BlackBerry wants to create independent company for IoT business

Blackberry headquarters in Silicon Valley
Sheila Zabeu -

October 11, 2023

After a review of its business portfolios that began last May, Canadian company BlackBerry decided to separate its IoT and Cybersecurity units into two independently operated entities. The main objective of the separation is to make an initial public offering (IPO) for the IoT business, scheduled for the first half of the next fiscal year.

BlackBerry believes that an independent IoT subsidiary will allow shareholders to more clearly assess the performance and potential of BlackBerry’s core businesses. Furthermore, each of the two separate companies may follow its own capital allocation strategies and policies.

“BlackBerry’s board and management believe that separating our core businesses will improve our ability to generate value. Both the IoT and cybersecurity businesses have excellent technologies and talent and address large and growing market opportunities. This proposed new structure will further enhance operational agility and the ability to focus on delivering exceptional solutions to customers,” said John Chen, president and CEO of BlackBerry.

In the early days of mobile telephony, BlackBerry was considered almost a synonym for a cell phone. Politicians and senior executives of large companies carried equipment that already had a keyboard and devices that sometimes acted as a mouse and were capable of exchanging email messages. After a few years, a lot began to be said about how BlackBerry missed the bandwagon, not anticipating the demand from consumer users, only from executives, in the face of the revolution started by Apple.

However, more recently, BlackBerry can be studied as a hardware company that moved into the software world. The share of its hardware sales in revenue has been falling year over year, and in fiscal 2023, the business segment that accounted for the majority of BlackBerry’s revenue was cybersecurity. That’s a big difference from earlier this decade, when hardware was still the company’s predominant source of revenue.

In 2016, BlackBerry abandoned its focus on smartphones and adapted its business model to trends in software and the Internet of Things (IoT). The initiatives have expanded, for example, to the areas of automotive infotainment and driver assistance systems, among others. Now, its strategy for this segment depends on selling products that adopt its embedded software.

BlackBerry has increasingly focused on software, mainly in the area of cybersecurity and what it calls “Enterprise of Things” (EoT), an evolution of the Internet of Things concept aimed at offering privacy and productivity in the connected world.

In its fiscal year 2024 second-quarter report published on September 28, BlackBerry reported a loss of $42 million compared to a loss of $54 million in the same period last year. While cybersecurity segment revenue fell 40% year over year, IoT division revenue grew 4%. The company stated that it expects to see IoT revenue continue to grow, with the best fourth quarter in the company’s historical series for the segment.

On October 17th, the BlackBerry Summit 2023 will be held, addressing the future of IoT, IT and cybersecurity technologies. The central theme will be “Trust”, as the company believes that rapid technological advances have created a digital trust deficit that needs to be overcome collectively. Executives from McKinsey, Siemens, AWS, among other companies, as well as representatives from the Canadian government, will address issues in the morning that need to be resolved to achieve a reliable digital future. The afternoon plenary will bring together opinion leaders from the government, the private sector and the media, discussing topics such as national security, the use of Artificial Intelligence to neutralize disinformation and the future of digital experiences in Smart cities.

In time: on October 12th, the film BlackBerry will hit cinema screens in Brazil, which tells the story of the rise and decline of the world’s first smartphone. See the trailer here.