BlackBerry's Health Investment Makes Sense, But Can It Deliver?

In a rather surprising bit of BlackBerry (NASDAQ: BBRY  ) news, the company has decided to invest an undisclosed amount in a small start-up health care IT company called NantHealth. The move came as a surprise to many, who see BlackBerry as strapped for cash and straining to cut costs. However, in this segment from Tuesday's Tech Teardown, Motley Fool tech and telecom bureau chief Evan Niu breaks down the rationale behind the move. BlackBerry's QNX platform is already used to run a wide range of medical devices, and by making this investment the company is looking to integrate that platform with NantHealth's Clinical Operating System. The two companies are working together to develop a health care industry-specific smartphone, a niche play that Evan sees as making a lot of sense.

As BlackBerry's efforts in the consumer market continue to sour, Evan sees it as high time the company started making this kind of shift to other markets. The company continues to maintain that it will not be abandoning its consumer hardware business, but as it continues to operate at a loss and bleed cash through operations, the odds of that business staying afloat much longer are getting slimmer.

Evan notes that, for a company in BlackBerry's position, it can often come down to two choices. Wait, and continue to burn through what's left of the company's cash reserves, or invest some of what's left in a long-shot bet, and hope for the best. In the video, Evan tells investors what he thinks of BlackBerry's prospects after this move.

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  • Report this Comment On April 16, 2014, at 5:45 PM, sk8ertor wrote:

    Wow, how clueless are the two in the video? Do everyone a favor and stop reporting on BlackBerry until you get a clue. The girl on the right makes herself appear like a total airhead and Evan plays along with her quite well.

  • Report this Comment On April 16, 2014, at 7:06 PM, xxBURK wrote:

    How ignorant can this girl be? It doesn't take a genius to know that BlackBerry is already well suited for this move. They will be making a device and providing software using QNX technology. I can't believe you sit there laughing when you have no what you're talking about. There are so many other educated people that would be a better choice than this air head. Unreal.

  • Report this Comment On April 17, 2014, at 9:44 AM, melegross wrote:

    She doesn't seem the fool, it's the commentators here who do. This is certainly a long shot. While QNX may be used by many medical devices, that has nothing to do with smartphones. there simply is no connection.

    For Blackberry to succeed in displacing the iPhone, and iPad, in the medical area, they will need to expend a great deal of time and effort, neither of which they have. How long will it take for them to develop this, and how much will it cost?

    They have very little cash, as most of what's on the books these days is debt. They are running through that rapidly - $1 billion in the last two quarters. When will that debt be called in?

    I hope they can make good on this, but it's just a small chance that they can. All too much of what RIM, and now Blackberry, has promised, has fallen flat.

  • Report this Comment On April 17, 2014, at 9:55 AM, xxBURK wrote:

    @ melegross. With all do respect, BlackBerry 10 was designed with QNX. It has everything to do with BlackBerry smart phones. This is why bb10 has so much potential for the future.

  • Report this Comment On April 17, 2014, at 9:57 AM, melegross wrote:

    Oh yes, by the way boys, he's the one with the doubts. You seems to be forgetting that. He says it's a good idea that they are trying something instead of just continuing to just burn through the cash, but he doubts it will work, just as he says that most of what they've been doing isn't working. So don't blame her.

  • Report this Comment On April 17, 2014, at 10:00 AM, melegross wrote:

    xxBURK, I'm very well aware of what BB10 is, and isn't. I'm also aware that its been a total failure. That's something that you should be aware of as well. If it wasn't, they wouldn't be in all of this trouble now.

    BB10 has no future. Sales have been going down from the atrocious levels they began with. This is a desperate attempt to become revenant somewhere, as even the DOD is abandoning them.

    There is little they can do that can't be done on another platform.A platform with vastly more money, sales, and imagination.

  • Report this Comment On April 17, 2014, at 1:01 PM, xxBURK wrote:

    @ melegross. Thanks for the reply.

    Yes, I'm also aware of the lack luster sales of BB10. That does not mean it's not one of the best new operating systems out there. Our company has a total of 135 BB10 devices in use. Without a doubt, it's made our lives and company better in every aspect. If you look back in history, all new operating systems take time. BlackBerry didn't help themselves in 2013, that's a given. Mr. Chen is obviously going to change the perception of this company and hopefully things will come alive again. All I'm saying is that BB10 deserves respect. I for one think it's coming soon. All the best.

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Evan Niu

Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.

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