DOES BLACKBERRY HAVE A SHOT AT SUCCESS IN THE FLEET MANAGEMENT MARKET?
BlackBerry entered the fleet management market last year, launching its Radar solution, as it looks to compensate for revenues declines in its smartphone and services access fee business. The broader telematics space is growing at a relatively healthy clip, with industry-wide revenues projected to grow from $9.5 billion in 2016 to $27.9 billion by 2021, translating into a CAGR of almost 24%. BlackBerry does have some advantages in this space, given its expertise in wireless, embedded systems software and secure communications – which form the basic building blocks of a fleet tracking system. That said, competition is also intense, with large companies such as Verizon increasingly focusing on the space. In this note, we take a look at what this business could mean for BlackBerry.
Trefis has an $10 price estimate for BlackBerry, which is slightly ahead of the current market price.
Radar Solution Is Slowly Gaining Traction
Fleet management systems essentially allow companies to gather real time information regarding the location, temperature and physical contents of their trailer, chassis and container fleets. These systems help companies improve the efficiency of their fleets, helping to cut capital investments and reduce labor costs. BlackBerry’s Radar offers a small modular device that can be quickly installed to the back of a vehicle’s container. The data logged from the vehicle is transferred to BlackBerry’s IoT platform and its purpose built applications for the transportation and logistics industry. BlackBerry charges about $400 upfront for the hardware, with the monthly fees amounting to between $10 to $20 per for every trailer connected to Radar, including wireless fees. BlackBerry has had a couple of small, yet significant customer wins for Radar over the last few quarters. Earlier this year, BlackBerry won a contract with Trailer Wizards, Canada’s largest commercial trailer rental company with about 25k trailers. The company also has a contract to install its tracking technology for FedEx’s custom critical services division.
How BlackBerry Stacks Up Against The Competition
Competition in the telematics market is relatively fierce, and BlackBerry competes with the likes of Omnitracs, Teletrac Navman, Trimble Inc and wireless giant Verizon. Verizon in particular could be a formidable competitor, after it acquired Fleetmatics Group last year for about $2.4 billion. The company is focusing on marrying its nationwide wireless coverage in the United States with hardware and software platforms to provide end-to-end solutions. In contrast, Blackberry will bank on AT&T for wireless services in North America. Verizon’s marketing reach could also be significantly stronger than BlackBerry’s. That said, BlackBerry does have some advantages. The company claims that its solution offers more sensor readings, which are taken more often compared to other solutions on the market currently. This should allow customers to monitor assets more accurately. BlackBerry also intends to launch a new lower-cost version of Radar, called Radar Light, that could potentially be priced lower than its current offering (estimated ~$200 for hardware and ~$10 a month for services). BlackBerry notes that this offering could increase its total addressable market from 8 million units to 28 million units.