[sergey_IL]

I just want some rough estimate.
From various reports I can conclude that QNX owns 50-60% of automotive infotainment today and its expected to be so in upcoming years also. New car sales are expected to be 90 mln (worldwide for 2013) and constantly growing. Many new cars will be sold with infotainment system installed by manufacturer.
Optimistic estimate for 2013, QNX will be installed on 15-17 mln cars, if they get 10$ for each car it means 150-170 mln of very high margin revenue. Additionally industrial automation market is expanding rapidly and QNX is supported by major players like Texas Instruments, Freescale and Renesas.
Can also add that all embedded software is much harder to change, you need pass regulatory requirements etc. So if you choose QNX you can't simply drop it one day.

Final thought: software company with potential revenue of 100-200M$ and steady growth should have market value of 500-700M$.

EDIT: 90 mln including trucks
for light vehicles is 67 mln :
http://www.gbm.scotiabank.com/Englis...n/bns_auto.pdf
biased infotainment market share outlook:
https://www.abiresearch.com/press/qn...market-share-t

EDIT2: Some info on RTOS:
http://www.lisha.ufsc.br/wso/wso2009/papers/st04_03.pdf

EDIT3: Old and non reliable, but at least points to something:
View topic - Per Unit Royalties

[theRock1975]

A company with growing customer base and steadily growing revenue should be priced at 10x earnings at the minimum.



Posted via CB10

[sergey_IL]

A company with growing customer base and steadily growing revenue should be priced at 10x earnings at the minimum.

Agree, if optimistic outlook is right and assuming 70% margin (normal for software only) we can get about 70M$ profit for QNX -> 700M$ market value.

[qcbarry25]

I just want some rough estimate.
From various reports I can conclude that QNX owns 50-60% of automotive infotainment today and its expected to be so in upcoming years also. New car sales are expected to be 90 mln (worldwide for 2013) and constantly growing. Many new cars will be sold with infotainment system installed by manufacturer.
Optimistic estimate for 2013, QNX will be installed on 15-17 mln cars, if they get 10$ for each car it means 150-170 mln of very high margin revenue. Additionally industrial automation market is expanding rapidly and QNX is supported by major players like Texas Instruments, Freescale and Renesas.
Can also add that all embedded software is much harder to change, you need pass regulatory requirements etc. So if you choose QNX you can't simply drop it one day.

Final thought: software company with potential revenue of 100-200M$ and steady growth should have market value of 500-700M$.

EDIT: 90 mln including trucks
for light vehicles is 67 mln :
http://www.gbm.scotiabank.com/Englis...n/bns_auto.pdf
biased infotainment market share outlook:
https://www.abiresearch.com/press/qn...market-share-t

BB paid 200m for it. i highly doubt it is worth 3-4x that amount now.

[sergey_IL]

BB paid 200m for it. i highly doubt it is worth 3-4x that amount now.

Can you please argument why?

[brucep1]

Can you please argument why?

I'm not sure they are getting the $10 per car revenue that you think they are. Do you have any sources to back that number up?

[sergey_IL]

Let's if BlackBerry puts 40% of QNX on stock exchange, what EPS we can expect for QNX Inc?

[sergey_IL]

I'm not sure they are getting the $10 per car revenue that you think they are. Do you have any sources to back that number up?

No I don't have, one of the reasons for this thread is to find close estimate.
Other use case: QNX is not used for infotainment only. If manufacturer chooses QNX they likely to use it for car control also (not every car uses OS for control, but many does) in this case price may go even higher.

[brucep1]

No I don't have, one of the reasons for this thread is to find close estimate.
Other use case: QNX is not used for infotainment only. If manufacturer chooses QNX they likely to use it for car control also (not every car uses OS for control, but many does) in this case price may go even higher.

Until I see otherwise, I assume that QNX has more of an Android relationship with its partners rather than a revenue generation one.

[sergey_IL]

Until I see otherwise, I assume that QNX has more of an Android relationship with its partners rather than a revenue generation one.

I believe you don't trust what QNX says:
Customers
and see about Renault-Samsung for controlling and monitoring all car subsystems.

