Print 18 comment(s) - last by Jim_Liquor.. on Aug 20 at 6:01 PM

Even if BlackBerry device sales come to a close, new unit could guarantee a modest revenue stream

BlackBerry, Ltd.'s (TSE:BB) bid to survive and reinvent itself in the face of a hostile devices market entered a new chapter this week with the creation of the BlackBerry Technology Solutions unit.  A crucial part of new CEO John Chen's restructuring plan, some feel that this unit may be a not-so-subtle bid to group together the achieving parts of BlackBerry -- a set of business that could form BB's nucleus -- should the device business be shuttered.
So far CEO Chen hasn't ruled out ditching the BlackBerry devices business.  He also hasn't committed to abandoning ship on the smartphones/mobile OS business quite yet.  But with Q2 2014 sales of BlackBerry devices falling to 1.5 million units globally (0.5 percent of total smartphone sales), some wonder how long BlackBerry to cling to the role of OS developer and device developer.
A shakeup announced today, though, illustrates that there's plenty of viable businesses at BlackBerry even if it eventually does choose to exit the smartphone market.

QNX Hyundai vehicle
QNX is seen running in an infotainment system for Chrysler's Jeep Brand.
[Image Source: Autoguide]
The phonemaker today announced the creation of a new unit that lumps together many of its most successful businesses that are not tied exclusively to its in-house devices and QNX mobile platform.  Some -- like QNX Embedded -- don't even directly deal with BlackBerries at all.  The new unit includes:
  • A portfolio of 44,000 BlackBerry patents
  • The Paratek antenna business
    • Purchased in 2012
    • Produces self-tuning antennas for areas with poor cellular coverage
  • Project Ion
    • BlackBerry's bid to put QNX into devices comprise the Internet of Things (IoT)
    • Provides deployers with OS, provides developers with standardized SDKs
    • Will help BlackBerry vie for smart appliances business
    • Monetization path is unclear
  • Cryptographic applications/solutions
  • QNX embedded
    • Automobiles
      • In 2013 had 53 percent market share [source]
      • Used by over 40 OEMs
      • Only estimated to account for 2% of BB revenue with ~$3 per vehicle fee [source]
      • QNX OS for Automotive Safety 1.0 -- aims to increase that share by offering end-to-end services related to cloud vehicle processing
    • Other
      • Casino machines
      • Nuclear reactors
      • Large internet routing hubs
Rather than appoint an insider from his struggling firm, CEO John Chen sought out fresh blood.  He successfully wooed a quiet, but brilliant technologist who has served at numerous mobile companies to become president of the new unit.

That new face is Sandeep Chennakeshu, Ph.D.  The owner of over 73 significant wireless patents, Professor Chennakeshu spent much of his career with the mobile unit of Swedish conglomerate Ericsson AB (STO:ERIC.AERIC.B), which he joined in 1994 after a stint at General Electric Comp.'s (GE) research division.  During his time at Ericsson, he eventually rose to become the mobile unit's CTO, then was appointed President of the mobile unit of Swedish conglomerate Ericsson AB (STO:ERIC.AERIC.B) in 2003.  

Sandeep Chennakeshu
BlackBerry scored a mobile industry veteran when CEO John Chen wooed Frescale chief devleopment officer Sandeep Chennakeshu, Ph.D (pictured) to lead the crucial new unit.
[Image Source: Nyteknick (Sweden) (left); VT Society (right)]

In 2006 he left to join Freescale Semiconductor Ltd. (FSL), becoming head of its mobile unit.  Until this month he had been serving as chief development officer at Freescale, but he was wooed away by BB CEO John Chen.

In a statement CEO John Chen stated:

I am very pleased that Sandeep has joined BlackBerry to lead BTS.

QNX, Certicom and Paratek are strategic and technically innovative assets with significant potential to address the much wider global markets for secure, reliable communications and embedded applications. Project Ion creates an application platform that enables secure and collaborative machine-to-machine communication required by the growing number of end-to-end, Internet of Things applications. Our broad global portfolio of 44,000 patents is of value to several industry segments.

Combining all these assets into a single business unit led by Sandeep will create operational synergies and new revenue streams, furthering our turnaround strategy.

BGC Partners, Inc. (BGCP) analyst Colin Gillis was relatively bullish on the move, telling Reuters:

These are the call options for upside value that the market may not be factoring because it just looks too far away.  In any good turnaround, you focus in on the immediate tasks at hand but you also look down the road and say 'Where do we want to be? And what assets do we have to get us there?

He said he did not expect the unit to be sold off or spun off, despite the fact that some may view it as a prelude to such a move.
While it's been a rocky ride for the company formerly known as RIM, new CEO John Chen has many believing the impossible -- saving the sinking BlackBerry -- may be possible.  While device sales are slowly riding into the sunset, he announced in a recent memo that his restructuring efforts were mostly complete and that BlackBerry should be cash flow positive by the end of its current fiscal year.
In that regard, this shakeup could be viewed as the final major step in the restructuring process, as BlackBerry strives to achieve the difficult return to profitability.

Sources: BlackBerry [press release], Reuters

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By sprockkets on 8/18/2014 8:45:28 PM , Rating: 2
Only estimated to account for 2% of BB revenue with ~$3 per vehicle fee [source]

I love it. The source for that also points out that Linux is set to take over QNX for automobile installs :)

Also, "QNX is at present the market leader in the automotive infotainment OS market with 53 percent share of units in 2013. However, the OS will cede share to Linux in the coming years because of stronger competitors and uncertainty surrounding its parent firm, BlackBerry. QNX has better safety certification than other infotainment OSs, which opens additional auto opportunities that are not counted in this market forecast."

