BlackBerry goes SaaS in auto, Volvo and Audi pick Android

Rumors have emerged from Macquarie analyst group that BlackBerry is working with automakers Aston Martin and Range Rover to develop a security service for vehicles. The move is an expansion on BlackBerry’s software strategy, in the wake of its handset collapse, and a transition into software as a service (SaaS), indicating the importance of the automotive sector to BlackBerry’s transformation.

According to the rumors, the system would remotely scan vehicles for computer viruses and tell drivers to pull over if they were in critical danger. BlackBerry will also install security patches to an idle car as part of the service, being tested by the luxury automakers – although neither parties would respond to confirm the rumor.

The Macquarie analyst stipulates that BlackBerry’s security service could be launched as early as next year, costing $10 a month per vehicle. Interest in automotive security has risen dramatically since 2015, when hackers uncovered vulnerabilities in Fiat Chrysler vehicles that led to a U.S. recall of 1.4m vehicles. While BlackBerry was providing its QNX software to FCA, it is widely accepted that QNX wasn’t to blame for the faults – but BlackBerry PR was on the backfoot for a few months.

BlackBerry is hoping that it can exert the same dominance it once had in the pre-iPhone smartphone market in automotive software. BlackBerry has now completed its strategic shift to software, after finishing the offload of its hardware business – despite a few desperate attempts to save its iconic phone designs.

The company’s financial outlook has steadily improved, with software and service revenue increasing 25% year-on-year – after spending the last three years investing in the software side of its business. It purchased QNX from Harman in 2010, giving BlackBerry a particularly good foothold in the automotive software market – which it has used to become the dominant player in operating systems for cars.

BlackBerry is still expecting growth of 15% in software and services, business this year and has alluded to new services to drive this growth, leading us to believe that this is one of those new services previously alluded to.

BlackBerry has been able to maintain a strong reputation in enterprise grade software and in particular security, building the Enterprise of Things (EoT) BlackBerry Secure offering. To this end, the company acquired a range of security companies, including Good Technology, WatchDox, AtHoc and Encription.

Elsewhere in the automotive software market, Volvo and Audi announced that they would be using Android in their vehicles – and notably, not the Android Auto software that bridges smartphones to IVI systems.

This deal looks like it will come as a blow to BlackBerry, potentially losing a QNX customer to Google’s operating system, as both Audi and Volvo are BlackBerry customers. Furthermore, both Google and Apple have purportedly been poaching QNX staff, to work on its automotive security platform.

The announcements also marks a rift between the automakers, over In-vehicle infotainment (IVI) systems. The rift, has been caused by the potentially lucrative value of the data in-car software would be capable of collecting. By letting the likes of Apple and Google into the vehicles, the automakers fear losing out on the valuable data generated by their vehicles.

Automotive data has a clear value to insurance providers and dealerships for monitoring usage, but also to the automotive retail market that supplies vehicle maintenance and accessories. Businesses with a physical retail point will also find value in the data for their marketing strategies.

With Android being open-source, the ability to customize IVI systems and retain their brand appeals greatly to car manufacturers. However, if they were to license the Google apps, they would provide Google with access to their valuable ecosystem.

Toyota and Ford are uncomfortable with tech companies finding new revenues in their products and are attempting to push back with SmartDeviceLink (SDL). SDL is an attempt to limit the extent to which Google and Apple software can get their teeth into the ecosystem’s data – as well as the fear of Google and Apple developing their own cars.

SDL originated in Ford’s AppLink software, which allows approved mobile developers to access Ford’s Sync IVI platform – brining the smartphone inside the car itself and allowing the driver to use content and features through the cars systems. SDL allows the automaker to retain control over the application, and the extent to which they can interact with the rest of the car’s software.

The major advantage Silicon Valley has in respect to IVI is that they control the smart phone ecosystems which consumers use to access content. All the useful personal data that a driver might want to bring into the vehicle already exists on the phone – things like address books, calendars, music playlists, and even social media.

If Apple and Google can convince drivers that a fuller user-experience is better inside their ecosystem, then automakers that embrace those platforms could see improvements in their sales. The Silicon Valley giants are also better placed to monetize the data a car can generate, through their existing operations. As long as automakers receive a fair share of the revenues, then it shouldn’t be much of a surprise that Audi and Volvo are happy to choose Android – but don’t expect to see those contractual agreements anytime soon.