[app_Developer]

$10/car seems a bit high. It's worth noting that Harmann, one of the largest manufacturers of in-car systems, sold QNX for $200 million just a couple of years ago, at approximately 5x revenue.

[sergey_IL]

$10/car seems a bit high. It's worth noting that Harmann, one of the largest manufacturers of in-car systems, sold QNX for $200 million just a couple of years ago, at approximately 5x revenue.

At that time infotainment market was very small. QNX has diversified clients but the strongest one is rapidly increasing. Think about startup which develops RTOS and this RTOS getting large portion of rapidly growing market.
I don't understand why 10$ per car is high. Even patent licensing for smartphone costs up to 7$. We are talking about software used in a car, which must meet many regulatory requirements. This is also the main reason for QNX popularity, it got all the safety/security/reliability any RTOS can get in USA and EU (other countries simply following this certification and mostly don't have their own)

[danprown]

I do not think that the market was that much smaller 3 years ago when QNX had 50 mills in revenue (likely much less in profit).

I don't think QNX is in the top ten infotainment providers: from Panasonic, Pioneer, Harman, Denso, etc. QNX may license its RTOS to Panasonic for their solution.

"In a replication of the results of 2011, Panasonic along with the rest of the Top 10 accounted for nearly two-thirds of overall motor vehicle infotainment revenue in 2012," said Luca de Ambroggi, principal analyst for automotive infotainment at IHS. "Of the industry's total revenue last year of US$34.6 billion, the Top 10 accounted for US$22.6 billion, or 65%.

Panasonic tops list of auto infotainment suppliers in 2012, says IHS

I just do not see how QNX with its 50 mm in 2010 could leapfrog all these established players.

At that time infotainment market was very small. QNX has diversified clients but the strongest one is rapidly increasing. Think about startup which develops RTOS and this RTOS getting large portion of rapidly growing market.
I don't understand why 10$ per car is high. Even patent licensing for smartphone costs up to 7$. We are talking about software used in a car, which must meet many regulatory requirements. This is also the main reason for QNX popularity, it got all the safety/security/reliability any RTOS can get in USA and EU (other countries simply following this certification and mostly don't have their own)

[sergey_IL]

I do not think that the market was that much smaller 3 years ago when QNX had 50 mills in revenue (likely much less in profit).

I don't think QNX is in the top ten infotainment providers: from Panasonic, Pioneer, Harman, Denso, etc. QNX may license its RTOS to Panasonic for their solution.

"In a replication of the results of 2011, Panasonic along with the rest of the Top 10 accounted for nearly two-thirds of overall motor vehicle infotainment revenue in 2012," said Luca de Ambroggi, principal analyst for automotive infotainment at IHS. "Of the industry's total revenue last year of US$34.6 billion, the Top 10 accounted for US$22.6 billion, or 65%.

Panasonic tops list of auto infotainment suppliers in 2012, says IHS

I just do not see how QNX with its 50 mm in 2010 could leapfrog all these established players.

QNX is not manufacturing ANY hardware products.
QNX only developing QNX RTOS kernel and supplementing software.
The main source of revenue for QNX is by licensing its software to manufacturers.
They have various types of licensing, but for large scale and complex projects they are using runtime licensing model (aka royalties). The latter means, if manufacturer produces and sell some unit which runs QNX software they will pay to QNX for this. This is actually the same model Microsoft is using, for each PC sold with windows preinstalled manufacturer pays to Microsoft some fee.
That's why is high margin business. What is different from consumer software, high reliable embedded RTOS shoul met some requirements which are defined by governments and international standardization consortium. Other thing which is different, is that every manufacturer wants/needs to fit/optimize the software to its actual hardware system, this why it called embedded OS. Every provider of embedded RTOS is also involved with the customer design and development.
Recently we heard about QNX partners with Panasonic, Garmin and two Chinese companies (Foryou, BYD). Which actually means they will be developing the final product with help of QNX and when final product is manufactured and sold they will get some licensing fee per each unit sold.
Can add that in most cases, kernel and other software components are sold separately, so actual licensing cost can be pretty high.

