Blackberry’s chicken and egg problem: should they follow Microsoft’s example?

Two days ago the CEO of Blackberry, John Chen, created a stir here in the valley when his letter to a few members of Congress was posted on Blackberry’s blog. In it he asked that legislators intervene and require the developers of the more popular apps to develop an app for the Blackberry platform. Using net neutrality as his platform he called developers “discriminatory” when not making their apps available for Blackberry users. The full paragraph says it better than I could:

“Unlike BlackBerry, which allows iPhone users to download and use our BBM service, Apple does not allow BlackBerry or Android users to download Apple’s iMessage messaging service. Netflix, which has forcefully advocated for carrier neutrality, has discriminated against BlackBerry customers by refusing to make its streaming movie service available to them. Many other applications providers similarly offer service only to iPhone and Android users. This dynamic has created a two-tiered wireless broadband ecosystem, in which iPhone and Android users are able to access far more content and applications than customers using devices running other operating systems. These are precisely the sort of discriminatory practices that neutrality advocates have criticized at the carrier level.”

Number of apps available in leading app stores as of July 2014. Source: Statista

Number of apps available in leading app stores as of July 2014.
Source: Statista

He’s right that there is a chicken and egg problem with getting apps for new ecosystems. Developers won’t prioritize making apps for mobile operating ecosystems with a lower market share. Just ask Windows, who, as of July 2014, still are at around 300,000 apps available as opposed to Android’s 1.3 million. Yet, Windows had only 100,000 apps in June 2012, so while growth is slow, developers, especially of the more popular ones, such as Netflix, have decide that Windows has a large enough market share to develop apps for. That said, Windows market share in November 2014 was 3.4% and Blackberry’s was 2%, while the number of apps available for Windows was 300,000 as opposed to Blackberry’s 130,000.

Market share held by smartphone platforms in the United States from January 2012 to November 2014. Source: Statista

Market share held by smartphone platforms in the United States from January 2012 to November 2014.
Source: Statista

Microsoft, facing the same chicken and egg challenge that Blackberry is facing, tried a different approach to growing their app store. About a year ago, in order to pump up the number of apps in their store, they wrote “repackaged website” apps for popular brands that weren’t already in their store. Now, this tactic served to anger some developers as they said it was “Mediocre experience at best” it did prompt others to create a native app for Windows, which was Microsoft’s objective all along.

Finally, market share is not the only motivator for app developers when deciding what mobile operating system to write for. Though Android has an overwhelming advantage in number of handsets shipped worldwide, market share is not the only predictor of profitability. Last week Monument Valley’s developers shares stats about sales and revenue over time and by platform. Evidently, iOs is far more profitable for developers than Android, by far. Of Monument Valley’s almost $6 million revenue, 81.7% is from iOs, 13.9% is from Android and 4.3% is from Amazon (granted, the iOs version was released mid April, a month before the Android version, but iOs drives the bulk of revenue all year long.) When Blackberry offers that profitability with a larger market share, developers will come, no doubt. Until then, let’s hope Congress stays out of this.

 

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