BlackBerry Reinvents Itself, Prepares for Potential Smartphone-Free Future
August 18, 2014 7:51 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
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 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
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
Secure Work Space
-- sandboxed, encryption protected workspace for Android/iOS
RIM Cryptographic API
-- Java language routines, currently for secured BB apps
In 2013 had 53 percent market share [
Used by over 40 OEMs
Only estimated to account for 2% of BB revenue with ~$3 per vehicle fee [
QNX OS for Automotive Safety 1.0 -- aims to increase that share by offering end-to-end services related to cloud vehicle processing
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
, 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 (
), which he joined in 1994 after a stint at General Electric Comp.'s (
) research division. During his time at Ericsson, he eventually rose to become the mobile unit's CTO, then
President of the mobile unit of Swedish conglomerate Ericsson AB (
) in 2003.
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. (
), 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
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. (
) analyst Colin Gillis was relatively bullish on the move,
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.
BlackBerry [press release]
"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA
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