In terms of IP value creation Blackberry is one operating company worth keeping a close eye on. The Canadian tech giant has a huge portfolio of assets – around 38,000 – and has a brand with global cachet; but it is slowly withering in its legacy handset market and is transitioning away from manufacturing devices.
As we have seen with others that have moved out of a highly competitive market – such as Ericsson and Nokia – transition tends to focus a company’s mind on its patent portfolio and monetisation opportunities. Blackberry is a long way behind those two telcos but there’s no doubt that it has become more and more focused on deriving value from its IP.
In 2014, for instance, it hired Mark Kokes, an experienced licensing player, as senior vice president of IP, licensing and standards. He joined from InterTrust and before that had done a stint at HTC. His hire appeared to pay immediate dividends in 2015 when Blackberry announced a licensing deal with Cisco. It then followed that up earlier this year by announcing deals with Canon and International Game Technology (IGT).
At the start of this year we also reported on a patent disposal that Blackberry had made to investment firm Centerbridge Partners, some of the details of which were disclosed in court documents filed in a dispute between Michael Friedman (who was advising on the deal) and his former employer Ocean Tomo. Those patents are reportedly being monetised by former Alcatel-Lucent duo Craig Thompson and Ozer Teitelbaum. So, in short, Kokes and his team appear to be making steady progress as Blackberry becomes a far more significant player in the patent market.
Given all this, the comments yesterday by Blackberry CEO John Chen on a quarterly call with analysts are worthy of note. Chen was reporting on what was a tough quarter for the company as it struggles to move on from its handset heyday. On the call he pinpointed IP licensing as one of the key drivers for the software business and insisted that despite BlackBerry’s record of selling patents, its focus is on licensing not further sales. “Many people have wanted to buy the patents,” Chen said. “But I’m not really in a patent-selling mode, I’m in a patent licensing mode.”
It seems clear, therefore, that we can expect plenty more agreements over the next few years. However, overall, Chen was clearly keen to play down expectations. He pointed out that the company’s hefty portfolio put it in a good position but that he was keen not to force Blackberry’s licensing approach and that he preferred deals that delivered recurring quarter-to-quarter revenues which, he pointed, are harder to achieve.
If anything that looks like a very sensible move. In the current climate forecasting whether and when a potential licensee is going to take a licence is going to be tough. The more deals that Blackberry does close that are done on a recurring basis then the easier it will be for the company to offer the market more accurate forecasts for licensing revenue. You only have to look at Nokia’s licensing agreement with Samsung, which came in under analysts’ expectations and generally left the investment community disappointed, to see the damage that can be done by heady expectations. For the time being Chen’s comments give Kokes and his team plenty of breathing space to deliver additional deals and a steady stream of licensing revenues. In this uncertain market that’s a nice luxury to have.