BlackBerry Stops Making Smartphones; to Focus on Software and Services
In a bid to streamline its operations, the troubled smartphone maker, Blackberry, has decided to outsource the hardware development to its partners and realign its focus on software and services. This move comes at a time when companies like Google and Microsoft are gearing towards a greater control over their hardware which might include manufacturing the same by themselves.
Things don’t seem to be improving anytime soon for Blackberry which announced its Q2 Fiscal 2016 today which revealing that Blackberry made $100 Million less than last year at $352 million. CEO John Chen had been quoted many times saying that they would eventually exit the hardware business considering that it’s no more profitable.
John Chen was quoted in a press release as follows, “Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia,” and further added that “Under this strategy, we are focusing on software development, including security and applications. The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital.”
Parallely, rumor mills have been speculating Blackberry’s exit from the mobile phone business and they drew the inference from Chen’s statement this year when he told CNBC: “If by September, I couldn’t find a way to get there [make a profit], then I need to seriously consider being a software company only.”
The Canadian manufacturer has been trying to cut the corners and has let go of 200 employees earlier this year. Chen, on the other hand, is confident about the shift to software and says that the company’s financial foundation is still strong and the move to software is has resulted in software revenue doubling up this year. On the contrary, Blackberry has also started shipping an end-to-end asset tracking system called the BlackBerry Radar.
Interestingly the news came at a time when Blackberry announced that it would no longer be manufacturing the Blackberry Classic that runs BB 10 and instead will focus on its new Android lineup including the BlackBerry Priv along with the recently launched DTEK50, and the upcoming DTEK60. During its heydays, BlackBerry stock peaked out at $236 as opposed to the current $7 value. It was in 2009 that BlackBerry accounted for 40 percent of the smartphone OS share in the US, unfortunately, the number has now plummeted to less than 1 percent.
BlackBerry and Nokia, the two smartphone manufacturers leading the market until late 2008 have been rendered nearly insignificant by the fierce competition. Ironically, both the companies shied away from making a plunge to the Android ecosystem. Also, this doesn’t mean that BlackBerry is closing down its handset business and instead they will be outsourcing the hardware to partners.