John Paczkowski

Recent Posts by John Paczkowski

BlackBerry. What Now?

RIM_I_Want_To_BelieveAre a new operating system, a pair of handsets on which to run it, and a name change enough to restore Research In Motion, now “BlackBerry,” to its former glory? That’s an open question after the Wednesday event at which the company attempted to recast itself as a player in the market it helped pioneer.

Certainly Wall Street wasn’t impressed. BlackBerry’s shares, which had more than doubled over the past three months after a precipitous decline, tanked following the event. Shares closed down 12 percent at $13.78. Profit-taking? Surely there was some of that. But investor anxiety over the daunting task ahead of the company was obviously at work here as well. As BlackBerry CEO Thorsten Heins himself said, “Today is not the finish line. It’s the starting line.”

And the race ahead is one in which BlackBerry has already been lapped by Google and Apple, the two smartphone upstarts that unseated it. Which is not to say it’s a race in which the company is ill-equipped to compete. BlackBerry’s new Z10 handset appears to be garnering generally positive reviews. BlackBerry 10 seems to have finally closed the gap with more mobile operating systems. And while BlackBerry currently holds just 4.6 percent of the smartphone market — a tenth of what it once claimed — it has a user base of about 79 million people with a predisposition for its handsets. And there is almost certainly pent-up demand for its new hardware among diehard BlackBerry users.

But is there untapped demand beyond that?

Well, that’s the big question, isn’t it? With its new BlackBerry 10 OS and handsets, does BlackBerry have what it needs to convert iPhone and Android users who no longer consider its offerings an option? Because once the BlackBerry faithful upgrade their devices, there’s a real risk that sales could slow. BB10’s task is really threefold: It needs to satisfy hardcore BlackBerry users, stem defections to rival platforms and encourage defections to its own platform, and convince developers to build apps for it. That’s not going to be easy when it’s not at all clear that the world wants or needs another mobile operating system.

“BlackBerry 10 is competent,” Wedge Partners analyst Brian Blair told AllThingsD. “But it’s three years too late to catch anyone’s attention.”

Sterne Agee analyst Shaw Wu took a similar view, noting some recent carnage in the smartphone market. “So far, customers and developers have been lukewarm to adopt new platforms, including Windows 8 and webOS, despite strong reviews and carrier interest,” Wu said. “To us, it’s not just the number of apps, but the quality of apps and whether developers are making money and customers are using them.”

Precisely.

Debuting BB10 with 70,000 apps is impressive, and BlackBerry deserves a lot of credit for pulling that off. But a critical mass of apps is hardly a self-sustaining app ecosystem. A healthy app ecosystem is a transactional one. That’s why you often hear Apple boast about the billions of dollars it has paid out to developers. Sure, the iTunes App Store is approaching 800,000 apps. But that’s an empty number. The important thing is that people are buying so many of them that, as of last October, Apple had paid developers $6.5 billion.

BlackBerry is a long way from reaching either of those heady numbers. But 70,000 apps is a start. And BB10 and the Z10 handset would seem to have at least given the company table stakes in the smartphone high-rollers room. Now, can BlackBerry parlay those stakes into a true comeback? (And if not, can it parlay them into an acquisition? BB10 potentially makes it a more attractive target.)

Who knows? Perhaps the consumer smartphone market is ready for something new.

We’ll see.

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