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BlackBerry stock is up 100% since Christmas, even as BBM grows weaker

Published Jul 24th, 2014 3:37PM EDT
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BlackBerry is up more than 5% on Thursday, buoyed by the CEO’s comments about partnerships that might mirror the recent Apple-IBM pact. That Apple-IBM alliance was seen by some as a fatal blow to BlackBerry, since it gives iOS another boost in the enterprise market. But BlackBerry has recently started resembling a mythical Canadian beast that absorbs fatal blows with polite disinterest, growing only stronger as its prospects weaken.

The company’s handset business remains on the ropes, with its last stronghold of Indonesia about to come under siege by a Xiaomi product offensive. The new square BlackBerry phone has been greeted by a sort of incredulous embarrassment, though the company remains relentlessly upbeat about its prospects.

But perhaps the biggest recent setback for BlackBerry has been the way BlackBerry Messenger’s performance has eroded in affluent Western markets.

When BBM debuted on iOS and Android last year, it received strong sampling in markets from the United States to the UK and Indonesia as former BlackBerry addicts rushed to download the app on their phones. BBM has remained remarkably strong in Indonesia, Nigeria and South Africa, remaining a top 5 iPhone download in these three growth markets.

But its grasp on affluent Western markets has slipped badly. BBM has drifted down to No. 71 on the British iPhone download chart and to No. 99 on the Canadian chart. A few months ago, it was a top 50 app in both countries. In the U.S., it is out of top 700.

At the same time, many of its rival messaging apps are putting in remarkably strong performances. Kik, the bitter cross-village rival from Waterloo, Ontario, is the No. 22 iPhone app in America, No. 53 in Australia and No. 59 in Canada. Viber is No. 15 in Australia, No. 17 in France, No. 36 in the UK and No. 47 in Germany.

Of course, WhatsApp and Facebook Messenger remain extremely popular across the Western markets. But BBM has now slipped notably behind its second-tier rivals like Kik and Viber when it comes to the richest mobile markets in the world. Strong showings in Africa and Indonesia are nothing to scoff at — but monetizing consumers in these markets is far trickier than it is in Canada, UK or Australia.

BlackBerry’s share price continues levitating as investors speculate on various acquisition and partnership ideas. But as months pass, the value of one of the company’s core products, BBM, is becoming more difficult to calculate as its user mix continues to tip ever more heavily towards Africa and Indonesia.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.