BlackBerry’s Move To Pool Potentially High-Growth Technology Assets Is Encouraging


Earlier this week, BlackBerry (NASDAQ:BBRY) announced it will be creating a new business division that will house some of the company’s most promising technology assets. The division, which will be called BlackBerry Technology Solutions, will hold assets including BlackBerry’s QNX software systems, its Internet of Things platform (Project Ion) and the company’s portfolio of about 44,000 patents. BlackBerry has been trying to reposition itself as a provider of software solutions focused on business and government customers, given that its consumer and hardware focused initiatives have largely been met with a lackluster response. We believe that the move to create a new business unit serves to reinforce the company’s strategy and could prove positive for two reasons. Firstly, it is likely to bring about improved operational synergies between the company’s technology groups, potentially allowing them to collaborate on projects and share expertise. Secondly, the move could also provide better visibility for these often overlooked assets, potentially aiding the company’s valuation. Below is a brief look at some of the assets that BlackBerry will include in its technology group.

We have a $8.50 price estimate for BlackBerry, which is slightly below the current market price.

See our complete analysis for BlackBerry here

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QNX Software: BlackBerry’s QNX platform  is used as an operating system for embedded systems owing to its low hardware requirements, stability and flexibility. The QNX software includes the operating system and middleware that OEMs (original equipment manufacturers) license from the company. While the software has been particularly successful in the automotive infotainment market, where it had a market share of about 53% in 2013, [1] it also finds applications in other areas such as medical equipment, air traffic control, control systems and other devices that require embedded computing power. The business generates revenues through the licensing of software products and through the professional services that BlackBerry provides customers who develop QNX powered products (see A Look At BlackBerry’s QNX Business).

Internet of Things: BlackBerry has been looking to capitalize on the growing interest in the so-called Internet of Things (IoT) trend, through the development of an application platform called Project Ion. Broadly, Internet of Things includes devices (excluding computers, tablets and smartphones) that have embedded computing power and Internet connectivity. BlackBerry could be well poised in the IoT space, given its proven track record of building reliable cloud services and also due to its QNX software, which could serve as a foundation for connected devices. The company has also been partnering with groups such as the Application Developers Alliance and the Industrial Internet Consortium for building its IoT ecosystem.

Cryptography and Antenna Technology: BlackBerry Technology Solutions will also hold Certicom, a wholly owned subsidiary of BlackBerry, which provides advanced security software to telecommunications and technology companies. Certicom has a strong suite of intellectual property related to elliptic curve cryptography and is considered a leader in this space. [2] The division will also hold BlackBerry’s Paratek antenna technology assets. The technology includes several improvements in antenna hardware and tuning technology for mobile devices, and is targeted at improving reception and performance, particularly in areas with weak signal strength. [3]

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Notes:
  1. Linux to Take the Lead in Automotive Infotainment Operating System Market, IHS, December 2013 []
  2. Certicom: The Key to Blackberry’s Future? , SafeLogic, September 2013 []
  3. Paratek Antenna Technology Will Make An Appearance In BlackBerry Z30, BerryReview, September 2013 []