Why BlackBerry is on the rise again

BlackBerry is on the rise again after it has failed miserably in the smartphone market. Their demise has been a long one in the making. Apple changed the smartphone market with their touch screens. Although BlackBerry actually continued to grow for around two years after the iPhone launched in June 2007, taking market share away from then-leader Nokia. BlackBerry’s market share among all smartphone operating systems grew from 9% in 2007, to 20% in 2009, according to Gartner. Then, the decline started. Now their market share has dropped to 0%, but this was inevitable because BlackBerry sold the global rights to future BlackBerry-branded smartphones to Chinese company TCL Communication.

So what are BlackBerry’s plans for the future?

CEO John Chen took over in november 2013 and has made some real changes to it’s business model.

According to themselves they now are “a cybersecurity software and services company dedicated to securing the enterprise of things”. So they have transformed themselves from a hardware manufacturing company to a software company. And this transition seems to have worked: “Non-GAAP revenue for the third quarter of fiscal 2018 was $235 million with GAAP revenue of $226 million. Approximately 75% of third quarter software and services revenue (excluding IP licensing and professional services) was recurring. BlackBerry had approximately 3,000 enterprise customer orders in the quarter”.

From hardware to software

BlackBerry has emerged as a big player in connected cars and the Internet of Things thanks to its QNX software unit. BlackBerry QNX is an embedded software platform on the autonomous vehicle market, designed for safety and security. The company now provides tools and cyber security technology to protect and mitigate, hardware, software, applications and end-to-end systems over their lifetime from cyber attacks.

These are much more profitable lines of business than the cutthroat world of making hardware. BlackBerry said on dec 20th 2017 that its gross margins improved to a record high of 77% in the quarter. And with cyber security attacks becoming more prevalent and the financial risks attached to them becoming much larger, the transformation might pay off nicely.

John Chen’s goals: “We want to make BlackBerry ubiquitous in the auto sector,” Chen said. To that end, Chen is even going to the North American International Auto Show in Detroit in January for the first time and will deliver a keynote address there.

BlackBerry in the cyber security business

Chen said the company will also keep focusing on cyber security products for big businesses and governments too. The stock enjoyed a pop in 2017 after the WannaCry ransomware attack as investors realized BlackBerry’s security business could benefit.

So what do you think? Can blackberry keep up the momentum? BlackBerry QNX will be at CES 2018. So you might want to keep an eye on it next week!

BlackBerry 1 year chart
BlackBerry 1 year chart

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