Connected cars provide BlackBerry with a three-point-turn
- Summary:
- Automotive manufacturer Ford has given BlackBerry a big vote of confidence, just as the mobile firm turns in an unexpected narrowing of losses. Is CEO John Chen's turnaround strategy working?
Automobile manufacturer Ford just handed out a vote of confidence in the technical prowess of BlackBerry by signing up 400 new engineers to join its mobility and connectivity operation, the majority of them having previously worked at BlackBerry.
Ford had previously committed in 2014 to using BlackBerry’s QNX car software for its SYNC infotainment systems, while in October last year, the two companies said they will expand the use of QNX software within Ford’s fleet.
Meanwhile BlackBerry itself had a bit of a shot in the arm when it turned in narrower-than-expected losses, sending its share price up 5% as investors took this as a sign that CEO John Chen’s decision to recalibrate the firm as a software developer is paying off.
Wall Street had been expecting a net loss of around $74 million for the quarter, but in the event BlackBerry reported a net loss of $47 million on sales of $286 million, down 38% year-on-year, despite what Chen called its “best ever” software billings. In the enterprise market, software and service revenues hit $182-million for the quarter.
The future lies in expansion of BlackBerry’s licensing program, said Chen:
This will focus on a broader set of endpoints. What this might mean, and I make no promise, is that you may soon see a BlackBerry tablet, and it will also extend to co-branded handsets with IoT and Enterprise of Things to EoT devices. These endpoints will run our software and security features and be co-branded Secure by BlackBerry.
In the second half of 2016, BlackBerry launched a federal Cybersecurity Operations Center focused on achieving FedRAMP certification for the US government. The firm’s crisis management platform has now achieved the FedRAMP and Authority to Operate certificates and the plan is to expand the federal market footprint, said Chen:
We intend to take most of our enterprise products through the certification process. Also on the cyber security front, Giuliani Partner selected BlackBerry Secure as the underlying software platform to support its consulting practice for government enterprise customer. This is the great start in our security services business and you should expect more of these types of partnerships in the future.
Chen added that he hoped FedRAMP certification would open up other government interest:
I think it’s acceptable to a lot of governments around the world after we pass in the US standard. So, we have achieved all that. So, it is anchor to our federal business as a whole, both in the Unified Endpoint Manager side of the equation as well as the ad hoc side of the equation. It’s baked into support our current businesses or growing our current businesses as well as winning new projects. We will also license it, but where it’s applicable by law.
Driving in my car
As for that Ford association, Chen bigged up the potential of the automotive market and BlackBerry’s QNX arm:
Earlier this year at CES, we announced our most advanced and secure embedded offering for autonomous drive and connected cars. The QNS software development platform 7.0, the key feature of that is the 64 bit operating system which enables high performance for more powerful domain controllers inside vehicles. Also included are enhanced kernel-level security protect against the malfunction, malware and cyber attack. The 7.0 release works with ARMv8 and Intel x86, 64 bit architecture. Sixty-two partners have already signed up as beta users on the platform. These partners are in four main groups - in automotive, chip makers, general embedded, and other applications including ISVs.
We demonstrated a Level 4 self driving scenario on test track with the Lincoln MKC powered by the BlackBerry software and Renesas hardware, and that’s also at CES, sorry. We also demonstrated at CES a prototype of vehicle management portal. With over 100 million lines of code now, a software code in some of today’s vehicle, there is a growing risk of security breaches and failures. This portal would be targeted for automotive makers and Tier 1 suppliers. It allows user to scan software code, identify vulnerabilities or exposure and view key parameters and attributes in a dashboard view. We received extremely positive feedback from the CES attendees, and we expect to launch this offering later in the fiscal year.
For now, Ford is the bellweather example, of course. Chen explained:
A car is really a computer on the road or mobile computer on the road. The company at BlackBerry started with a pretty dominant position in infotainment. So, if anyone has a 2016 model Ford or a Jaguar or a number of different cars, you are using BlackBerry software. So, the Ford 2016 model has our Sync 3. Ford has worked so well with us that they have decided to expand using our software.
Then there are areas of telematics; there are areas of safety, ADAS areas, all of that, where BlackBerry actually has an offer in the market. AWe continue to build new products and new modules and new ideas like, for example, on the cyber-security side, a vehicle portal management. We hope Ford will take a very, very serious look at it.
With that, we could start having recurring revenue for ourselves and for Ford. We also have over-the-air technology that Ford’s very interested in. So, it’s a much more bigger than just a basic OS. It’s a horizontal application. It’s how cars are put together and how cars modules talk to each other. The future car is basically one huge program. So, I am very bullish, and this is only with Ford, and it is non-exclusive. So, if I could do more with others, other car manufacturers around the world, Europe, Asia that will be even better.
What won’t happen though is BlackBerry deciding that it should produce its own vehicles, added Chen:
In infotainment, we own over half the market today, 60 million cars. So, I hope that gives us some leverage and [we will] continue R&D. This is why we created the autonomous driving car centers, innovation centers in Ottawa a quarter-plus ago,n because we wanted to attract partners with us to build application on our platform.
People often asked me whether I’m going to build an autonomous car. No, I’m not. I’m not building an autonomous car. I don’t want to compete with my customer, nor do I want to compete with a very, very big name that wanted to spend hundreds of millions, if not billions in there. I’m not building any autonomous cars.
My take
It's too early to state with confidence that Chen has pulled off a three-point-turn with the likes of the Ford deal, but the signs are that focus on software rather than hardware is proving to be the sensible decision that so many commentators had predicted it would be. There are going to be bumps in the road ahead, inevitably, but for the first time in years, BlackBerry looks as though its heading in the right direction.