BlackBerry May Spin Off BBM Into Subsidiary: Report
Struggling phone maker BlackBerry is considering spinning off its popular BlackBerry Messenger solution into a subsidiary, which would operate with greater independence, The Wall Street Journal reported Aug. 27, citing people familiar with the matter.
The report adds that the subsidiary would be called BBM Inc.
"The move signals that BlackBerry is trying to position BBM as a valuable asset ahead of a potential sale," said the report.
On Aug. 12, following a long review period by financial advisors, BlackBerry announced that it is open to "strategic alternatives," including partnerships, a sale of the company or other transactions.
It added that BlackBerry has been shifting executives over to its BBM team and "working on a number of offerings beyond messaging, including some tools already available to BlackBerry users, like video chatting."
At its BlackBerry Live event in May, the company announced that it was bringing BBM to a "greater audience, no matter what mobile device they carry."
By summer's end, BlackBerry has promised to bring BBM to iOS and Android devices, and to make it as "fully featured" as possible.
The decision to extend BBM to competing platforms, said CEO Thorsten Heins, was a "statement of confidence" in BlackBerry and its new BB10 operating system.
At the event, BlackBerry also sought to sweeten the allure of BBM with the introduction of BBM Channels. Still in beta, Channels is BBM "up a notch," said Heins, allowing BBM users to communicate with celebrities, brands, businesses and other groups.
Heins has spoken passionately about BBM, even as the ship in Waterloo seemed to be sinking.
During a Sept. 2012 earnings call, he spoke of traveling to emerging markets where BBM enjoys immense popularity.
"It's amazing when you go into these countries and you see how BBM is just kicking it. I mean, it's everywhere," Heins told media and analysts on the call.
During an August interview with The Telegraph he likewise enthused, "Every cab in Jakarta has a BBM pin on the door."
In May 2012, BlackBerry hired J.P. Morgan Securities and RBC Capital Markets to perform a "strategic review" and "evaluate the relative merits and feasibility of various financial strategies, including opportunities to leverage the BlackBerry platform through partnerships, licensing opportunities and strategic business model alternatives."
Heins, however, was resistant to making any changes before the market response to its BlackBerry 10 platform and devices—which it introduced Jan. 30—was clear. While the devices enjoyed healthy sales initially, no one expects BlackBerry, once the smartphone leader, to regain its former glory.
Announcing the launch of BBM for iOS and Android in May, the company said at the time that BBM had more than 60 million monthly active customers, and more than 51 million of them were using BBM an average of 90 minutes per day.
BBM features include a "D" and an "R" in front of messages, indicating that message has been delivered or read. Nearly 50 percent of BBM messages are read within 20 seconds of being received, BlackBerry said in its statement, "indicating how truly engaged BBM customers are."
Andrew Bocking, executive vice president of Software, Product Management and Ecosystem at BlackBerry added that the time is "definitely right" for BBM to become a multi-platform service.
"BBM has always been one of the most engaging services for BlackBerry customers," said Bocking," enabling them to easily connect while maintaining a valued level of personal privacy."