Let’s First Start With the Big App Developer Support Problems
This is primarily in response to the question “Why doesn’t BlackBerry pay big name app developers to get them on-board?” – as I know it’s a question that a very large part of the community is wondering. Why not go that route and stick to their guns with BB10 instead of jumping ship to Android?
The answer is that they will simply never secure those apps… Microsoft took the route of paying billions for advertising and bringing app developers on board. 10-fold what BlackBerry has the resources to spend, and they are having the exact same problem. You can have all the incentives you want, offer to pay some of the top developers millions of dollars to bring their app over, but it’s STILL not going to happen.
Users Matter. Point Blank.
The truth of the matter is that users are now the most valuable thing for app developers. I say “now” because eventually this is going to have to change. It is simply not a sustainable business model. Just having 500m users and making $0 isn’t a feasible company, yet the top app development companies are currently functioning with that due to so much VC money flying around. The industry is currently thriving on FOMO (Fear Of Missing Out). Noone wants to miss out on the next Facebook, Snapchat, or Instagram.
So with that in mind, for the apps that have 500m+ users like Instagram, Snapchat, etc. what is another 10 million users on the BB10 ecosystem? Is it honestly worth Instagram or Snapchat to build and support an entirely different operating system at the chance of getting a fraction of 10 million users on-board? On a platform that a large percentage of the hardcore user base claims that they don’t even care that much about apps? Not in the slightest. It doesn’t matter how much they are begged and pleaded with, how many incentives there are, it’s simply not worth it for them.
Risk vs Reward
It’s like someone telling you hey, Bob, do you want $1 right now? or a 30% chance to win $100k? You’d be an idiot to take that $1.. But now if they said do you want $15k right now or a 30% chance to win $100k, that first option sounds a LOT more interesting. Well now replace that $1 with $10k and that $15k with $15m. That’s more realistic to what BlackBerry would have to do. And can they afford to be running around offering $15m to all of these various companies to simply build an app and support it? Hell no, they have stockholders, they can’t just run around giving money away like that for a small chance to be relevant again in the consumer eye.
Now if this would GUARANTEE BlackBerry success though, then they would absolutely do it.. But there’s no guarantees in business and their stock is already volatile enough. It simply got to a point where playing the app on-boarding game became more risky than moving over to Android. They made a pure business decision and the truth of the matter is that it is going to cost them them a LOT less developing an Android OS compared to app-onboarding AND it offers a MUCH higher chance of success. It’s always risk vs reward in business and once you start accepting that is when you will finally understand why BlackBerry was backed into this corner and why they are going the route they are.
Big App Companies Don’t Care About Money
At the end of the day, the top apps that we need on BB10, the dev companies behind them quite frankly DON’T care about money. Now that may sound weird.. But hear me out.
As previously explained, users are worth an easy 100x multiple “in theory” and that’s why we are in such a big problem right now. Users are WAY too highly valued in current app company valuations, making it simply impossible for BB10 to be an attractive app development option. The bubble needs to either burst and these $26b valuations of apps with only a few hundred million users have to go down to their proper $3b area, and then, only THEN is some kind of cash incentive from BlackBerry worth it. In the current state, BlackBerry would have to be offering these developers hundreds of millions of dollars just to port their app over to make these companies change there mind. And as a company, with shareholders and common sense, BlackBerry just simply cannot do that.
WhatsApp is a great example of a big app company that didn’t care about money. They ONLY cared about users. I’m sure many of you have experienced the $1 per year fee for WhatsApp that they never ended up charging? Yeah, hitting 400m users and still not charging a cent. Imagine how much money went into development costs and servers. I can tell you, they had a net loss of $138 million dollars at their peak. They were losing money like crazy. But they had the users, that’s ALL they cared about, and that’s all most big app development companies care about right now. It’s not the money. Because what ended up happening to WhatsApp? Facebook saw their 500m userbase and snatched them up for a whopping $21.8 billion. Now please tell me how much money you’d expect a company like BlackBerry to incentivize making an app when they are losing $138 million dollars a year? (Yes, WhatsApp was on BlackBerry at the time, but I think this helps explain why up-front cash doesn’t matter to these companies). The same thing can be said about Instagram, an app that isn’t officially on BB10.
Now that’s the problem that they have to face when it comes to getting users onboard BB10 and why BB10 cannot grow, but why ditch BB10 for Android?
Well it’s a pure hardware play at this point (there are some software benefits, but it’s primarily a hardware reason). They are hemorrhaging money from the hardware division and either have to axe the hardware division, or make hardware successful. They simply cannot sell enough BB10 devices to make the hardware business successful because the consumer market is vocal that BB10 needs more big name apps (and BB10 can’t get those apps because of everything I mentioned above).
At least Answer Me This
So to everyone that is complaining about Android, the real question is this:
Would you rather BlackBerry kill off it’s hardware division and never create another BB10 device? Sure, maybe some other hardware manufacturers would create some BB10 hardware eventually, but probably not. Well not unless BlackBerry managed to get more big name apps on-board, but again, referring to everything I mentioned above, that’s not likely to happen. And even going this route, how long would they continue supporting BB10 for anyway? As devices get outdated, more and more people will jump ship. As good as the specs are for the Passport, it’ll be outdated in a couple years and then BlackBerry will go into maintenance mode with BB10 for these users. They will have to because they will be losing money supporting BB10 as an OS and will be forced to axe that just as they axed the hardware business in this scenario. There’s a small percentage of users that will probably still utilize BlackBerry 10 over Android but that’s not enough to sustain a profitable handset business.
Or would you rather BlackBerry give their hardware business one last shot with Android to possibly keep BlackBerry around as a hardware and software company? Still get to experience Blackberry’s phenomenal hardware and try to give their productivity mindset to a more popular OS?
Because in both scenarios, there’s not a good outcome for BB10, but at the end of the day you have to pick one. And to be fair, so much is still unknown at this point, who knows how BlackBerry will truly execute Android on BlackBerry hardware. Stay tuned.
App development costs money to develop, QA, and support. Many of these companies business models involve acquiring a huge user base, often at a significant loss, to get a massive payout once popular enough (via acquisition or IPO). Due to BB10’s low adoption rate, there’s little justification for these companies to spend their precious operating dollars, time, or resources to go after the BB10 market.