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February 14, 2022

BlackBerry ends support for mobile devices

By MarketLine

Following on from the transition to a security software company rather than a phone company, on 31 January, 2022 BlackBerry announced a sale of many legacy patents to Catapult IP Innovations Inc. for $600m.

The company is described by BlackBerry as “a special purpose vehicle formed to acquire the BlackBerry patent assets.” The patent sale included non-core assets, such as those for mobile phones, QWERTY keyboards on a mobile device, and BlackBerry Messenger (BBM).

Blackberry has a strong presence in the automotive software sector

One of the main products BlackBerry offers is QNX, a real time operating system for smart vehicles and the market leader for embedded cybersecurity in automotive vehicles. QNX is embedded in more than 195 million vehicles and is designed to increase the security of the systems that have been developed to manage both hardware and software installed in vehicles.

QNX has proven a very lucrative endeavour for BlackBerry and is well positioned in a growth sector to continue to see increasing revenue. At the end of the first quarter FY2022, revenues from QNX royalties have increased to $490m, a 9% increase from the previous year where the figure stood at $450m.

BlackBerry has positioned itself as an innovator in the automotive software security sector and plans for its QNX system to be indispensable in the cars of the future. This has already begun to be the case, with BlackBerry securing design wins with 24 of the top 25 global EV automakers, representing 82% of EV production volumes.

Emerging markets a key to future success

BlackBerry have evolved and reorganized its operating segments into three clear areas: cyber-security, Internet of Things (IoT) and licensing and other. This shows that they are a growth-focused company with a primary focus on cyber-security and the IoT market.

The cyber-security market is rapidly growing with the industry forecast to be worth $238bn in 2030, up from $115bn in 2020 according to GlobalData figures. Similarly, the IoT market is forecast to be worth over $1.077tn by 2024, up from $622bn in 2020.

The key strategy for BlackBerry is to place itself at the forefront of these emerging markets and claim a large portion of it due to being one of the best in the industry. The gross margin for the cyber-security segment in the Q3 of FY2022 was 59%, and the gross margin for IoT revenue was 81%. Both core segments of BlackBerry’s business beat revenue expectations last quarter, marking two consecutive quarters where this has happened, all the while increasing investment to drive growth.