The BlackBerry (BB -1.57%) that once was is no longer the BlackBerry that it is now and investors are cheering the news.

What: CEO John Chen has worked to shift BlackBerry away from being a hardware/smartphone business, shifting the company's sights to software. It's a major move that is still a work in progress, but there are signs that it's starting to take root.

In its second quarter 2016 earnings report, the company showed non-GAAP software and services revenue of $74 million, a 19% increase over Q2 FY15 driven by 33% growth in software licensing revenue. Overall, the company derived 41% of its revenue from hardware and 58% from software and services. That's a change from 46% from hardware and 54% from services in software during the same period a year ago. 

Clearly, investors like what Chen has accomplished since the company's stock dipped slightly after it reported on Sept. 25 -- the stock climbed steadily in October to finish the month nearly 19% up, according to S&P Capital IQ data.

Data source: YCharts.

So what: The start of a successful transition is not the same as fully completing one. While there were some encouraging numbers in the BlackBerry earnings reports, total revenue still dropped during the period from $916 million in the same quarter last year to $490 million. GAAP gross margins also tightened up from 46.4% to 37.8%, and the company's loss per share improved only a little, from ($0.39) to ($0.24). 

Now what: Chen has said that if the company's first attempt at an Android-based smartphone, the Priv, does not help BlackBerry back toward 5 million handset sales a year, then it may exit the hardware business. That's a smart move, but software and other segments have a ways to go before they can make up for the revenue being provided by hardware, even as its sales dwindle.

The CEO is positioning his company for the likely reality that it will soon no longer be in the hardware business and investors are rewarding initial signs of success. It's still very early in the game, though, and while these numbers are encouraging, it's been a successful transition.