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BlackBerry? Like, so not cool, say young users

The company logo is see at the Blackberry campus in Waterloo, September 23, 2013. REUTERS/Mark Blinch
The company logo is see at the Blackberry campus in Waterloo, September 23, 2013. REUTERS/Mark Blinch

By Belinda Goldsmith and Paul Sandle

LONDON (Reuters) - 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.

( This refile changes Kik CEO's name to Ted Livingston from Tim)

(Additional reporting by Alastair Sharp; Editing by Mark Potter)

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