BlackBerry to End BBM Music Service

Zacks

In a recent strategic move BlackBerry smartphone developer, Research In Motion Ltd. *(BBRY) has announced that it will discontinue its BBM music service from Jun 2, 2013. It is believed that tough competition from free online music-streaming service providers has compelled BBRY to shut down its operations.

Notably, the cloud-based music-sharing service allows BlackBerry Messenger (:BBM) subscribers to create a music library and share songs with friends at a monthly service pack of $4.99. However, a user can share a maximum of 50 songs from a list of more than 1 million tracks.

BBRY is compensating its 60 million BBM subscribers by providing them with a 30 day free access to RDIO music service. RDIO offers more than 18 million songs, including the latest hits and classic albums.      

Streaming music on mobile phones has been flourishing over the past few years as companies like Pandora Media Inc. (P), Spotify and MOG continue to fight for market share. In Canada, BBRY subscribers are also deprived of CBS Music’s free on demand music service, which is available in rival Apple Inc.’s (AAPL) iPhone and Google Inc.’s (GOOG) Android-based smartphones. 

We believe that BBRY needs to come up with a similar free music-streaming service for the old BlackBerry smartphone customers to cope up with its rivals in the online music category.  

However, BBRY has not included the music service in its latest BB10-operating system (:OS)-based smartphones. Instead, the new OS-based smartphones come with a free music-streaming service called Songza that recommends playlist based on the mood or activity of the user. 

Research In Motion currently carries a Zacks Rank #2 (Buy).

*Research In Motion announced that effective Jan 30, 2013, the company would operate around the world under the name BlackBerry. From Feb 4, 2013, the company’s ticker symbol for trading has been changed from “RIMM” to “BBRY” on NASDAQ. The legal name of the company has not changed, for which the approval of the official change by shareholders will be sought at the company's Annual General Meeting later in 2013. During the time, the company will do business as BlackBerry.

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