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Blackberry is quietly trying to make a comeback — but not with phones

justin trudeau blackberry
justin trudeau blackberry

(Canada Prime Minister Justin Trudeau visits Blackberry's autonomous research center.Reuters/Blair Gable)

Blackberry has had quite the fall from grace.

What was once the world's biggest smartphone maker is now out of the phone manufacturing business altogether. Since 2009, its market share has fallen from 20% to just .1%.

But Blackberry is looking to stage a comeback, just not with smartphones. Blackberry has been quietly ramping up its self-driving car software efforts to compete with the likes of Apple down the line.

Before you completely dismiss the old handset maker, it's worth remembering that Blackberry owns the QNX Operating System. That's the operating system Ford's Sync 3 infotainment system runs on, as well as General Motors' new OnStar system and the Audi TT virtual cockpit. It also supports Apple's CarPlay.

Blackberry QNX is running in more than 60 million vehicles as of the end of 2014, with over 40 automakers relying on the software platform, Grant Courville, senior director of product management at QNX, told Business Insider.

Colin Bird, senior analyst of automotive technology at IHS Markit, told Business Insider that Blackberry QNX is currently the leader in the connected car space, which includes infotainment, navigation, telematics, and rear-seat entertainment. QNX has a market share of about 47% and its closest competitor is Linux with 20% market share.

Blackberry is now modifying its QNX platform so it can run self-driving car tech as well.

The idea is to give automakers a secure platform to run their self-driving car software. Since self-driving cars are still in their early days, many automakers are running the software on massive computers sitting in car trunks.

Blackberry is looking to get a slice of the self-driving car space by offering a secure, integrated platform to support self-driving car software later on. (Doing so also gives Blackberry some cushion to ensure its product stays in cars as they evolve.)

"We’re not building a car and we’re not building hardware," Courville said. "Our ultimate goal is to provide a software platform for the car... become essentially the OS for the car."

lincoln mkz blackberry
lincoln mkz blackberry

(The self-driving Lincoln MKZ running on Blackberry QNX.Blackberry)

As part of that aim, Blackberry has opened an Autonomous Vehicle Innovation Centre in Ontario, where it was also approved to test self-driving cars on public roads. Canada's Prime Minister Justin Trudeau made an appearance on the center's opening day.

A self-driving Lincoln MKZ running on Blackberry QNX software also drove itself on a test track at CES this year.

"It’s us planting a stake in the ground in a much more public way than we’ve traditionally done and showing people we are absolutely committed to this and we do want to be that software platform for the car," Courville said.

BlackBerry CEO John Chen
BlackBerry CEO John Chen

(Blackberry CEO John Chen.AP)

It looks like Blackberry's focus on software is starting to pay off. Although the company missed on revenue in the third quarter, Blackberry posted a profit and raised its earning outlook for the 2017 fiscal year.

Blackberry gets more than half of its total revenue from its software products and plans to increase its software revenue by 30% this fiscal year.

Blackberry does not break out its QNX financials. But Bird said Blackberry gets anywhere between $5 to $15 in royalties per vehicle with the system.

Blackberry is expected to deliver 36 million QNX licenses this year, Bird said.

“I don’t consider ourselves in a turnaround anymore,’’ Blackberry CEO John Chen said during the company's earnings call, according to Bloomberg. “We’ll make money this year. Nobody believed us in the beginning.’’

But Blackberry is likely to face mounting competition from the likes of Apple.

Bloomberg first reported in October that Apple is building an operating system for its car project in Ottawa, where Blackberry is located. Apple is looking to build the operating system for its own self-driving software to run on.

Per the report, Apple poached two dozen engineers from Blackberry for the project. Apple also hired Dan Dodge, the former CEO of QNX, earlier in 2016.

blackberry qnx
blackberry qnx


But Blackberry does have two advantages over its current and mounting competition: speed and security.

Blackberry's QNX Neutrino RTOS is an operating system that powers time-sensitive tasks, like driver assistance systems. Unlike Linux and Microsoft, QNX is able to handle these tasks in milliseconds, something that will become increasingly important as self-driving cars have to make quick decisions on the best course of action.

Bird said that the QNX Neutrino operating system is a "significant" reason why Blackberry has had an edge over competitors already.

Additionally, Blackberry QNX has an advantage when it comes to security.

"One of the big benefits that we’re getting from Blackberry is all about security expertise, security software, intellectual property. And that’s what we’re bringing into automotive," Courville said.

QNX is ISO 26262 compliant, which is an international standard for safety for electronics systems in automobiles. Bird said Windows is not compliant with the standard, nor are most Linux distributions. Having an operating system that can run self-driving software securely will only become more important as autonomous cars are prone to hacking.

But what may truly determine which companies win out is their willingness to work with automakers when it comes to data ownership.

"There will be a bit of tug of war between how much access the automakers provide to the vehicle and all the information that can come from vehicle," he said. "How much they allow, how much they monetize, and how much they keep to themselves."

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