By Belinda Goldsmith and Paul Sandle
LONDON, Sept 24 If you want to know how
BlackBerry lost its mojo in a major consumer market, spend some
time with a bunch of British teens.
The phone that once so dominated the UK youth market that
its messaging service BBM was even blamed for helping to connect
young rioters who fought police and wrecked shops in London and
other cities in 2011, has now lost its cool.
BlackBerry has been usurped by Apple
and Android-run phones, and BBM has been
eclipsed by the emergence of free messaging apps that work
across a range of devices.
"I use WhatsApp and Kik with all my friends and family. You
can use these on any device even if you can't afford an iPhone,"
said 14-year-old Euan McPhillips, a schoolboy from Gerrards
Cross, just north of London.
U.S.-based WhatsApp and Canada's Kik Interactive are two of
five major "cross-platform" messaging services that have built
up big followings and which are also being tipped as the next
big takeover targets for the likes of Facebook and Yahoo.
The three others are WeChat in China, developed by Internet
company Tencent Holdings Ltd and promoted by Argentine
footballer Lionel Messi; South Korea's KakaoTalk, run by
privately-held Kakao Corp; and Japan-based Line, a unit of Naver
Corp of South Korea.
The grandfather of the group, WhatsApp, created by two
ex-Yahoo engineers in 2009, has more than 300 million
users and processes 31 billion messages a day, a spokeswoman
told Reuters, making it bigger than Twitter in terms of active
users. That compares with BBM's 10 billion messages a day.
BlackBerry's image has taken a big hit as a result,
underscoring the challenge facing the consortium led by its top
shareholder Fairfax, which agreed to take the company private on
Monday in a $4.7 billion deal.
An annual CoolBrands list, compiled by 3,000 consumers and
38 experts and released this week, showed BlackBerry had
plummeted to No. 180 in the list of Britain's coolest brands
from No. 4 three years ago. Apple was top for the second year.
HOT ACQUISITION TARGETS
Ben Wood, head of research at telecom analysts CCS Insight,
thinks WhatsApp could be a $1 billion-plus takeover target.
"Someone could decide to take them out of the market, like
Facebook, because they want everyone to use Facebook Chat, or
Microsoft to protect its Skype franchise," he said.
"Or alternatively, someone like Yahoo could say this is a
platform that gets us engagement with another channel."
WhatsApp did not comment on its future strategy.
BlackBerry established itself by being seen in the hands of
lawyers, bankers and politicians and became the smartphone of
choice for British teenagers and young adults.
It held 35 percent of the British market for 16-24 year olds
early in 2012, according to Ofcom data, beating Apple and
Android, but fell to 17 percent a year later while Apple and
Android had 40 percent and 35 percent respectively.
Facing the loss of a key demographic, BlackBerry announced
it would make BBM available for Android and iPhone, but, in
another stumble, the roll out was paused on Saturday after an
unreleased version of the BBM for Android app was posted online.
"Everyone has moved on from BBM. iPhones are more reliable
and you usually get unlimited texts with an iPhone contract. The
screens are bigger, the apps are better, so why would you want a
Blackberry?" said 17-year-old London student Freya Bowen.
CCS Insight's Wood, however, said BBM could be one of
BlackBerry's most valuable assets if it can keep the loyalty of
its remaining customers and add more on other platforms.
"If BlackBerry really deliver a slick application, that
draws on the heritage where all the people that used to love BBM
can get it again, and they get all of the immediacy and the
privacy, (...) then there is a chance they could ramp it up to
200-250 million users and get up there with WhatsApp," he said.
Kik, created and launched in October 2010 by a team of
students at Canada's Waterloo University and located next to
BlackBerry's HQ campus in Canada, now has 50 million users.
Kik founder and CEO Ted Livingston said he expected one of
the big five cross-platform messaging services to emerge as a
dominant force in the next year or so as Facebook did as a
social network, and that was fuelling interest in the sector.
"Already it is very clear that these five companies are very
valuable and we've had a lot of interest," Livingston, 26, told
Reuters in a phone interview.
"But we are interested in Kik for the long haul. It is pure
luck to get to ride a wave like this and, whatever the money,
you would regret getting off that wave."
He said the five were racing to differentiate themselves.
"People want a simple messaging service but they also want
secondary offerings, be it gaming, shopping, or platform
sharing, and that is where the money comes in," he said, citing
Kakao's successful promotion on gaming apps.
As for Kik? "Our big bet is the web because we have taken
Kik and turned it into a browser," he said.
Line in August said its app had been downloaded more than
200 million times and it may seek a stock market listing in the
United States or Japan, but did not give a time frame. The
company could not be immediately reached for comment.
WeChat has over 300 million users and is used by over half
of Chinese smartphone users. It has denied any plans to spinoff
from Tencent. Reuters was awaiting a reply to an email to the
company seeking more information.
Kakao, which carries a version of the popular game "Candy
Crush Saga", has about 90 million users. It could not be
immediately reached for comment.