RE: ironic
By glowingghoul on 8/18/2014 9:34:42 PM , Rating: 2
It just says they'll take share from QNX. The auto industry is very conservative when it comes to tech (see Ford Fusion for an example of what happens when they aren't). QNX has a long track record and auto related approvals with many agencies worldwide.

RE: ironic
By melgross on 8/18/2014 9:59:17 PM , Rating: 2
Doesn't mean much. Times change. Blackberry has had nu erous security advantages, but it's almost gone. Even if QNX took more market share, at $3 a car, even 20 million cars a year would mean just a paltry $60 million.

RE: ironic
By Reclaimer77 on 8/19/2014 9:29:25 AM , Rating: 1
Why the hell would we want QNX in our vehicles when 85+% of us have an Android phone?

I know an Android-based system will work with my phone and my apps. I do NOT know that's guaranteed with QNX.

I think the only reason Blackberry has a foothold here is because it's a fairly virgin market. As soon as strong Linux based competitors (Android) make a push, it's over for Blackberry just like it's been for their smartphones.

RE: ironic
By Flunk on 8/19/2014 9:40:52 AM , Rating: 3
Your post doesn't make sense, the underlying OS being the same doesn't have anything to do with interoperability or compatibility. As long as they're programmed to communicate it doesn't matter what the underlying OS is.

It's fully possible to create an Android-based car OS that does not interact with your phone at all and conversely one written in QNX that works perfectly with an Android phone.

I'd rather someone other that Google wins the car OS wars because Android is so pervasive on phones. If Google controls both they'll be able to lock out all other competitors.

Ideally I'd like the car to have an interface that allows me to plug in my phone and then my phone takes over the whole entertainment/navigation interface. That way software updates are more frequent and easy. Also, if you don't like the experience changing your phone is a lot cheaper than changing you car. I don't care even marginally what OS that car interface is running.

RE: ironic
By Reclaimer77 on 8/19/14, Rating: 0
RE: ironic
By arazok on 8/19/2014 9:33:40 AM , Rating: 2
I don’t understand why auto manufacturers bother at all. They’re terrible at software. They should just throw a touch screen on the dash and a slot for your smartphone. Slip the phone in and let it take over the screen. Offer a standardized API for controlling car specific features. Then people can run any phone/software they want. Companies can develop custom software for cars and pay license fees to access the API.

RE: ironic
By Reclaimer77 on 8/19/2014 10:02:36 AM , Rating: 2
Probably because there's no true standard universal way to mirror your smartphone, ANY smartphone, to a display as of now.

But knowing devices makers, they'll just make it Airplay compatible. Asses...

RE: ironic
By robinthakur on 8/20/2014 6:23:54 AM , Rating: 2
And they would be right to, Airplay is by far the most reliable mirroring and streaming protocol I've used in the home, it simply works as one would expect. Compared to flakey old DNLA or whatever everybody else uses, it is awesome. That said cars technology is virgin territory, and they do really need to support ANY device, perhaps as a module you can buy for the car after market.

RE: ironic
By Nutzo on 8/19/2014 12:00:10 PM , Rating: 2
Not everyone has a smart phone, and even though I do, I wouldn't want to have to plug it into my car just to listen to some music.

I prefer the much simpler approach of putting my music on a USB drive and just plugging it into the radio.

I do like having the phone connected to the radio to answer calls (hands free), and it would be nice if the radio ran android so it could use google maps, and if the NAV could connect to WIFI at home for free updates (instead of the $100+ charge from the dealer).

RE: ironic
By arazok on 8/19/2014 2:31:31 PM , Rating: 2
The car would have to come with some default nav panel for those without a smartphone, but for the remaining 80% of the population, they could have the apps they prefer over some car manufacturers unupdateable platform.

I'm sure the radio could also continue to support an audio in or usb for those who just want to use an iPod or phone.

I am pretty sure...
By retrospooty on 8/18/2014 8:15:35 PM , Rating: 4
They have uninvented themselves.

Poor BB
By Kenazo on 8/19/2014 12:52:03 PM , Rating: 2
I have a Z10 that I've been using for a year and a half. It's too bad BlackBerry couldn't get their act together when they launched these devices, the "flow" of the OS seems much stronger to me than the S5 or 5S and love to see a "next generation" version, but probably won't get the chance.

RE: Poor BB
By Jim_Liquor on 8/20/2014 6:01:01 PM , Rating: 2
If you think BB Z10 is smooth, you obviously haven't touched a decent Windows Phone. By not mentioning that, you have killed your own point.

Comparing something as crappy as the iPhone5S or the bloatware-tastic S5 is ludicrous, they both are lag-fest machines.

What a farce.
By callmeizzy on 8/18/14, Rating: 0
RE: What a farce.
By coburn_c on 8/19/2014 4:11:34 AM , Rating: 3
Sounds like Jason Mick and his headlines.

No Buyout = No Point
By Flunk on 8/19/2014 9:32:38 AM , Rating: 2
If you think about it, Blackberry is a company that spent over a year trying to sell itself and ended up with no interested parties at all.

The outlook for all their products appears poor and their device market share fell so badly last year that it doesn't matter if they keep making devices or not they're still a non-entity in the market.

Might as well try and spin off as many units as possible, maybe someone might want to buy one of them. Otherwise just continuing the race to the bottom isn't going to help anything.

Old article?
By BennyTroves on 8/19/2014 9:57:16 AM , Rating: 2
Isn't Blackberry already operating in the smartphone-free future? I know some people are still using the antiquated devices but since their marketshare dropped below 0.5% that would qualify in my books as smartphone free operations.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

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