What do you do when the marketplace finds you mostly irrelevant?
If you’re BlackBerry, you reinvent yourself. Fully 20 years ago, Research in Motion (RIM) had a significant portion of the market space for cellular phones in both the business and the consumer market. Their phones were well received, with carrier partnerships that propelled the brand forward.
With the introduction of the iPhone and the subsequent partnership with the AT&T network a decade ago, United States market share, especially in the consumer space, dropped precipitously, moving from a high of 21 million BlackBerry users in 2007 to only 9 million three years later.
By 2014, it was estimated that Blackberry accounted for 1.0 percent of smartphone sales in the United States, down from its peak of 20 percent—and the decline was seen in the stock price of RIM, which fell nearly 90 percent between 2010 and 2012, with subsequent years seeing losses in the billions of dollars.
While remaining active internationally, and working with external hardware development partners to create subsequent iterations of smartphones for the international and business sector, BlackBerry (the new corporate name after a rebranding in 2013) simply stopped developing new hardware for phones in 2016, relegating that to external development partners.
So, what comes next?
BlackBerry, like many companies, had a choice when faced with a shifting marketplace. Focus on what you did well, but no one wants any longer, or focus on what you can do well and shape the marketplace of tomorrow.
Led by their CEO, John Chen, the shift away from smartphone manufacturing towards a software and services company is proving a return to financial stability. In laying the foundation for the next iteration of BlackBerry, Chen’s focused, in part, on providing software servicing to automated cars.
With over 60 million cars already in operation utilizing BlackBerry software, the company is taking advantage of deals in place with automakers such as Ford, as well as third party companies to position itself for the next wave in the automotive future, expecting the market to be ready for completely driverless cars by 2025.
The results are starting to speak for themselves. Talking to investors last fall, Chen said, “We achieved historical highs in total software and services revenue and gross margin, as well as the highest non-GAAP operating margin in over five years, reflecting our complete transformation to a software company.”
With an expectation that the software and services revenues continue to increase through the fourth quarter, and an additional $2.5 billion in cash in reserve ( bolstered by a recent settlement of $815 million with Qualcomm), it’s possible that Blackberry could look to continue its growth in these sectors by acquiring companies in both the cyber security and automotive software arenas. BlackBerry expects overall revenues for fiscal 2018 just under a billion dollars and the company as a whole to be profitable.
