2014 was a pivotal year for the smartphone industry. It entered a consolidation phase, with around five OS platforms beginning to give way to just two – Google Android and Apple iOS, which would lead the next decade. BlackBerry was at a critical juncture then. Only 10 months had passed since John Chen took over its reins with an ultimate mission to turn around the business. Having tracked BlackBerry for more than a decade then, we highlighted in ‘BlackBerry: Time to Pivot’ how the company could focus on its core competency “software and security” to first survive and then grow into a key player in the tech industry.
Fast forward to a decade later, we reconnected with the BlackBerry team and discussed the pivot. The progress had been nothing short of phenomenal. BlackBerry’s business now consists of three main groups:
• Cybersecurity (~$435 million Annual Run Rate at ~55%+ Gross Margins)
• IoT (~$245 million ARR at ~80%+ Gross Margins)
• IP Licensing (~$20 million ARR at ~60%+ Gross Margins)
While cybersecurity has been the key growth area so far, IoT, which includes embedded software in automotive alongside other IoT verticals, offers significant growth opportunities for BlackBerry.
The IoT business vertical consists of BlackBerry Technology Solutions (BTS), which include BlackBerry QNX (embedded software solutions and services), BlackBerry Radar (telematics and asset monitoring) and BlackBerry IVY (intelligent vehicle data platform).
The key component of the IoT vertical is BlackBerry QNX, which the company (called RIM or Research in Motion then) acquired from Harman back in 2010 for around $200 million. The early adoption at BlackBerry for the QNX OS, the lightweight microkernel-based architecture OS, was in the BB10 OS line of smartphones and PlayBook tablets. However, QNX’s core competency in terms of stability, flexibility, security and ability to run on low-capability hardware made it more attractive for mission-critical applications in industrial, robotics, medical and transportation settings, as well as in the safety-centric automotive industry. Automotive became one of the most important growth verticals for BlackBerry QNX after exiting the initial mobile devices venture.
QNX offers a portfolio of solutions focusing on safety, security and reliability in the end application. These solutions include BlackBerry QNX RTOS, QNX Hypervisor, QNX Software Development Platform (SDP), QNX Sound and other tools around cryptography, functional safety and security. Since its inception and then acquisition, QNX has raced to power more than 235 million vehicles globally and has become the gold standard for the safest and secure software OS, hypervisor and dev for automotive OEMs, Tier-1 vendors and others despite strong competition mainly from Android Automotive OS (AAOS), Automotive Grade Linux (AGL) and other custom solutions.
BlackBerry’s IoT division President Mattias Eriksson, who joined the company almost three years ago from leading location platform player HERE Technologies where he was SVP & Head of Product leading mapping content and core location platform from vision to portfolio, explains how BlackBerry’s focus shifted from mobile to security and then to IoT with QNX, and cybersecurity.
Mattias highlights a key trend where BlackBerry started focussing less on integrated IVI business and more on foundational software at a time when the industry was seeing a significant “open source” movement coupled with the growth of hyperscalers changing the dynamics between the edge and the cloud, and the new era of “Software Defined Vehicles”.
So, the company’s focus on the foundational software platform to provide the plumbing for the future advanced edge compute was pivotal to its success and strong position in the automotive segment. This “undifferentiated heavy lifting” done by BlackBerry is helping its customers to focus on building differentiated features on the top and not worry about the core foundational part of the stack. Having said that, to have that solid foundation for OEM and industry partners which is secure and reliable is not easy as the development warrants significant resources, unique IP, and highly scalable visionary design to power a variety of future experiences.
With the advent of AI, the importance of processing at the edge in the vehicle has increased. However, selected data will be sent to the cloud to train advanced ML models which will then be pushed back to the edge or the vehicle for actionable edge inferencing. This is where BlackBerry has been working in an R&D partnership with AWS to develop BlackBerry IVY, a platform abstracting middleware complexity and enabling secure and controlled data processing at the edge and the cloud. This enables automakers, system integrators and industry partners to analyze valuable data, find gaps, innovate with new services and experiences and monetize effectively.
Further, beyond automotive, Mattias also highlights the opportunities in B2B edge IoT devices, which are becoming smarter and need a sophisticated embedded software and development platform such as QNX moving from MCUs to MPUs or SoCs and from single function to multiple functions. The focus IoT segments include commercial vehicles, autonomous systems, sophisticated medical equipment, robotics and high-end industrial systems. While automotive will remain a priority for BlackBerry in the near-term to mid-term, the other segments will be parts of a long-term strategy as the adoption and maturity grow.
Key Takeaways
- BlackBerry has done exceedingly well over the last decade to pivot to become an integral part of the automotive industry to power not only current-generation vehicles but also future Software Defined Vehicles and from edge to cloud.
- BlackBerry still has a long road ahead as the auto industry transforms over the next 10 years to capture and create more value.
- BlackBerry’s unique positioning and core ability in software and security have given it an edge in mission-critical and safety-demanding applications as the number one choice to power “Software-Defined Everything”
Bonus
We got an opportunity to see the different components of BlackBerry QNX in action at CES 2024. The demo on the latest QNX SDP 8.0 was intriguing, highlighting the company’s unique position in the industry and the vision to build scalable solutions.
The QNX SDP 8.0 is the foundational development platform for the next-generation microkernel-based QNX OS, hypervisors, software tool chain, and manager for powering compute-intensive and mission-critical applications such as industrial robots, autonomous vehicles and drive systems. This was designed ground-up to make it highly scalable and can work across a range of compute from 4 to 64 cores and increasing workloads. The SDP 8.0 helps optimize the systems for hard real-time performances to ensure predictability, reliability and deterministic system behavior, making it a unique platform architecture with a focus on functional safety.
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