By 2019, Blackberry will shed all of its past legacy
It’s melancholic to see BlackBerry, once the dominant smartphone leader in the world, fade into near obscurity. According to data provided by research firm Gartner, BlackBerry devices only made up a paltry 0.05 percent of the mobile market in 2016 Q3, whereas Google’s Android and Apple’s iOS accounted for 81.7 percent and 17.9 percent, respectively. In fact, the Canadian company no longer develops hardware in-house, instead outsourcing its brand name to companies like the Chinese electronics manufacturer TCL and earning revenue from the licensing agreement.
BlackBerry, however, does not seem to be alarmed that they are no longer a smartphone force. Instead, through the intentional shedding of their former glories, the company is taking a large pivot towards an expansion and greater monetisation of its software assets. BlackBerry has been quietly acquiring several software firms over the past few years, with them having “no major gaps in its software portfolio, thanks to the integration of a string of recent acquisitions.”
Notably, the company saw a year-on-year growth of 49 percent for software and services revenue in their Q3 report, amounting to US$172 million. But BlackBerry does acknowledge that more work will be required before they make headway into healthcare and automotive sectors, areas that they’re targeting to drive growth in the future.
Yet, investors and industry watchers have not been quite as optimistic as the company. BlackBerry, which is set to release their fourth-quarter and full-year report on Friday, is predicted to barely break even with $1.4 billion in revenue for the fiscal year. To encourage investor confidence, the Ontario-based company has to showcase a solid increase in revenue from their software and services sector, one that their CEO John Chen pledged to grow by 30 percent year-on-year.
Nicholas McQuire, an IT analyst at CCS Insight, said that “BlackBerry is a completely different beast than it was a decade ago,” adding on that the company “has pivoted in the right direction with some new and promising areas ahead of it, but these are nascent markets which will take time to materialise in its bottom line.”
The company’s new direction, towards budding industries like cyber security and self-driving cars, has produced some results thus far. Its QNX operating system for automobiles can be found in vehicles made by Audi, General Motors, and Ford, in 60 million cars across the world, with a push for the system to be used in the self-driving car market. Moreover, their acquisitions of Good Technology and WatchDox has solidified their position as the leader in the enterprise mobility market.
Although the waters remain rough for BlackBerry, should the company survive its drop in revenue and put a stop to its cash burn, it might find itself in a favourable position. Gus Papageorgiou, Associate Director at Macquarie Capital Partners, said that “by 2019 BlackBerry will have effectively shed any legacy of its previous business model. What will likely remain is a high margin software business that should generate good profits.”
