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Tech Times | BlackBerry won't make BlackBerrys any more

Published:Monday | October 3, 2016 | 12:00 AM


It's the end of an era for smartphone maker BlackBerry.

The company confirmed last Wednesday it will no longer manufacture its own devices, instead outsourcing it to partners. BlackBerry CEO John Chen says the company will prioritise software development, including apps and security.

The revelation was made in a release detailing second-quarter earnings, which showed revenue of $352 million, missing Wall Street forecasts compiled by S&P Global Market Intelligence. Non-GAAP earnings per share were even for the quarter, beating analyst estimates of a loss of five cents a share.

"We are reaching an inflection point with our strategy," said Chen in a statement. "Our financial foundation is strong, and our pivot to software is taking hold."

Shares of BlackBerry were up more than three per cent in pre-market trading.

At one point, BlackBerry owned the smartphone market with its signature devices featuring a QWERTY keyboard and sophisticated software. With the rise of the iPhone as well as Google's Android platform, BlackBerry soon fell out of favour with enterprise and consumers.

BlackBerry attempted a comeback in 2013 with the launch of a touchscreen-only smartphone as well as its BlackBerry 10 operating software. However, poor sales pushed the company to consider a potential sale later that year. BlackBerry eventually dropped the sales bid and replaced CEO Thorsten Heins with Chen.

BlackBerry has since made multiple efforts to revive its smartphone business, including the August launch of the Android-powered DTEK50, which the company claimed was the most secure smartphone in the world.

BlackBerry's fall from dominance prompted many of its customers in the enterprise market - once a stronghold for the company - to switch to iPhones and Android devices. Last summer, the US Senate finally dropped BlackBerry.

The shift to software has been part of Chen's strategy since he took over the CEO role nearly three years ago. The move to software gives BlackBerry the chance to improve their margins and generate recurring revenue, says BGC Partners analyst Colin Gillis.

"The decision to outsource the last bit of smartphone manufacturing is just the final nail in their hardware business," says Gillis. "It's long been a business in decline, and their future is in software."