How BlackBerry found a second life inside cars and robots

0:01So I was at my mother-in-law's very recently and I walk into the living room and on the floor there is a box and inside that box is a PlayStation 2 console with some of the original games from that console and it brought back so many memories, all the nostalgia. Absolutely one of my favourite consoles of all time. And more recently I was in my attic and I found an old BlackBerry phone as well. So the attic, these little rooms in the house, always such a goldmine for classic tech. I want to know what is your favorite piece of old technology you found hidden in your house somewhere?

0:42Hello and welcome to another episode of The Tech Download. I'm Arjun Karpal, Senior Technology Correspondent at CNBC. Now I'm about to say a name that will really sound like a blast from the past. BlackBerry. In this episode, I'm speaking to John Giamatteo, who's the current CEO of BlackBerry, on why investors are back on board with this company, what its current business is, and where it has a role in the future of AI. Now, a very quick history lesson about BlackBerry is actually founded in 1984 in Canada, originally known as Research in Motion. BlackBerry, of course, was best known for its phones, popularized by the keyboard, and it became a real key device for people wanting to message quickly and in businesses and many other settings as well.

1:29The phrase BBM me became a very popular phrase at a certain time. BBM, BlackBerry Messenger, was effectively the original WhatsApp or iMessage in many ways. Interestingly, in its heyday, 2009, 2010, BlackBerry had about a 20 % global smartphone market share. At the time, Nokia, another one of these nostalgic companies, which you'll remember in the phone space, was still the dominant player. But Apple, with the iPhone, was on the ascendancy. And of course, things change as Apple grew, as Android devices grew as well. And that really eroded away BlackBerry and, of course, Nokia's positions in the mobile phone market.

2:09Now, just to give you some context about the share price of this company. In around mid 2008, BlackBerry shares traded at an all time high of around$147 each. At the time of me recording this, the share price is around$8 or so. But the company is back on the ascendancy and this time in a different area. Its core business is not phones anymore. Its core business is a piece of software it calls QNX, which is a key software in cards. It also has a big business in secure communications, for example, between governments. So let's get into the conversation with the BlackBerry CEO about where this company is going and what it does now.

2:53John, thank you so much for joining me on the Tech Download. Appreciate your time. Yeah, my pleasure, Arjun. Thanks for having me. So, John, look, when people hear BlackBerry, there's a lot of people who think about the heyday of when BlackBerry was a major player in the mobile phone market. It was an iconic brand at the time. What is the company today? It's funny you start with that, Arjun, because that is literally how I spend almost every one of my meetings, whether it's with a customer, with a government official, with the media, is really kind of redefining and rearticulating what BlackBerry is all about today.

3:31BlackBerry is a 42-year-old company. I don't think sometimes a lot of people don't realize how long BlackBerry has been around and the reinvention of BlackBerry over the years as we've gone through different phases of our journey. And while the products that we offer to our customers around the world can't necessarily be held in the palm of your hands like the old devices, those values of security, trust, and innovation still shine through in the software and services and the other solutions that we deliver to the market today. We really focus on three specific areas. And one is obviously Q &X, and we'll talk more about that in terms of safety, embedded software industry, and how dynamic that is today from cars to robots to advanced supply chain technologies.

4:35And that business is growing at a really healthy pace. The other is our secure communications. And these are mission-critical communications from mobile device management to emergency notifications to the most advanced encrypted technology that we use with governments all around the world. 75 % of the business that we do in secure communications is with governments around the world. And one of the dynamics about working with governments is often it takes a long time to get in and to meet their certifications and to meet their standards. But then once you're in, it becomes a really sticky relationship for the long term.

5:23And then the third that I would say kind of underpins both is our extensive intellectual property portfolio. We have a very structured and detailed process in how we protect our inventions and protect our intellectual property. So that in and of itself, while we use that IP to kind of protect ourselves from any claims that might be out there, we also use that portfolio as an opportunity to monetize. monetize. I think there's a lot of thematics there, which are so important to the market right now as we begin to talk more about AI and the way that technology is impacting different areas. QNX. So this is your modern day growth driver right now.

