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Summary

  • Internet of Things will create substantial opportunities for the company over the next few years, as this segment is expected to grow rapidly.
  • QNX can work as a platform for the applications for Internet of Things.
  • Focus on the enterprise segment and the security feature of the company will give it an edge over its competitors.

BlackBerry (NASDAQ:BBRY) has been through a lot over the last few months. In our last few articles, we have discussed different aspects of the company. We have discussed QNX and its applications. In the company's last annual filing, it was mentioned how John Chen intends to take QNX to a new platform as the company integrates this layering software into Machine to Machine connectivity industry; an industry better known as "Internet of Things." In this article, we will discuss the current state of this industry, its growth potential and how BlackBerry can benefit from this growth by using QNX.

"Internet of Things" Industry

Internet of Things is the idea of connecting machines to machines creating a smart network which can either operate on its own or provide the easy control from remote areas enabling mobility. This idea has been considered before, and the researchers have been working on the idea for decades. The only thing missing was the proper infrastructure to turn this into reality. Now that we have reached the era of high speed wireless LTE networks, the problem of infrastructure is solved to some extent. We know that any application can be made on operating systems such as Android, which would enable users to control an electronic device over Wifi, provided the device has electronic reception. This can easily be done over LTE networks as well.

There are many companies already working on such products and services. Some famous names are Cisco (NASDAQ:CSCO), SAP AG (NYSE:SAP), and General Electric (NYSE:GE), to name a few. This segment of the technology sector is expected grow rapidly over the next few years - according to Gartner, there will be roughly 26 billion devices connected to Internet of Things by 2020. ABI research has an even bigger anticipated number of about 30 billion devices by 2020. However, this huge number of device connectivity raises questions on IPv4, the older version of internet protocol on which 96% of the current internet traffic operates as of 14 May 2014. The problem with IPv4 is its address exhaustion - it is able to provide roughly 4.3 billion 32-bit addresses in a given time. To counter this problem, IPv6 was developed and is intended to replace the older version. The newer version uses 128-bit and can provide 7.9x10^28 times more than IPv4. As the internet shifts to IPv6, we will experience greater connectivity, and IoT could be implemented in a better way.

IoT market has huge potential. IDC's research suggests that the market can reach $8.9 trillion by 2020, connecting 212 billion devices, of which 30.1 billion will be connected autonomously. Large scale systems will be installed to back this infrastructure which includes Big Data. In 2012, spending on IoT was around $4.8 trillion and by 2020, it is expected to reach $8.9 trillion with an approximately 7.95% annual growth rate. Cisco, which is one of the aggressive companies in this industry with a $250 million investment, anticipates the industry to be worth $14.4 trillion by 2022.

Where does QNX stand?

So far, we have seen QNX to be facilitating the connectivity of in-car infotainment systems and other indoor functions. However, BlackBerry is working on its application in many different sectors, including complex areas such as Medical and military facilities. These include sophisticated devices where margin of error and down time are not acceptable. In addition, the company has recently announced Project Ion. Under this project, BlackBerry is pushing QNX into IoT market to power a new generation of IoT applications which will allow its customers to access massive amounts of key data in short periods of time. The company is also linking this system to its Enterprise Mobility Management, which would allow companies to securely access and manage data through millions of end points in a multiplatform structure. QNX can be an important platform for IoT applications, and BlackBerry can benefit from QNX over the next few years.

BES migration program

In order to capture greater market share, BlackBerry came up with a low cost strategy. This was mainly focused on the older customers to upgrade to new BES platform. The cost of switching from BES 5 to a competitor was more than double of upgrading BES 5 to BES 10. This has worked out great for BlackBerry and the company has issued over 1 million EZ passes for the BES5 customers to upgrade to BES 10 or shifting from a competitors product. Its presence in all three segments i.e. Basic, Enterprise and Regulated Mobile device management is also the best in the industry, giving it an edge over its competitors.

Conclusion

Although the market share of BlackBerry in the global smartphones market continues to decline, the company can make a turnaround through its focus on enterprise segment. Also, the security features of the company are an asset to its enterprise customers, which gives it an edge over its competitors. Furthermore, the potential of IoT over the next few years might bring considerable growth for the company through QNX. We believe BlackBerry is on the right track, and the company will be able to make a turnaround.

Source: BlackBerry Is On The Right Track