Does BlackBerry Really NEED Digital Content?

by Brad Moon | January 30, 2013 9:14 am

As Research in Motion (NASDAQ:RIMM[1]) undertakes the most important product launch in its history, an announcement released on Monday shouldn’t be overlooked. RIMM sent out a press release[2] trumpeting a series of content partnerships with big-name players in the movie, TV and music businesses. Yes, RIMM is trying to turn its BlackBerry World storefront into a full-on competitor to the Apple (NASDAQ:AAPL[3]) iTunes Store and Google (NASDAQ:GOOG[4]) Play.

It’s a pretty commonly held axiom among tech analysts that a smartphone platform needs a healthy app store to survive. RIMM has focused on bringing as many app developers as possible on board for BlackBerry World, and looks to be on pace to hit a respectable 70,000 apps in time for the BB10 launch[5].

That’s a smart strategy, even though it’s not a cheap one; RIMM handed out over 8,000 developer handset prototypes, offered guaranteed app revenue levels and embarked on a worldwide, developer-focused “BlackBerry 10 Jam World Tour.” Having a slew of apps on hand at launch will be a big part of any BB10 success.

But did RIMM need to expand BlackBerry World to include digital media — movies, TV shows and music — as well?

The old Research in Motion had little interest in the business of selling entertainment to its customers. The company dismissed frivolous features like cameras as unnecessary for business users. Besides, who would expect a U.S. government agency employee to be buying and watching movies on their BlackBerry? Essentially, RIMM’s consumer experience was simply a slightly modified version of the corporate one.

Unfortunately for RIMM, the smartphone market moved to being largely consumer-driven, while even corporate smartphones became multipurpose devices that employees did use for their own amusement. Being able to buy music, stream movies and rent TV shows from iTunes was a big part of the iPhone’s appeal.

While they may well do it anyway, users don’t want to be forced to download Netflix (NASDAQ:NFLX[6]) for movies or to buy songs from Amazon (NASDAQ:AMZN[7]); an operating system-level integration between device and content is part of the smartphone experience today. RIMM really had no choice but to invest in content.

Because of this shift, RIMM resembles Apple and Google more than other smartphone manufacturers like HTC, Nokia (NYSE:NOK[8]) or Samsung (PINK:SSNLF[9]). It’s not just making smartphones, but is operating a platform and offering digital content — something that is expected by consumers. Nokia can let Google or Microsoft (NASDAQ:MSFT[10]) do the heavy lifting while it focuses on just the hardware, but RIMM doesn’t have that luxury.

Just look at what happened with its old brand of thinking: RIMM all but fell out of a market it essentially invented and dominated for years.

You can bet that RIMM CEO Thorsten Heinz has carefully studied every mistake his predecessors made, though. While the new BB10 smartphones are intended to shore up the company’s eroding core-enterprise and government-user base, they also need to take consumers and their needs into account — something previous generation BlackBerry devices did only halfheartedly and then only under the gun of the iPhone’s (and then Android’s) relentless gutting of its market-share.

In the end, whether BlackBerry owners actually buy movies and music from BlackBerry World will be almost irrelevant. It’s not like RIMM is expecting to make scads of money from the venture. But by making the option available, it’s removed a key criticism: that the BlackBerry is built solely for business and treats consumers like an afterthought.

 As of this writing, Brad Moon did not own a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2013/01/does-blackberry-really-need-digital-content/

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