Blog Post

BlackBerry reportedly considering a BBM spinoff business

BlackBerry’s(s bbry) highly profitable BBM service could spin-off as a subsidiary, signaling a potential restructure of assets prior to a company sale. The Wall Street Journal’s sources indicate the new group would be called BBM, Inc. if such a move were to happen.

This move wouldn’t surprise. The company’s sole bright spot right now are the lucrative BlackBerry Services. They only provides around around 20 percent of BlackBerry’s revenues, but account for the bulk of the company’s profits.

This is a stark contrast from the hardware business which creates the bulk of revenues but little in the way of profit. And new BlackBerry phones continue to get outsold by Android(s goog) handsets, iPhones(s aapl), and even Microsoft(s msft) Windows Phones. In the second quarter of 2013, Nokia(s nok) alone sold twice as many Lumias than BlackBerry sold of its new BlackBerry 10 handsets, the Z10 and Q10.

The handwriting was on the wall for some time in this case. At the end of 2011, I suggested that in 2012, BlackBerry wouldn’t be the same company; instead it would be sold or would simply focus on its service business, which was highly profitable back then as well. My timing might have been off but the message is the same: BlackBerry Messenger isn’t enough to sell BlackBerry phones; that’s why the company is bringing BBM to iOS and Android this year.

Updated at 9:58am PT to correctly show that BlackBerry Services, not the BBM Service, accounts for most of the company’s profit.

4 Responses to “BlackBerry reportedly considering a BBM spinoff business”

  1. cumiastowski

    Kevin – you’ve got a MAJOR error here. BBM does not generate 20% of revenue. The company’s BlackBerry service (fees they take from carriers, mostly on legacy BBOS) generates this revenue.

    You really should fix this and focus on understanding the sources of revenue better.