours after its release on Monday for non-BlackBerry users. The company says it is processing new users at a rate of 500,000 an hour, with millions more queued up.

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“We have absolutely incredible demand we’re trying to manage,” BlackBerry spokesman Jeff Gadway said. “We’re off to a really good start.”

The rush for the new BBM app is a welcome moment for the Waterloo, Ont., company, which has been clobbered by competitors in the smartphone market. The millions of new BBM users are in addition to the 60 million already using the service on their BlackBerrys.

But it’s not clear how BlackBerry will make money from the new service. The app is free, and other players have moved ahead of BlackBerry in the instant-messaging race.

BBM was the first instant mesenger exclusively for mobile devices and became hugely popular and a driver of device sales in the late 2000s. It gave users, whose identities were protected by a unique and anonymous code, the ability to instantly know when messages were delivered and opened.

But when rival Apple and Android smartphones gained in popularity, BlackBerry decided against making the service available to those users. So a number of other players developed similar apps, and some are now far more popular than BBM. China’s WeChat, Line from Japan and Silicon Valley-based WhatsApp each boast more than 200 million users. Even Kik Interactive, another Waterloo, Ont., company started by a former BlackBerry co-op student, has 90 million monthly users.

“There’s a good chance BlackBerry could have owned this market,” said Matt Golden, a Toronto-based venture capitalist whose Golden Venture Partners focuses on investing in mobile commerce companies.

Mr. Gadway said BlackBerry has the potential to catch up to its much larger rivals, as “there isn’t really one runaway dominant instant messaging app.”

The instant messaging space has drawn a lot of interest, attracting more than $200-million (U.S.) in venture capital investment in the past year, while Line is reportedly eyeing a public offering that is expected to value it in the billions of dollars.

As they have expanded, instant messengers have become a headache for wireless carriers, as users don’t pay for most chat apps, avoiding basic texting offered by the carriers. Industry consultancy Ovum has estimated these and other “over-the-top” services, such as Skype, cost carriers $13-billion in lost message revenue in 2011, rising to an estimated $32.6-billion this year.

But some investors are hesitant. Most of the lost wireless revenue is not flowing to the developers of instant messenger services, many of which are free, but derive some revenue from games and gimmicks, such as virtual stickers.

Boris Wertz, a Vancouver-based venture capitalist, said he’s “not quite sure how to invest in the sector” given it is marked by “hundreds of nearly identical services. He said chat users have a much more “lightweight” connection to chat apps than users of Facebook, who might have hundreds of friends and a repository of photos, videos and conversations on their pages. By contrast, typical chat users interact with two to 15 others, and the nature of those communications means “the content is pretty much irrelevant five minutes later.”

“I think, eventually, you’ll see a handful of winners, but it’s too early now,” said industry analyst Jack Gold. “But that usually happens as markets mature and I don’t think we’re anywhere near a mature market in this space now.”

BlackBerry in 2011 began planning to make BBM available on all smartphones and to persuade wireless carriers to offer it to their customers as an enhanced alternative to basic texting. But the plan ran into stiff opposition from senior executives who worried about the impact on device sales. Newly installed CEO Thorsten Heins killed the initiative in early 2012. Then, this year, BlackBerry said it would expand BBM to all platforms.

KEY FEATURES

  • Ability to chat and share photos, voice notes and other files with other smartphone users.
  • Ability to host multiperson chats for up to 30 people.
  • Ability to post personal messages, profile pictures and current status.

IDENTITY PROTECTION

Users are assigned a personal identification number made up of a random collection of numbers and letters, rather than a phone number or an e-mail address.

How Blackberry Messenger Works

Scroll below the image to learn more

1. Encryption key is stored in the user’s secure mailbox account.

2. Blackberry messages don’t have to be short, but short message service text messages (SMS), in the Latin alphabet, max out at 160 characters. For other alphabets, such as Chinese, the maximum SMS length is 70 characters.

3. Data sent to and from the smartphone is encrypted using the private key retrieved from the user’s mailbox.

4. Data remains encrypted in transit and is never decrypted outside of the firewall.

5. Instant messages can only be sent to someone if you know his or her PIN code, or if they are already in your contact list.

6. Encrypted information travels securely to the smartphone where it is decrypted with the key stored there.

BBM is low-cost

Since BlackBerry messages are sent as data, users do not incur individual charges for each message as they would through regular SMS texting. While phone companies have introduced bulk texting plans, many options still include caps on the number of individual SMS messages that can be sent. BBM has no such limit.

BBM is faster

Messages are “real time.” Users can carry on multiple, simultaneous conversations with other users and participate in group chats — all features unvailable through traditional SMS technology.
GRAPHIC BY MATT BAMBACH
SOURCES: REUTERS, MOBILEACTIVE.ORG, AP, HOWSTUFFWORKS, CRACKBERRY.COM

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