Auto, Industrial Uses Driving Growth in IoT Market

The total addressable market (TAM) for Internet of Things (IoT) applications is expected to grow between 8% and 10% over the next three years, BlackBerry executive chairman and CEO John Chen said Thursday (June 23) during the company’s quarterly earnings call.

BlackBerry’s own IoT revenue is expected to have a five-year compound annual growth rate (CAGR) of 20%, Chen said, adding that this target does not include revenue from IVY, the intelligent vehicle data platform being co-developed with Amazon Web Services (AWS).

“This faster-than-market growth rate is primarily driven by the market share gain in our core safety-critical auto domains,” Chen said during the call. “In addition to auto, we also expect growth from adjacent verticals, particularly medical and industrial, broadening our addressable market.”

Focusing on Higher-End, Electric Vehicles

During the quarter ending May 31, BlackBerry’s IoT business unit recorded 19% year-over-year revenue growth. The company also reported that its QNX software for connected cars is now embedded in 215 million vehicles worldwide — 20 million more than in the previous year.

During the call, Chen said that the supply chain situation appears to be stabilizing and that the economic issues that will affect the overall auto market are having less impact on higher-end models and electric vehicles — two categories of vehicles that are more likely than lower-end models to include BlackBerry’s QNX software.

“Each of [the original equipment manufacturers] has their own strategy, but I see it more suited to high-end cars being built — that they are able to manage their supply chain issue and build and release cars that have more value to them,” Chen said.

Twenty-four of the top 25 producers of electric vehicles, in terms of their volume of production, use QNX in their vehicles, Chen said, adding that the sales of electric vehicles are likely to continue rising due to the current gas prices and concerns about the environment.

“As sales volume goes up, although still a small percentage of total vehicles sold, we are seeing the volume uptick,” Chen said. “So, it’s a good trend for us.”

Enabling a Growing Number of Use Cases

Citing estimates from independent auto analyst Strategy Analytics, Chen said the three-year growth rate for the advanced driver assistance system (ADAS) market is estimated to be 29% and that for the digital cockpit market is expected to be 40%.

“Within those domains, we plan to grow even faster than that as we continue to win market share,” Chen said.

Giving an update on the development of IVY, Chen said BlackBerry has begun a number of proof-of-concept (POC) trials with automakers and Tier 1 suppliers and continues to receive requests for more. He said the product’s June release supports additional sensors and hardware.

“Progress is also being made on the application ecosystem side, and we currently engage with multiple potential partners,” Chen said. “These partners enable a wide variety of exciting use cases, including AI-driven battery management, predictive maintenance and usage-based insurance, just to name a few.”

The pay-as-you-go model has been growing in the auto insurance industry, Chen noted. Other use cases for the IVY platform include helping original equipment manufacturers deliver over-the-air software updates and deploying financial technology to enable the “auto as a wallet.”