[danprown]

I hear what you are saying, I just do not think the money is there for embedded OSs. They do not command the same premium as desktop ones. We have not seen any real numbers. I believe there was a discussion about this some time in the forums and I saw (or someone posted) that in Harman's financial disclosure when they sold QNX, they listed 10 mm profit from the QNX division.

another point is that QNX (under BBRY) may run into the the same problems it had when it was under Harman (and I gather that is why it was sold) -- to expand its reach, licensing, etc. it may need to work closely with its parent's direct competitors, in this case Apple and MSFT.

[kfh227]

Whatever it pulls in for revs with a 1x to 3x multiple.

Posted via CB10

[Dunt Dunt Dunt]

QNX is not manufacturing ANY hardware products.
QNX only developing QNX RTOS kernel and supplementing software.
The main source of revenue for QNX is by licensing its software to manufacturers.
They have various types of licensing, but for large scale and complex projects they are using runtime licensing model (aka royalties). The latter means, if manufacturer produces and sell some unit which runs QNX software they will pay to QNX for this. This is actually the same model Microsoft is using, for each PC sold with windows preinstalled manufacturer pays to Microsoft some fee.
That's why is high margin business. What is different from consumer software, high reliable embedded RTOS shoul met some requirements which are defined by governments and international standardization consortium. Other thing which is different, is that every manufacturer wants/needs to fit/optimize the software to its actual hardware system, this why it called embedded OS. Every provider of embedded RTOS is also involved with the customer design and development.
Recently we heard about QNX partners with Panasonic, Garmin and two Chinese companies (Foryou, BYD). Which actually means they will be developing the final product with help of QNX and when final product is manufactured and sold they will get some licensing fee per each unit sold.
Can add that in most cases, kernel and other software components are sold separately, so actual licensing cost can be pretty high.

Sorry but no, in most cases it is the finished product or OS that is valuable. QNX "wants" to be the OS and they have a infotainment system, and they love to be able to charge for the full OS and for each yearly update to the system. But that isn't what most companies are buying from them, they are buying basic components/modules or even just the basic kernel (they use to give away) and using them to build their own final product. We don't know what QNX is getting or even what their earnings currently are. But the fact that a few years ago their earnings were less than $50M is a VERY GOOD indicator that you might be looking more at a bulk licensing arrangement of some sort, or an arrangement that has nothing to do with the number of vehicle that they system even gets installed in.

I think that if QNX earnings were anything to brag about ($100M - $200M would qualify), that Thor would have said something - anything positive right now is something to grasp onto. Either way it is a moot point, we will find out what they are worth when that division gets sold off.

[sergey_IL]

What is full OS in terms of embedded ? There is no such a thing, this is not a desktop or any common computing device.
I've worked with embedded software and usually you buy license for each project and pay for the kernel only. If you want additional libraries (communication, GUI, encryption) you should pay for them also.
But "pay per project" typically used for small projects, i.e. single hardware device to be sold not more than 100K units. But for potentially large projects royalty is preferred.
QNX CAR platform can be meant as full OS in your terms it provides full solution for infotainment.

[sergey_IL]

What are these? Can you answer?
- Micro kernel OS
- Real time OS
- Embedded OS
- Run-time licensing
- QNX CAR 2 platform
- IEC 61508
- IEC 15408 ( EAL 4+ )
- ISO 26262

[lnichols]

With the QNX Car 2 platform released and many manufacturers and OEM's (Garmin) getting on board with it too, it should be worth more than when BlackBerry bought it, the issue is that I don't think they paid that much for it (think I remember it was estimated to be a few hundred million) so it isn't worth Billions.

[sergey_IL]

May be BlackBerry should sell QNX for 1B$ (this high is because of potential growth).
BlackBerry has nothing in common with QNX, this never been their business and never will be.

[cgk]

This has come up before here and I seem to remember the licensing for the QNX Kernel is nearer 5c than $10 per unit but gets cheaper with volume.

[Dunt Dunt Dunt]

May be BlackBerry should sell QNX for 1B$ (this high is because of potential growth).
BlackBerry has nothing in common with QNX, this never been their business and never will be.

If they could sell QNX for that amount... don't you think they would have?