6:10What exactly is the software with QNX and what are the themes and the trends that are driving the growth of this business? It's really one of the most exciting parts of the company right now. QNX is, think about it, is the operating system of the car. And as more technology and more software goes into the car, the more demand there's going to be for the types of software solutions that we provide with the QNX platform. And, you know, there's 90 million automobiles that get manufactured a year. So out of those 90 million, I would say 75 % of those 90 million cars have kind of basic software technology in it.

7:01You know, infotainment type of things, you know, to tune your radio or to listen to a podcast like this. You know, that's basic, basic functionality. And then 25 % of those 90 million cars are now using more advanced technologies, digital cockpit with the digitization of everything that you use in the vehicle. ADAS is a safety platform that powers things like blind spot assist or different types of driver assistant technologies. But one trend that we're seeing across the board is for sure more shifting towards the 25%. I just want to think through this a bit because these days you look at the car and often a lot of the modern cars will come with screens that resemble a lot more of the kind of interface that we might be used to on, say, a smartphone or a tablet or something like that.

8:07Some of the chips and the semiconductors now going into the cars from companies like NVIDIA or even a Qualcomm, for example. Is it in that sort of software layer where, you know, on the screens, on the infotainment systems where BlackBerry is paying a big role here with QNX? In many cases, we're the ones that are actually powering that screen, enabling that screen. And, you know, our approach, Sarge, has been really kind of a more ecosystem type approach. So our partners, NVIDIA, Qualcomm, ARM, Texas Instruments, Intel, every major silicon player in the industry has standardized their whole architecture on the QNX operating system.

8:56So that's why when I was giving the reference of 25 % of cars, of those 90 million cars are using more advanced software technologies, we are up to about 95 % market share on those 25%. So as you think about, as the 75 % starts shifting more and more, and as more technology with AI and with different applications start moving into that ecosystem, we're very excited about how well positioned we are with partnerships with the silicon players, partnerships with tier one suppliers that often take the hardware, the software, bring it all together and provide it as a solution. to the car manufacturers, we're playing a really important role in partnering with the ecosystem.

9:50John, I remember a few years ago, there was a conversation amongst sort of tech companies, amongst automakers that, you know, we may see a world and then, you know, I'm talking perhaps, let's say like eight to 10 years ago that, you know, maybe the automakers might start to develop their own operating systems. And if not, they would go towards a company like Google or Apple to be the default operating systems in the car. Now, that hasn't actually panned out in that way. What have the conversations been like over the years from the automakers as they begin to think about more and more software in the car?

10:27And at times, I've heard the future car described as a smartphone on wheels. What we've seen over the years is there have been times with some of our customers who took a shot at that. Said, you know what, we're going to develop our own operating system. And I think what we saw over the past, you know, I want to say five, seven years, is I think they came to the realization that's not necessarily their core competency. When you think about car manufacturers and the value that they, with their brand and integrating different solutions from, you know, audio to safety to geo, you know, maps and all the different technologies and capabilities.

11:14I think what many of them came to the realization that, you know, at the operating system level, you know, maybe we should be relying on the industry to bring us, you know, best in breed capabilities. And then we'll build on top of that. And I think that's where we see more more than more times than not. A lot of our customers are focused on that that part of the the stack where they can really differentiate, differentiate their brand, bring different technologies into it. But what the, you know, kind of the operating system, the plumbing, the middleware, the things that make the car, you know, go in so many ways, you know, having them kind of get into every single element of it.

12:09I think they're realizing they can rely on partners like BlackBerry to help them do that. What role, and this is going to get us into the conversation about AI, because, you know, you can't have a conversation these days without mentioning AI. But what role do you see QNX, BlackBerry playing in a world in which cars become electric and cars begin to be more autonomous in many ways, whether that's through the sort of robo taxi side of things or more autonomous features within cars through what you mentioned, these advanced driver assist systems or ADAS? Where does QNX fit into that? What is the opportunity there?

