BlackBerry’s small share of the mobile market fell sharply after its new BlackBerry 10 devices failed to grab the market’s attention.

Cormark analyst Richard Tse thinks the various strains of BlackBerry’s (TSX:BB, Nasdaq:BBRY) software business will collectively result in a revamped but smaller player that has a good chance of dominating certain niches.

Yesterday, BlackBerry reported its Q1, 2016 results. The company earned (U.S.) $68-million on revenue of $658-million. The company’s revenue from software and technology licensing came in at $137-million, a 150-per-cent bump over the same period last year.

“I am pleased with the strong performance of our software and technology business. This is key to BlackBerry’s future growth,” said CEO John Chen. “Our financials reflect increased investments to sales and customer support for our software business. In addition, we are taking steps to make the handset business profitable. We believe these actions are prudent and necessary to grow the business, and we believe the remaining milestones in our strategic plan are achievable.”

Tse says that while the street was unimpressed with BlackBerry’s software numbers, he thought they were decent. The analyst notes that the company delivered 2,600 enterprise wins in the quarter, 40% of which were outside its EZ Pass upgrade program. He points out that competitors MobileIron and Good have a total of 8500 and 6200 enterprise customers, respectively.

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“When it comes to BlackBerry’s Q1/F16 results, it was somewhat of a head fake,” says Tse. “While the initial view on the results was that BlackBerry was seeing significant momentum in software revenue, using the company’s software assumptions provided on its conference call, it appears “core” software revenue was flat (down slightly) on a sequential basis with the bulk of the upside coming from technology licensing deals which are viewed by the market as “one-offs” and non-recurring. That is why the stock did a U turn yesterday post conference call. But was software really that bad? We do not believe so; the reality is that the financial results are improving and many initiatives continue to be underway for BlackBerry to hit its targets.”

Tse says Blackberry’s QNX also has the potential to drive growth, particularly in the Internet of Things market.

In a research update to clients today, Tse maintained his “Buy (Speculative)” rating and one year target price of $14.00 on BlackBerry.