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BlackBerry Limited (Kaivan Karimi, Senior Vice President Of Strategy And Business Development) – Covered At RBC By Paul Treiber

Summary

An end-to-end platform.

BlackBerry is targeting the “plumbing” of connected and autonomous vehicles.

Strategy to scale to $20 or more per vehicle.

Linux is poorly suited to safety critical applications in vehicles.

Linux is not free.

BlackBerry Limited (Kaivan Karimi, Senior Vice President of
Strategy and Business Development) – covered at RBC by Paul
Treiber
SPARC published by Paul Treiber yesterday:
 An end-to-end platform. While BlackBerry’s position in automotive is typically
perceived only as its QNX operating system (OS), BlackBerry is best viewed as an
end-to-end secure and connected platform for automotive and other vertical
markets. BlackBerry’s platform consists of its QNX OS, its hypervisor (virtualization),
Certicom security solutions and related tools, its NOC-based cloud platform, and its
Jarvis binary code scanning tool, among other solutions. BlackBerry Radar is an
application of this end-to-end platform for the truck trailer telematics market. We see
BlackBerry addressing other verticals over time, such as healthcare.
 BlackBerry is targeting the “plumbing” of connected and autonomous vehicles. The
increasing complexity of vehicles (current vehicles have 100MM+ lines of code, more
than the space shuttle and MS Windows) and connectivity of vehicles (full Level 5
autonomous requires V2X connectivity) are driving demand for next-generation
automotive middleware. BlackBerry has the broadest portfolio of foundational and
middleware software for automotive. CANBUS, the legacy connectivity protocol in
vehicles introduced in the 1980s, is not secure and is poorly suited for connected and
autonomous vehicles. The company provided an updated disclosure that its software
is now in 100MM vehicles globally, up from its prior disclosure of 60MM vehicles.
 Strategy to scale to $20 or more per vehicle. BlackBerry’s QNX currently generates
approx. $2-3 per vehicle as the OS for infotainment systems. BlackBerry has partnered
with chipset vendors like Qualcomm and NVIDIA, and expects to see higher revenue
per vehicle from specific applications (like digital instrument clusters) along with the
transition from ECUs to domain controllers in vehicles. Automakers are in the process
of consolidating the 100+ ECUs and 6-8 operating systems per vehicle, which are
becoming very difficult to further scale, with 10-12 domain controllers and 2-3
operating systems.
 Linux is poorly suited to safety critical applications in vehicles. BlackBerry does not
see Linux (including AGL or Automotive Grade Linux) as a viable alternative to QNX in
vehicles, given its security shortcomings. BlackBerry indicated that Linux has
materially greater security vulnerabilities compared to QNX, according to disclosures
at the National Vulnerability Database (NVD) at the U.S. National Institute of
Standards and Technology (NIST). While several autonomous platforms are based on
Linux while in development, BlackBerry does not expect Linux to be widely used in
production mass market vehicles. According to Mathias Halliger, VP Automotive
Products at NVIDIA, other than Google’s Waymo, every autonomous vehicle platform
using NVIDIA chips plans to port to QNX (which is POSIX compliant) for autonomous
vehicles in production (originally disclosed at BlackBerry’s Analyst Summit in April
2018).
 Linux is not free. Although Linux does not have licensing fees, its usage in automotive
requires automakers to make significant investments in R&D staff. Automakers
effectively end up “owning” their own operating system when they customize Linux,
which entails significant fixed costs to develop and maintain.
Takeaways from RBC Auto Tech Conference
June 1, 2018 

https://www.rbcinsight.com/WM/share/ResearchViewer/?YYY340_a0lQ3LRaZh+1NpNJQbmxH7yLwGb84zufLGtNKcq+bZcVRjN4GR75hg==&a=a

Disclosure: I am/we are long BB.