BlackBerry Shifts Cybersecurity Focus Towards QNX and Secure Communications
In a strategic pivot, BlackBerry has announced plans to reallocate resources from its underperforming Cylance endpoint protection business to more lucrative sectors within the cybersecurity landscape, particularly QNX and secure communications. This decision follows the company’s acquisition of Cylance in February 2019 for $1.4 billion, an investment that has not yielded the expected returns. BlackBerry’s Chief Financial Officer Tim Foote indicated that this move is part of a broader strategy aimed at stabilizing revenue streams and transitioning towards profitability after significant cost reductions.
The Canadian technology firm is exploring various options for the Cylance operation, which has been a notable drain on BlackBerry’s cybersecurity portfolio, with projected EBITDA losses of $51 million by the end of February 2025. Foote emphasized the need for substantial continued investment in Cylance to foster growth and profitability — an approach the company now deems less than optimal. Instead, BlackBerry aims to harness growth opportunities in QNX, an embedded systems platform with promising market potential, and its secure communications unit, which is anticipated to generate an EBITDA profit of $52 million in the current fiscal year.
Adjustments in investment strategy will entail a significant cutback in funding for Cylance, as well as a concurrent examination of potential opportunities for the business. Reports from IDC reveal that Cylance has been losing market share in the endpoint security sector, with its percentage falling from 1.5% in 2021 to 1.3% in 2022. As the 15th-largest vendor in the endpoint security market, the firm faces an uphill battle to regain traction.
While revamping its cybersecurity division, BlackBerry has successfully implemented rigorous cost-cutting measures, achieving an expense reduction of $100 million. Although overall revenue has declined, focused efficiencies in research and development, combined with reduced sales initiatives and facility consolidations, have reportedly led to improved margins. Foote indicated that the division is on track to break even this fiscal year, with profitability anticipated in the following two years.
BlackBerry’s shift in focus also includes leveraging artificial intelligence and machine learning technologies, particularly in the realms of managed detection and response (MDR) and extended detection and response (XDR). Shil Sircar, Senior Vice President of Cylance Data Science and Engineering, stated that the company has dramatically increased its machine learning capabilities, evolving from four models to eighteen over the past year and a half. This advancement aims to enhance the platform’s ability to detect and mitigate cybersecurity threats effectively.
Forging partnerships with law enforcement agencies like the FBI and Interpol has empowered BlackBerry to solidify its position within cybersecurity policy-making circles, enhancing its credibility in the industry. The collaboration allows the company to influence critical decisions that shape global cybersecurity strategies, particularly within initiatives such as the International Counter Ransomware Initiative.
Amid these developments, BlackBerry has modernized its Cylance cloud infrastructure, yielding significant cost efficiencies and facilitating continued innovation. The company has adopted partnerships with data analytics leaders like Databricks to optimize back-end operations, enabling scalability. These enhancements have contributed to elevated customer satisfaction, reflected in favorable renewal rates for MDR services, further underscoring the firm’s commitment to improving its AI-driven cybersecurity solutions.
In conclusion, BlackBerry’s strategic redirection aims to stabilize its cybersecurity efforts through a focused investment in high-potential areas while simultaneously addressing the challenges presented by the Cylance acquisition. As the company navigates this critical transition, it remains vital for business leaders to stay informed of the evolving cybersecurity landscape and to anticipate potential tactics and techniques that adversaries might employ. Understanding these threats through frameworks like the MITRE ATT&CK Matrix can provide essential insights into bolstering cybersecurity defenses, thereby safeguarding organizational assets against an ever-changing array of threats.
