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New unit moves BlackBerry beyond smartphones

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A Blackberry Z10 handset is seen at the Fairfax Holdings annual general meeting for shareholders in Toronto, April 9, 2014. REUTERS/Mark Blinch

If it wasn’t already obvious that BlackBerry is moving beyond its roots as a smartphone vendor, this week's announcement that it's launching the BlackBerry Technology Solutions business unit should make it abundantly clear. The company isn’t walking away from handsets anytime soon, but its future more than ever hinges on building viable revenue streams based on its intellectual property and selling the results to enterprise customers.

According to a release on the company’s blog, BTS consolidates a number of BlackBerry’s technology assets, including:

  • QNX. The company’s embedded software unit grew out of its 2010 acquisition of QNX Software Systems from Harman International. The QNX unit builds highly robust operating systems that can be found in a wide range of commercial and industrial environments. Its technology also underpins the BlackBerry 10 operating system, and is seen as instrumental in BlackBerry’s push into verticals like health care and automotive.
  • Project Ion. This initiative, announced last May, aims to leverage BlackBerry’s QNX-based technology to build a platform – and drive revenue – in the fast-evolving Internet of Things space. Project Ion will allow BlackBerry and its partners to build solutions that help customers rein in their ever growing constellations of connected devices and extract business value from the IoT infrastructure.
  • Certicom. This wholly owned subsidiary, acquired for US$106 million in 2009, specializes in highly secure public-key cryptography solutions that maximize mobile security for enterprise customers. Certicom’s inclusion in the BTS group reinforces BlackBerry’s value proposition with increasingly security-concerned corporate buyers, especially regulatory-governed sectors like government, military, health care and financial services.
  • Paratek. The tunable radio frequency tuning technology, brought in-house with the 2012 purchase of Paratek Microwave Inc., is already incorporated into the latest generation of BlackBerry devices and allows devices to maintain connectivity – for higher quality voice calls and faster data transfers – in areas with limited wireless coverage. These adaptive antennas can also extend battery life by eliminating energy-hogging polling when the device encounters weak signal.

BlackBerry CEO John Chen has brought in Dr. Sandeep Chennakeshu, former CTO of Sony-Ericsson and President of Ericsson Mobile Platforms, to lead the new entity. In a nod to the importance of leveraging BlackBerry’s IP as the company builds out its enterprise products and services portfolio, Chennakeshu is listed as an inventor on 73 patents and thus has the credibility needed to sell BTS’s offerings to IT decision-makers.

Notably, the BTS division also includes BlackBerry’s 44,000-patent portfolio, and Chennakeshu’s familiarity with the IP landscape makes him an ideal candidate to unlock the potential in what has thus far largely been an untapped pool of assets.

The BTS announcement comes on the heels of last week’s news that smartphone shipments grew quarter-to-quarter for the first time in a year. BlackBerry’s Q2 2014 shipments of 1.5 million were up 15 per cent over the 1.3 million shipped during Q1. Market share remained at 0.5 per cent in an overall market that saw shipments of 301.3 million during the quarter.

Despite the encouraging turnaround in device shipments, the market’s continued focus on BlackBerry’s performance in hardware reinforces why the company needed to move forward with BTS in the first place. Much of the negative coverage of the company over the past three years has largely – and, let’s not mince words here, deservedly – focused on its crashing handset business. In pulling together its collection of largely unsung, yet strategically critical, assets, BlackBerry has in one move painted the most refined picture yet of what its business will ultimately look like when handhelds no longer dominate the agenda.

The BTS announcement may very well fade into the background as BlackBerry prepares to launch its Passport and Classic handsets. But that’s just a temporary diversion from the real story of a company fighting to be judged not on what once made it successful, but on what could drive growth in future.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own.