BlackBerry is not starting from scratch, having worked with Ford extensively to develop a subsection of the technology already provided in Ford automobiles. Additionally, because Ford is an international auto maker, it is likely that any positive progress forward in providing an intelligent operating system for the automobile could very well be utilized by other manufacturers around the world. Remember, in Asia, BlackBerry devices are still a reasonably well used brand (countries like Indonesia). Consumers are very familiar with BlackBerry operating systems and could very well embrace any new insertion of BlackBerry technology as a selling point for auto manufacturers.
Auto technology is a growth opportunity for BlackBerry; the industry overall is expanding at breakneck speed. If BlackBerry is to begin growing once again, they need to operate in markets that are growing and have higher margins. It's fair to say that margin compression is likely the norm in the handset and hardware business for mobile devices. The auto-tech business is still a higher margin business. If BlackBerry is successful in capturing market share in the auto space this will finally give the company what they've long needed — an opportunity in a growth space with high margins.
The Ford deal is all part of BlackBerry CEO John Chen strategy to move the company away from its iconic handset business and toward being an enterprise-software company. Chen deserves credit for his attempt at transitioning Blackberry away from legacy offerings. The fact that the company is still in business and pushing forward into new spaces speaks volumes about the determination of management to remake the company for a new path forward. This announcement is a major step forward in that transition.
Commentary by Michael A. Yoshikami, the CEO and founder of Destination Wealth Management in Walnut Creek, California. Follow DWM on Twitter @DestinationWM.
Disclosure: Michael Yoshikami has no personal ownership of BlackBerry stock and no investment-banking relationship with the company. However, he may buy the stock for clients.
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