For much of the mid to late 2000s.
Research in Motion's BlackBerry was the most
popular smartphone brand in the US, and it wasn't
close. Making up about 43% of smartphone users
at its peak. Even after touch screen phones from
Apple and Google became mainstream, BlackBerry
still maintained a strong user base for
several years.
This RIM is now worth about $66 billion with a
B.
Some couldn't imagine using a phone without a
keyboard. Others wanted the advanced
cybersecurity that BlackBerry phones
offered.
Something the BlackBerry is known for is not
getting hacked and having security and
privacy, something that is near and dear to our
DNA.
And the company's stock peaked at nearly $150 in
2008. Now it's sitting pretty at around five
bucks. January 2022 marked the end of an era.
A moment of silence for our dear departed
BlackBerry. Starting today, the BlackBerry
classic device, once a go to for millions,
including then-President Barack Obama, will no
longer work.
After over two decades of servicing mobile
communication devices, it established software
and cybersecurity as its sole business.
Because they are trying to stage what would be a
tremendous turnaround for a company that once
used to make smartphones. So they are
playing it cautious, but playing it cautious, on
the other hand, is limiting their growth
potential as well.
But the margin is going up and one of these days
the switch will flip. So we are hiring and growing
and and spending.
Overall, it was a tough transition.
And I'm proud of I'm proud of the way we're
pivoting.
So what made this iconic brand have such a
meteoric rise in catastrophic fall?
And what is it up to now?
Blackberry was founded in 1984 as RIM, short for
Research in Motion.
Its first product was Buggy, which allowed
information to be displayed on a screen
wirelessly. While Buggy did have some initial
success and was even used by General Motors,
it didn't last.
It made several other products, including
Digital Inc, a device used in film
post-production, which won an Academy Award for
technical achievement.
But it wasn't until it developed the Rim 901 of
the first wireless devices that could send
and receive data when Research in Motion really
started to pick up steam. It used an early
wireless data network to send and receive
messages, and it set the groundwork for what would
eventually become a BlackBerry.
The earliest iteration of the BlackBerry phones
we all know began in 2002 with a 5810.
It could send and receive messages and also
allowed for use of a simplified browser.
It was really interesting to go from small volumes
of these interactive pagers to huge volumes of
smartphone handsets.
Blackberry's popularity peaked in the late
aughts. At the time, the brand and its products
were quite simply a cultural phenomenon,
coined the CrackBerry by many, the phones were
seen as addictive. One of the first glimpses of
how smartphones would eventually take over our
lives.
It was really an exciting time.
I mean, we as a company had a really strong
product.
That Sarah Tarses, who joined BlackBerry when it
was still known as Research in Motion in
2001. President Obama was the first high tech
president and was adamant about keeping his
BlackBerry while in office. But I'm still.
Clinging to my BlackBerry. They're going
to pry it out of my hands.
In 2007, it was the most valuable company in
Canada, surpassing Royal Bank, which held that
spot for about two years.
In 2010, it acquired an operating system called
QNX, while BlackBerry was still largely focused
on smartphones at the time. This move has since
proven to be a massively important acquisition for
the company.
I was very excited to be part of the the charter
to help BlackBerry in the Next Generation
initiative. And also as QNX was now in a world
scale platform.
Charles Egan joined BlackBerry in 2011
largely because of its acquisition of his former
workplace QNX.
Blackberry's fiscal peak was in 2011 when it did
nearly $20 Billion in revenue, with over 80% of
that being from hardware. Even Kim
Kardashian was an unofficial brand
ambassador using the phones until 2016, when
her last BlackBerry devastatingly died.
A BlackBerry. It's it's my heart and soul.
I love it. I'll never get rid of it.
And she wasn't alone with her devotion to the brand
well past its prime era.
Many people held out from switching over to a
completely touch screen smartphone, seeing
keyboard less phones as undesirable.
But in 2007, everything changed.
And we are calling it iPhone.
Today. Today, Apple is going to reinvent the
phone.
Blackberry began making efforts to change up its
tech in 2008.
Its first fully touchscreen phone was the
storm, which had major hardware issues.
It quickly returned to its former button filled
glory before again trying out a touchscreen
device called the Z10 in 2013.
See, at this point it was trying desperately to
keep up with touch screen smartphones like
the iPhone that were becoming more and more
popular. But device sales were plummeting in
2011. It sold 50 million phones.
But just two years later, after the release
of the Z10, the number plunged to fewer than 30
million phones and in the years following,
sales continued to fall rapidly and its stock had
a meteoric descent.
I think we saw as we were getting closer to our
BlackBerry ten launch and seeing the headway
that Apple and Android were making in this
space. So I would say around that time frame is
when I think the the company realized that,
yeah, we would need to make some significant
changes.
Blackberry desperately tried to stay afloat by
flooding the market with products in the same time
period it took Apple to release four iPhones.
Blackberry released over 30 unique devices.
It made an effort to keep up with competition
by switching to a QNX operating system, which
it acquired the year prior, but to no avail.
In 2012, longtime co CEO and founder Mike
Lazaridis, along with co CEO Jim Balsillie, parted
ways with BlackBerry.
By 2013, 4500 jobs were cut and John Chen took
over as CEO with a desire to turn
BlackBerry's trajectory around.
When I came in, we were looking at losing market
share. We're writing off a lot of stuff and we're
losing money like crazy.
We're talking billions of dollars every quarter.
And so I have to put a stop to that.
And that was kind of the start of it, just really
more of a survival stay at that time.
You know, the fact that John Chen recognized
early the pivot to software.
