BlackBerry Ltd. (TSX:BB)(NASDAQ:BBRY) has been one of Canada’s most innovative tech companies since its Research In Motion (RIM) days and used to lead the global smartphone market. However, insurmountable competition from Apple Inc.’s (NASDAQ:AAPL) new iPhone and Alphabet Inc.’s (NASDAQ:GOOGL)(NASDAQ:GOOG) Android operating system led to BlackBerry exiting the phone hardware manufacturing business altogether.
BlackBerry has changed its focus to be a pure software play now, and the company has its eyes set on connected cars and a new and probably groundbreaking innovation in world history: autonomous driving vehicles.
The old tech giant is using its 2010 acquisition of QNX Software as the launchpad for its maneuvers into the autonomous driving market as well as the new connected car trend. QNX is already the in-vehicle infotainment software global leader, deployed in more than 50 million vehicles from 40 car manufacturers.
However, news is that Apple is also eyeing the same space and has probably already made some significant investments in autonomous driving software through its little discussed Project Titan. And Google is already in the lead in testing autonomous driving cars. One might wonder if Apple and Google will topple BlackBerry again in this new market.
The two BlackBerry competitors have already made significant inroads into the auto space. Apple deployed its in-vehicle infotainment offering CarPlay some time back, while Google developed Android Auto as an alternative.
Apple is now working on another vehicle operating system, and it hired two dozen engineers from BlackBerry’s QNX, including a former QNX CEO, to join Project Titan. Then Apple’s CEO Tim Cook may have recently hinted on an entry into autonomous driving cars, ride sharing, and electric vehicles.
Apple got a licence to test its autonomous driving vehicles in California earlier this year, and the company is said to have held talks about licensing its technology to Volkswagen AG, BMW AG, and other car makers.
The Google/Waymo partnership is already working out well with impressive road-testing results that could be way beyond those of competing systems. Google/Waymo cars are reportedly being powered by Google’s Android operating system.
However, while the competition is making strides, and QNX may be facing stiff competition from Automotive Grade Linux (AGL) and Linux, among other infotainment offerings, BlackBerry could have an advantage in connected cars will likely have some share in the autonomous driving market, too.
The BlackBerry advantage
QNX serves a market that’s markedly different from the consumer gadgets and electronics space, where tastes can change in a matter of weeks. Car manufacturers are enterprise customers who may highly price reliability, dependability, security, and demonstrated efficiency, which QNX has proved over the years.
Moreover, QNX has already broadened its portfolio in the past few years well beyond infotainment. It now has safety-certified software solutions that enable car manufacturers to rapidly create digital instrument clusters, telematics, and Advanced Driver-Assistance Systems, domain controllers, electronic control gateways, acoustics, and cyber-security systems.
That being said, the Ford partnership may strengthen BlackBerry’s clout on Ford’s future autonomous and connected vehicle products. If QNX delivers in the Ford ride-sharing vehicles intended for 2021, more car makers may choose to go with BlackBerry QNX as the base operating system for connected cars and autonomous driving vehicles.
Investor takeaway
Google and Apple may not actually repeat what they did to BlackBerry on the smartphone front as market dynamics are different in the car market. For the two to really kill BlackBerry’s hopes in connected cars and autonomous driving, they will have to offer a compelling offering to all car manufacturers to replace QNX offerings with Android OS or Apple OS.
That would be a huge task. Enterprise customers are not as easy to turn around as individual consumers are.
It’s quite early days to tell who shall win the autonomous and connected car space, but BlackBerry QNX will most likely have its place beside the Linux, AGL, Android, and Apple offerings in the new era, and probably defend some of its market share in the infotainment area.