12:50We couldn't be, I think, better positioned to address some of those use cases that you described. But in the automotive space, there's a high, the highest level of certification that is required in order to bring safety software into the car is an ISO 26262. It's a very well known and recognized certification level that all the car manufacturers utilize. And we are one, if not the only software provider that meets that standard. So that's like a table stakes. Before you can take it from the smart computer on wheels and then take it to autonomous robo-taxes and all these other things, having that baseline of certification and capability is something that we're very proud of, positions us really well in terms of future-proofing the company as it takes the next leap into some of these other use cases.

13:58So it's a good place for us to start from an overall positioning perspective. What is the kind of opportunity you see in autonomous cars? You think about Waymo, you think about Tesla, you think about all these other companies doing and trying to scale robo taxis. It feels like after about 10 years of talk, we're now starting to see, you know, these things being rolled out. What is the opportunity as you look at the broader autonomous car space, not just in robo taxis, but as potentially manufacturers integrate more autonomous features into the car? We still think it's still a little early days.

14:36You know, if I'm honest, it's not, you know, something that's going to completely disrupt the industry in the next 12, 18 months. But we do see it as a wave of the future, something that's coming down the pipe. And we collaborate just the way we work with all the chip manufacturers and the OEMs and the tier one suppliers. in that part of the industry. We have a deep collaboration that we work with them on. So I'm sure you'll see BlackBerry and QNX platform playing a prominent role in that as that part of the industry takes hold. This is all powered by advances in artificial intelligence across the board.

15:27And as people look at the landscape around AI, they see areas like semiconductors, which have done very well from a financial perspective, the model companies which are gaining a lot of traction as well um what is if i were to ask you you know what's blackberry's positioning in the world of ai um how would you describe it we lean into ai in a in a in a very deep way um uh but we do it uh the way i would describe it is really um in a pragmatic way you know we we uh we're a little bit careful about how much ai we actually put into the code of our products because, you know, back to kind of safety, secure, and certified type of software, those robo-taxis, failure is not an option.

16:19They have to stop. They have to turn. They have to do all the things they need to do every single time. Blue screening in a robo-taxi is not an option. Being a little bit cautious about how much AI technology you actually put into the code that's powering those tacks or those autonomous vehicles or any vehicle, for that matter, is something we're very, very careful. Now, will we use AI technology around testing new products and integrating new products in different ways to be more efficient and to improve our overall time to market? Absolutely, we will. But we're a little bit careful on how much we literally inject into the code, into the products that are actually powering a lot of these things.

17:16I want to just take you away from the conversation for a minute to talk about software, because this is so central these days to the BlackBerry story. Now, John Giamatteo of BlackBerry mentioned safety critical software. What exactly is that? When you think about a car or a robot, these are things that are run on software these days. But it's not just any app that makes these things work. There is a complex software system that underpins these things. and you got to have software in there that can't fail. What if the brakes of a car stop working or a robot mid-activity breaks down? The stakes are high, the risks are very high as well.

17:54And that's why safety critical software is so central to the BlackBerry story. This is software and systems that have to be designed and tested to behave in a highly predictable and reliable way. There are lots of industry standards to test this as well. But AI poses a new challenge because we're seeing more and more AI integrated into software. The problem is AI is not always accurate. AI is not always reliable. And in something like a surgical robot, for example, or an autonomous car, accuracy is a non-negotiable, which is why, as John says, a robo-taxi can't simply blue screen.

18:35Executive Decisions is the new podcast from CNBC, where I ask powerful leaders about their decisions that changed everything. I'm Steve Sedgwick, and here's the CEO of Siemens Energy, Christian Bruch. Business leaders should not stay quiet in a world which is super complex. We sit in a privileged position, and we have to use that to ensure that society remains prosperous, stable, successful. That's Executive Decisions with me, Steve Sedgwick. Get it wherever you're listening to this. Over the past few weeks at the time we're recording this, a lot of stories about cybersecurity threats that have been created by AI.