I remember the day he appeared in Ottawa and
spoke and I thought, okay, here's a leader
with a plan.
Jun Chen brings strong credentials to BlackBerry
as someone who's already successfully done
turnarounds historically.
Initially, Chen hoped to keep the iconic phones,
turning them into a stable source of revenue.
But after a few years, we realized that we would
never get the volume up.
And the volume came. The moment had came and gone,
so to speak. And so we made that pivotal trip to
a software only company and focus on security and
cyber and things of that sort.
See, this pivotal shift Chan is referencing was
largely dependent on a few key acquisitions that
BlackBerry had made, one of which being QNX in
2010, the operating system that was later
integrated into BlackBerry devices.
And this was viewed as, you know, one of the
silver bullets that BlackBerry needed for its
portfolio moving forward.
One thing we did was we took our security
software, which used to be designed for the
operating system or the new phones and moved that
back into the auto.
The others being the $1.4 billion acquisition of
silence and antivirus software firm and the
$425 Million Acquisition of Good Technology, a
device management software company.
These moves helped BlackBerry more swiftly
alter its focus from hardware to software.
Qnx had previously been fairly well established
as a software company dedicated to the
automotive industry.
And in fact, we supported our our devices for many
years after we announced the exit of US
manufacturing and designing our own
smartphones and now over the last number of years
have fully transitioned into the enterprise and
the foundational Iot software space.
So once BlackBerry decided phones were not
the future of the company in 2016, these
acquisitions quickly became central to its
business model.
Currently, BlackBerry has two main business units a
cybersecurity business unit and an Iot business
unit.
These are two fast growing markets.
I would like to think of BlackBerry as a company
that can actually grow if they play their cards
right.
The main focus within the Iot business unit is
automotive, and the BlackBerry Iot business
unit features the QNX operating system, which
is iconic and the de facto standard in
automotive.
So the QNX technology that we have in this
vehicle before we even outfit it with any of our
additional sensors was this is running Ford
Sync. So the infotainment is being
used in in the vehicle and this is prevalent in
quite a few of the the Ford vehicles.
We now have the lion's share of embedded
software in most of the cars.
So this is really as a offshoot of the result of
the strategy shift in 2016, which is where we
went from phone to non phone.
Now BlackBerry software is in 215 million cars.
It could be powering your car's infotainment
system or securing its connected and driver
assist features.
So what we have here is the MK Z concept vehicle.
We use this for autonomous drive
demonstrations. We have integrated a lot of
varying hardware and equipment and sensors
from various manufacturers. A lot of
these embedded boards would be the size of a
deck of cards. They'd be very inconspicuous in the
in the vehicle.
Blackberry works with numerous automotive
companies and all but one EV manufacturer.
You know, we work with all major automotive,
automotive OEMs, Audi, BMW, Ford, GM, Toyota,
Volkswagen, Volvo, just to name a few that you
may recognize.
In the automotive Iot industry.
Blackberry says its QNX software is the market
leader.
The demand is actually strong for these advanced
security and infotainment solutions
because of a few reasons. Now, for
example, there is an increasing demand for
advanced driver systems and for advanced camera
systems and also for advanced safety features.
If we look at the industry opportunity
itself, it's our expectation that the auto
software industry is going to roughly triple
in size from 2020 through 2030.
And its cybersecurity unit is securing the back
end of things like mobile banking apps and
patient portals.
So there's a quite a rich cyber portfolio within
BlackBerry, and that's that's securing banks and
governments and large organizations and small
and medium businesses.
While the cybersecurity industry is lucrative
with a market size of over $200 billion, it's
also competitive.
It's taking on tech giants like Microsoft,
Snowflake and CrowdStrike. And in 2021,
BlackBerry was only able to get a thin slice of
that pie, just under $500 million worth.
The competition is very intense with the likes of
Microsoft spending billions of dollars a
year to for product innovation.
And BlackBerry so far has not been able to
build any competitive advantages because of one
major reason. They primarily cater to
regulated industries such as government
entities, financial services companies and
the health care sector.
But in my opinion, if BlackBerry were to become
a recognized, fast growing cybersecurity
company, they have to focus more on their go to
market approach to come out of these regulated
industries and to capture market share in
the broad market, the mass market opportunity.
Blackberry has recently received more revenue
from the cybersecurity side of its business, but
analysts are more confident in the growth
potential of the automotive Iot sector.
I think that the company can reach a likely a
lower peak than we've seen in the past, but a
more sustainable growth trajectory and
potentially more profitable future as
well. The margin percentage basis.
While it was a major shift to go from
manufacturing cell phones to cybersecurity
and software, it was also a shift that made
sense for BlackBerry.
Even when they used to be a smartphone
manufacturer, they are always the BlackBerry had
a good name, a good recognition among
consumers for a company that prioritized security
features. So BlackBerry is not new to offering
high grade, high quality security features.
Its reputation for being secure was easily
transferable to part of its new enterprise in the
automotive industry.
Keeping the Internet of Things and cars safe from
cyber attacks is increasingly important as
cars become more autonomous.
Security researchers have hacked into vehicles and
proven that they could take over control of the
vehicle. And I do think that there's the
potential for payment systems to be compromised
or personal information to be taken.
And when you think of a car, it's more like ten
plus computers than one computer.
I do not necessarily think that you're going
to see the likes of returns that BlackBerry
enjoyed at their peak when they were a
smartphone manufacturer, at least for the next
decade. But then again, if BlackBerry plays their
cards right, they might be able to turn
profitable.
So while there's a chance BlackBerry hasn't been on
anyone's mind in nearly a decade, it's possible
that you interact with something it helped
develop almost every day.