They bought QNX for $200M and at the time they were desperate, so they paid much more than it was really worth. Has the QNX brand and earnings grown so much in three years to make it worth that much? We DO NOT KNOW, because BlackBerry doesn't breakout earnings from all of their divisions. QNX gets lumped in with "software and other revenues" which accounted in total for only 3% of BlackBerry's revenues last quarter. So the question is, is how much of this "other revenues" is QNX bringing in, how much is BlackBerry World revenues, how much of it is Patent Royalties, how much is revenues from other divisions that BB has purchased (DataViz, Certicom, Slipstream Data Inc, Tungle.me, Newbay, Gist, Scoreloop, TAT, JayCut, Viigo, Dash Navigation, Torch Mobile and of course QNX), and how much is just "other" sources?

BlackBerry/RIM reported revenues of $3B last quarter, 3% of that would be $90M. I don't know what QNX share of that was... but your hope for $100-$200M per year would mean that half of BlackBerry's "other" quarterly revenues were from QNX. I just don't see that being the case, but we are all free to believe what we want.

[danprown]

It is anybody's guess where the QNX revenue is.
My thinking is RIMM has actually set back QNX development, esp. when they closed the open source initiative QNX had undertaken to attract development, and now just by being associated with Blackberry, they are losing business.

Research In Motion Limited
Management�s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary
Revenue from continuing operations for the first quarter of fiscal 2014 was $3.1 billion, an increase of approximately $263 million, or 9.4%, from $2.8 billion in the first quarter of fiscal 2013. Hardware revenue increased by $512 million, or 30.7%, to $2.2 billion, primarily due to the higher average selling prices of BlackBerry 10 devices shipped, partially offset by lower shipment volumes. The lower shipment volumes were a result of decreased demand for the Company�s older device models in a very competitive environment, partially offset by the continued introduction of BlackBerry 1 smartphones into certain markets in the first quarter of fiscal 2014. The number of BlackBerry handheld devices shipped decreased by approximately 1.0 million, or 12.8%, to approximately 6.8 million in the first quarter of fiscal 2014, compared to approximately 7.8 million in the first quarter of fiscal 2013. Approximately 40% of the handheld devices shipped were BlackBerry 10 smartphones. The number of BlackBerry PlayBook tablets shipped during the first quarter of fiscal 2014 was approximately 0.1 million, representing a decrease of 0.2 million compared to 0.3 million in the first quarter of fiscal 2013. Service revenue decreased by $203 million to $794 million in the first quarter of fiscal 2014. The decrease was attributable to a decrease in average revenue per user (�ARPU�), a pre-tax $72 million service revenue deferral related to carriers in Venezuela (the �Venezuela Service Revenue Deferral�) as discussed in �Results of Continuing Operations - Three months ended June 1, 2013 compared to three months ended June 2, 2012 - Revenue - Revenue by Category - Service Revenue,� and a decrease in BlackBerry subscriber accounts compared to the first quarter of fiscal 2013. Software revenue decreased by $9 million in the first quarter of fiscal 2014 to $60 million as a result of a decrease in client access licenses (�CALs�) and maintenance revenues. Other revenue decreased by $37 million to $36 million in the first quarter of fiscal 2014 compared to the first quarter of fiscal 2013, which was primarily attributable to a decrease in gains on revenue hedging instruments and a decrease in non-warranty repair revenues as compared to the first quarter of fiscal 2013.

...

Other Revenue
Other revenue, which includes non-warranty repairs, accessories, licensing revenues and gains and losses on revenue hedging instruments, decreased by $37 million to $36 million in the first quarter of fiscal 2014 compared to $73 million in the first quarter of fiscal 2013. The decrease was primarily attributable to a decrease in gains on revenue hedging instruments and a decrease in non-warranty repair revenues as compared to the first quarter of fiscal 2013. See �Market Risk of Financial Instruments - Foreign Exchange� for additional information on the Company�s hedging instruments.

[sergey_IL]

But this does not contradicts my estimations either, the main decrease is not due licensing revenue.
If we assume that the largest portion of "other" revenue is from QNX licensing, it can be 20M$ for a quarter easily, gives us 80M$ for a year. Assuming high margins, net profit can be 50M$, gives us 500M$ market valuation.
Add to this potential market growth...

PS: Can take a look at EZChip, this relatively small company still provides top notch technology for high scale Ethernet routers. Only for potential growth it's valued at 30X earnings.