19:15And one of the sort of most high profile was this sort of rogue or model going rogue and open AI one attacking a company called Hugging Face. You know, I'm sure many of our viewers and listeners have heard of that. But that's just one example of where we're hearing the frontier AI company saying, look, AI is an increasing cybersecurity threat. So, you know, how big a deal is this in terms of the threat landscape as you think about the cyber and the secure communication side of your business? You know, what's nice for us is we've got deep roots in this part of the business. So if it means that, you know, it'll be a little bit, you know, slower to bring a product to market because we're optimizing for safe, secure and certified, then that's absolutely what we'll do.

20:05John, in a world of escalating or what feels like escalating cyber threats now powered by these advances in AI, what keeps you awake at night? What are you most concerned about in this realm? Complacency. I'll give you an example. You think about, and this goes to our government and military type of applications. Many governments around the world are still using things like WhatsApp, Telegram, Signal to actually communicate commands within the government. So you think about that. That's a commercialized messaging app that anybody can go download off of. And they're ripe for, you know, people doing malicious things and tapping into it.

20:58And a lot of times we'll go talk to prospective customers and talk to them about the threats and what's out there. and how, you know, BlackBerry's, you know, secure encrypted technologies can protect their communications in a much more comprehensive way. And you've got sometimes you'll hear, you know, well, it's secure enough. So complacency, I would say, both in industry, both in governments and in, you know, consumers. and people every day walking around, the threats are tremendous right now. And AI is only making them more exponential in terms of the threats. I suspect the argument they often give is, well, those apps are encrypted.

21:50Our job is make sure they're aware of the risks. Make sure they're aware of what are some of the threats that are out there. and then make sure they're aware of some of the options that they have to address those risks. And then we leave the decision-making to them. We have been seeing with all of the different geopolitical dynamics that are happening these days around the world, when defense spending goes up, when NATO spending goes up, when mission-critical communications are increasingly more required than ever before based on just some of the realities that's going on around the world, those types of circumstances really represent an opportunity for BlackBerry in so many ways to provide them a comprehensive set of capabilities to protect their mission-critical communications.

22:49There has been a large discussion around quantum computing. right, and the advances being made in quantum computing. And we've done podcast episodes on this before. But one of the big advances many people say is that quantum computing will have the ability to crack modern day encryption, particularly some of the encryption we rely on for secure communication, whether that is in our consumer apps or on a higher level than that. um how much are you thinking about this um potential at the moment around quantum we watch all these trends are you know whether it's quantum or um you know some of the ai infiltration um um you know techniques that are happening um you know we are you know knock on wood we prove we We serve governments all around the world with unhackable encryption for their secure communications.

23:50You know, can it be hacked one day, you know, with developments in quantum and other technologies? You know, maybe, but it's our job to ensure that as those technologies get more advanced, you know, our encryption technology gets more advanced. You mentioned something earlier, you said physical AI. And as we talk about physical AI, this encompasses a wide range of things from cars and autonomous cars to robots, robotics and other things too. As you think about BlackBerry's future growth, what trends around AI do you think you're going to be able to tap into to drive future growth at the company?

24:36We think that could be even a faster growing segment of the industry for things like robotics, AMRs, you know, automated mobile robots that are used in supply chains all around the world to do pick, pack and ship. You're probably not going to need people to do those things. You're going to see robots doing more of those things. We're seeing robots in, you know, surgical robots with medical device makers that are looking for, you know, opportunities for an embedded operating system to make sure that that surgical robotic arm does what it's supposed to do every single time. Um, industrial automation is another segment or, or vertical inside, you know, the whole physical AI space that we're very much focused on.

25:34So as excited as we are about the dynamics of the automotive industry and where that's going, These other applications around robotics and medical instruments and industrial automation represents a tremendous growth opportunity and one that I think BlackBerry and our Q &X portfolio is really well positioned to address. I was going to say this is somewhere where similarly to what you've done with cars, you know, where the software is incredibly key when you think about robotics and some of the industrial use cases, let's say in a factory or warehouse or, you know, some of the medical use cases, they will require such secure software, right?

