Skip to main content

Photo of Blackberry 14 located at 440 Phillip St. in Waterloo, Ont., home of the beleaguered smartphone company. BlackBerry Ltd.’s mobile instant messaging service continues to be one of the company’s few bright spots, adding 20 million new ‘active’ users.Fred Lum/The Globe and Mail

BlackBerry Ltd.'s mobile instant messaging service continues to be one of the company's few bright spots, though it remains unclear how or if the surging popularity of the free offering will improve its financial prospects.

The Waterloo, Ont., company, which is slashing staff and costs amid a collapse in sales and the subject of takeover talks, said Tuesday it had added 20 million "active" users – those who have downloaded and used the service at least once – since making its BlackBerry Messenger (BBM) app available to users of rival Android and Apple Inc. phones last Monday. "We had hoped for a smashing success and we've had one," said company spokeswoman Victoria Berry.

BBM now has 80 million active users and BlackBerry says it has been one of the top downloaded apps in dozens of countries. "It means BBM has great momentum to start with," said IDC analyst Kevin Restivo. "Now it needs people to be engaged if it wants those numbers to grow and be sustained."

But several things remain unclear about the apparent burst of success for BBM on non-BlackBerry devices. The company has yet to disclose its strategy for deriving revenues from BBM. Other, larger rival services already bring in dollars by selling games and virtual stickers that users append to messages. "They need to monetize BBM and convert those 20 million people to something that's providing revenues for them," industry analyst Rob Enderle said, adding that BBM's popularity was improving the market's impression of BlackBerry.

There also seems to be little relationship between the popularity of BBM and sales of BlackBerry handsets, which continue to slide. In its latest report on global smartphone sales released Tuesday, Strategy Analytics estimates BlackBerry's market share collapsed to just 1 per cent in the third quarter, down from 4 per cent a year earlier. "BlackBerry has been losing ground across all markets worldwide, especially North America, due to a weak device portfolio that is overly dependent on aging keyboard designs with inadequate screens," said Neil Mawston, executive director of Strategy Analytics' global wireless practice.

It's also unclear just how much potential BBM has to grow. Many users signing up for BBM in the past week are former BlackBerry device owners who miss using the chat service. Beyond reclaiming those users, however, BlackBerry would have much further to go to catch up with significantly larger players such as WhatsApp, which recently said it has 350 million active monthly users – more than four times BlackBerry's latest count. "BBM is going to be in a dogfight despite the early momentum," said Mr. Restivo, pointing out some of its larger rivals are targeting emerging markets that have been a strong growth area for BlackBerry in recent years.

Some reviewers have also griped that BBM for Android and Apple launched without the full functions available to users on BlackBerry devices, including voice and video-chatting capabilities. "You'll see those in the coming months," Ms. Berry said.

There is no doubt the instant messaging space is hot and attracting investors. Venture capital firms have poured more than $200-million (U.S.) into instant messaging startups in the past year. Reports last week said photo-sharing instant messenger Snapchat is in talks with investors for funding that would value the firm at more than $3-billion. Another firm, Japan's Line, is readying to go public and is expected to command a valuation in the billions of dollars.

In separate news Tuesday, BlackBerry announced it was laying off 300 staff from its Waterloo headquarters.

BBM was the first instant messaging service exclusively for smartphones and drove device sales in the late 2000s, giving users anonymous identities and the ability to instantly know when messages were delivered and opened. But when rival Apple and Android smartphones gained in popularity, BlackBerry initially decided against making BBM available to those users. So a number of other players developed similar apps, which eventually far surpassed BBM in popularity. That includes Waterloo-based Kik, started by a former BlackBerry co-op student, which has 90 million users. An earlier attempt to launch BBM as a "cross-platform" service and marketed through wireless carriers was killed early last year by new CEO Thorsten Heins after some senior executives feared it would hurt handset sales, The Globe reported last month.