When Emily Davis bought her first smartphone, all of her friends had BlackBerrys, so she got one, too.
The 23-year-old, who recently graduated from business school at the University of New Brunswick, kept in touch with all of her friends through Research In Motion Ltd.’s highly addictive BlackBerry Messenger service. The application, more commonly known as BBM, is fast, reliable and has popular features like group chats.
About 56 million of the world’s 78 million BlackBerry owners use BBM. Ms. Davis, however, found that the messaging service didn’t make up for her BlackBerry’s frequent glitches and short battery life. Frustrated, she replaced it with an HTC smartphone running Google Inc.’s Android software.
“A lot of my friends still had (BlackBerrys) when I switched,” Ms. Davis said. “Throughout the last year, though, pretty much everyone’s switched.”
What happened to Ms. Davis’ circle of friends highlights the challenge facing the Waterloo, Ont., company as it attempts a comeback with a new line of phones: in North America, at least, the valuable youth market – from texting teenagers to recent college and university graduates – is abandoning the BlackBerry in droves.
The phone’s BBM-fuelled appeal among North America’s youth has fallen rapidly – one reason its sales, and its stock price, are in free fall. RIM shares fell 7.5 per cent on Monday to close at $9.36, its lowest point since 2003, after a Morgan Stanley analyst described the firm as “essentially broken.”
Not only are fewer young people using BlackBerrys now compared to a year ago, but interest in purchasing a BlackBerry in the future is also greatly diminished.
New data from Toronto-based analytics firm Solutions Research Group, which tracks 1,000 Canadians in a quarterly survey, are particularly grim. The firm asked smartphone users between the ages of 12 and 24 what their next phone would likely be. In the most recent survey, only 12 per cent said a BlackBerry. That’s down from 31 per cent in the second quarter of 2011. (The survey found 71 per cent want Apple Inc.’s iPhone or an Android phone.)
For the United States, the data were even worse. While 9 per cent of all smartphone users said they might purchase a BlackBerry as their next device, in the youth demographic, that number was only 6 per cent.
“That’s shocking, really, and it really does show a brand in decline,” says Kaan Yigit, Solutions Research Group president. “Any time a brand is successful in the youth market, there’s a bit of a halo... it’s hip, it appeals to younger people, so it must be tomorrow’s brand.”
That halo effect is in full force at Telus Corp.’s business store on Toronto’s Queen Street West, where Apple Inc.’s iPhone and various Android and Windows phones sit prominently displayed, while BlackBerrys are relegated to the back rows. “Ninety per cent of our sales on the floor are iPhones, and I’d say about 75 per cent of that is [people switching from] BlackBerry to iPhone,” said sales associate Neal Lamba.
Data from the U.S. analytics company comScore, which show RIM has relatively steady traction among working age adults, nevertheless show a particularly steep fall among teenagers aged 13 to 17 years old. This demographic group, though it only accounts for about 8 per cent of smartphones in Canada, is growing fast. But whereas that age group in March, 2011, accounted for 7.1 per cent of BlackBerry users in Canada, it only accounted for 4.4 per cent by March 2012.
Of course, RIM is still seeing big momentum in various emerging markets, such as Nigeria and Brazil, despite pressure from cheap Chinese-made Android phones. That huge growth, like the sharp decline in North America, has a knock-off effect on the brand: In South Africa, BlackBerry was named the “coolest brand,” “coolest cellphone,” and “coolest high tech gadget” two years in a row.
In Europe, according to comScore data, RIM has also seen consistent growth among younger users, particularly in Spain, where it grew 227 per cent among 13- to 17-year-olds in the past year and 90 per cent among 18-24 year olds. "BlackBerry is a global brand and we have seen strong growth in the international youth market," said a spokesman.
Part of the BlackBerry’s decline among North American youth, though, could be related to what Mr. Yigit calls a “negative network effect” – that is, as fewer people own BlackBerrys, there is less incentive for others to buy them for the sake of having BlackBerry Messenger. There are now numerous alternatives to BBM, such as Apple’s own iMessage and third-party messaging services such as WhatsApp and Kik Messenger.
In addition, new startup wireless carriers such as Wind Mobile and Mobilicity have largely done away with the expensive per-text fees that originally made BBM so attractive.
Natasha Taylor, a 25-year-old Toronto dancer, stuck with BlackBerry because she was afraid that if she lost BBM she would lose touch with her contacts.
“I started noticing, one by one, people were switching off (BBM) and switching their phones,” says Ms. Taylor. She recently bought an iPhone 4S and simply texts her friends, instead. “I don’t think my conversations or friendships have suffered.”