26:21Similar to what you've done in the automotive space. Absolutely. Absolutely. It's one of our fastest growing businesses inside the QNX portfolio. We don't talk that much about it, but we probably should. We have in the QNX business over$950 million of backlog of firm orders from manufacturers all around the world. Now, today, the majority of that is in the automotive space because we serve, you know, basically every automotive manufacturer around the world with the exception of one. And I'm sure you could guess who that is. So in that$950 million, there's a portion of it that is robotics, that is all these new use cases.

27:18So when we think of like the future and we look at it, we're sitting on a backlog of that magnitude. And cars is going to shift from 75 percent basic to more advanced in a place where we have 95 percent market share. Robotics is going to shift in a hardcore way as some of these AMRs and autonomous forklifts and all these different applications. They're just starting to emerge a product that's safety, secure and certified like the QNX platform is very well positioned to address those demands. And we couldn't be more excited about the opportunity in front of us.

28:07i just want to tackle this term physical ai which appears more recently to be a synonym for humanoid robots but it encompasses a world of hardware powered by ai things like robotics but all sorts of types of robots as well as autonomous cars as well but perhaps in the near term it may be a bit less futuristic think about warehouse robots moving goods or autonomous forklifts You may have seen videos or pictures of within a sort of warehouse that is waiting for deliveries, for example, these robots carrying parcels around or packages or picking stuff off shelves. Think about in a car manufacturing plant, there may be these robotic arms that assemble parts of the car as well.

28:50Now, the hardware, of course, is one thing, but underneath that, there are AI models, software to control the machine, sensors, different components, all of this work together to carry out these decisions reliably. And that's important when you think about going from a demo of this kind of physical AI to the real world. A robot in a warehouse or a hospital needs to respond accurately and reliably if something unexpected happens. And with the physical AI boom, of course, this could benefit some of these hardware players actually making the physical things. But software is going to be key here.

29:28One of the big conversations has been around humanoid robots, these sort of walking human like robot forms. Is this an area you see that can scale in the future and holds promise or is this more a sort of big marketing push? I think it'll get some traction long term. I think it'll it's probably, you know, if if some of those other applications like AMRs and forklifts and medical devices, they're probably in the third or fourth inning. You know, I would say humanoid robotics is probably in the first inning. You know, it's still still early days, an emerging use case for sure. And, you know, we'll see how much traction it gets long term.

30:18John, as we talk about some of these technologies and particularly robotics and autos over the last few years, we've seen China do incredibly well in these areas in terms of the brands they're bringing out, the EVs they're bringing to market, the technologies they're bringing to market as well. Absolutely fascinating. And the pace of innovation has been so quick as well. Are you seeing, and it also links to this sort of digital sovereignty conversation, we're seeing China do more and more or want to do more and more of the technologies at home, whether that's around software, whether that's around the semiconductors, certainly around the hardware.

30:59What do these kind of trends mean for BlackBerry, you know, for QNX as you look to the Chinese market? You know, China is a really important market for us. and we got a strong presence there in Shanghai. We've got a strong team there that's engaging with the market on a lot of what you've talked about. A couple of things about China, and one of the reasons they are so fast and dynamic, and they're bringing out a lot, is they're safe for domestic consumption. inside of China, you know, their standards and regulations around safety are, let's just say, a little looser than some other, you know, markets around the world.

31:54But I think as China starts thinking about exporting a lot of these technologies to Canada, to the U.S., to the U.K., where you're sitting today, you know, if they want to export some of these technologies, But coming up with the stack on safety certifications for some of these solutions is something I think they're going to have to give a heck of a lot more thought to. And that's an area where I think we can help them, you know, because of, you know, the platform and all the subject matter expertise that we've developed over the years. So we've got a strong play inside of China, helping them develop solutions for internal domestic consumption.