BlackBerry: From phone dinosaur to tech champion

At its height, it was so popular that Barack Obama refused to part with his phone when he became president.

But the reign of BlackBerry, which transformed mobile communication in the mid-2000s and early 2010s, ended after its revolutionary cell phone with QWERTY keyboards was rendered obsolete by the emergence of Apple’s iPhone and smartphones with touchscreens and apps.

Now, a comeback a decade and a half in the making is paying off as the company posted a positive cash position — a key metric that signals financial stability — in its first quarter this year. That is something it has not achieved at the start of any fiscal year since 2017.

The recovery has been driven by an operating system for cars called QNX and Secusmart, an encryption software used by governments and some of the world’s major banks. While the platforms are less visible than the phones that once defined BlackBerry, they have become almost as ubiquitous.

“QNX is on fire,” John Giamatteo, BlackBerry’s chief executive since December 2023, said from the company’s headquarters in Canada’s Waterloo, about 115km west of Toronto, where BlackBerry built its first handset. “We’ve gone from a transformation period to now a growth period.”

It is a long way from the “CrackBerry” days when the handsets, once must-have accessories for stars such as former Hollywood power couple Brad Pitt and Angelina Jolie and young people alike, were said to be addictive. BlackBerry stopped selling phones in 2016 to focus on business-to-business software and services.

The decision by Research In Motion, as the Canadian company was known, to buy QNX in 2010 for about $200mn, is delivering, along with the purchase of German encryption provider Secusmart four years later.

QNX’s technology, which is also used in robotics, medical devices, defence and aerospace, now accounts for about half of BlackBerry’s revenue, a sign that the acquisitions have set the company up for a brighter future.

“I’m very happy for them,” said Jim Balsillie, the former co-chief executive who stepped down from the company in 2012 and was once one of its largest shareholders. “Our QNX acquisition worked out,” he told the FT.

BlackBerry is still a shadow of the $83bn behemoth that once had a share of about 20 per cent of the global mobile phone market before it was usurped by Apple, Samsung and Google.

But its shares have jumped 150 per cent over the past year and it currently has a market capitalisation of about $5.2bn. On the day of the results in June, it rose about 20 per cent.

The 2014 acquisition of the anti-eavesdropping software Secusmart is looking even more astute as global turmoil has prompted countries across the world to boost defence spending. The company provides Nato-grade encrypted voice, text and messaging services for 20 governments.

Giamatteo said the company’s tech had become so ubiquitous that people reading this article probably use BlackBerry’s products every day without knowing it.

“Nearly every car manufacturer in the world uses BlackBerry,” he said. “And we are seeing more adoption in future car design in China, in Europe and North America.”

Kevin Michaluk, a Canadian entrepreneur who launched a campaign to bring back the old handsets and sells his own version of the BlackBerry keyboard, said the company was now strategically more important than when it was selling phones.

“It’s less visible but arguably more embedded in the modern economy,” said Michaluk, who became known as “CrackBerry Kevin”, adding that such a comeback story is rare in technology.

“The market spent years valuing BlackBerry based on what it used to be. More recently, investors seem increasingly willing to value it based on what it actually is today.”

BlackBerry’s transformation mirrors that of Nokia, another former mobile phone giant that collapsed about the same time.

Nokia has now found a lease of life as a provider of the hardware needed for cloud services and data centres, winning support from Nvidia, which last October announced plans to invest $1bn into the Finnish group.

BlackBerry this year expanded its own Nvidia partnership in “physical AI”, supplying its QNX software for autonomous, humanoid and surgical robotics, medical imaging and industrial automation.

Scott Morrison, founder and chief investment officer at Wealhouse Capital in Toronto, said the decisions that BlackBerry made decades ago saved it from going bankrupt and ceasing to exist.

“I wouldn’t call their comeback ‘lucky’, you make your own luck,” he said.