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BlackBerry invests millions to rescue failing app strategy

BlackBerry Partners Fund?s big investment in cross-platform application store PocketGear during a Series B funding round could mark a play to save BlackBerry?s struggling application platform.

The Partners Fund?s decision to invest in PocketGear, which supports BlackBerry applications, comes as BlackBerry?s App World trails far behind competing iPhone and Android platforms. The investment could mark an attempt to salvage application distribution for the BlackBerry platform without an overwhelming financial commitment.

?Clearly BlackBerry?s app store hasn?t done that well,? said Neil Strother, Kirkland, WA-based mobile practice director at ABI Research. ?This gives them a boost, and opens up the door with new application offers to attract their target audience.

?This also gives them a boost without having to spend a lot of money internally,? he said. ?It broadens BlackBerry?s potential scope of reach.

?This underscores the fact that they haven?t had a great amount of success with new apps vis a vis what has gone on with Apple and Android.?

Trident Capital and Google CEO Eric Schmidt?s TomorrowVentures also participated in the $15 million investment round.

The BlackBerry Partners Fund is a $150 million venture capital fund that invests in businesses focused on applications and services for the BlackBerry platform.

Research In Motion is an investor in the fund and provides assistance in the areas of technology, marketing and channel development.

However, RIM does not have final say in the fund?s investment decisions.

Durham, NC-based PocketGear claims to be the world?s largest cross-platform open application store, offering more than 140,000 paid and free titles across several platforms, including BlackBerry, Android and Java.

PocketGear declined to state how much each company invested, except that Trident, BlackBerry Partners Fund and TomorrowVentures each doled out amounts in the millions.

The company said it plans to use the funding to scale its technical operations, build out its sales and marketing teams and expand its global reach.

?We?re really going to be ramping up the team,? said Jud Bowman, President and CEO of PocketGear, Durham, NC. ?We?re focusing on partnering with as many carriers and handset makers as we can.?

BlackBerry Partners Fund was not available for comment by press time.

Catch a falling app store
PocketGear?s Series B investment round comes during a period of explosive growth for the applications market.

Apple has dominated the application market, thus far, ands claims it serves over 200,000 applications through its App Store.

Google?s Android Market, which was on nearly equal footing with BlackBerry?s App World at the beginning of 2010, has ballooned to over 70,000 offerings, and some experts are predicting that it could eclipse Apple?s App Store (see story).

On the other hand, App World?s offering of applications only amounted to between 10,000 and 15,000 as of earlier this year.

Some have wondered if RIM?s application strategy is foundering (see story).

However, the release of the BlackBerry 6 operating system and the BlackBerry Torch smartphone could mean a brighter future for applications on the platform, according to a RIM executive at the eTail 2010 Social Media and Mobile Commerce Summit (see story).

Creating popular alternatives to the Apple application goliath is essential to creating a more competitive application market.

Mr. Strother said that BlackBerry Partner Fund could have that in mind.

?This shows that in the BlackBerry Partner Fund, they see a world with choices other than Android and Apple?s app stores,? Mr. Strother said. ?To me, it?s a good thing.

?This means consumers don?t have to be locked into any one store,? he said. ?The market may be competitive beyond what people think,? he said. ?The key issue for anyone in the mobile app space against Apple is you need devices and you need recognition for your store ? it?s about awareness.

?The bar is pretty high with Apple, and anyone trying to promote and distribute apps needs to keep that in mind.?

An open app world
Google CEO Eric Schmidt?s participation in the funding round is a move sure to raise eyebrows as Google?s Android Market is a competitor of PocketGears.

Mr. Strother said that Google, like BlackBerry Partners Fund, could be looking to push the application market into a more open paradigm.

?With Google and RIM, it says they take a different tack of being more open,? Mr. Strother said. ?Open is a loaded word ? what does it mean? ? but, in this sense, it?s not the Apple model.

?What they?re saying is there are other ways of stimulating the app market and putting money behind that and they think PocketGear is a storefront they want to back to create an alternative.?

PocketGear drew a similar conclusion.

?Apple has done an incredible job with the ecosystem they?ve built,? Mr. Bowman said. ?However, it?s proprietary and closed.

?We?re about cultivating an open app store, and supporting every open device and platform,? he said. ?Having the CEO of Google and BlackBerry invest in us ? strategically that?s very important, because they?re the top two manufacturers for smartphones.

?They believe in investing in open application platforms.?

Final Take
Peter Finocchiaro, editorial assistant at Mobile Marketer, New York