BlackBerry calls it quits and ends smartphone production

It's the end of an era for BlackBerry as the company announces it will outsource hardware development

Tags: Blackberry (www.blackberry.com)
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BlackBerry calls it quits and ends smartphone production The BlackBerry was popular among professionals, as it was designed for instant access to emails and was also famed for its QWERTY physical keyboard. (Getty Images)
By  Aasha Bodhani Published  September 29, 2016

After 14 years, BlackBerry has announced it will stop developing its signature smartphone.

Once-dominant in the smartphone market, BlackBerry has confirmed it will no longer manufacture the devices and instead outsource hardware development to an Indonesian company.

BlackBerry has announced an agreement with newly formed joint venture PT BB Merah Putih to license BlackBerry software and services for the production of handsets for the Indonesian market. Reports also claims deals are also in place with Chinese and Indian manufacturers.

The BlackBerry was once popular among professionals, as it was designed for instant access to emails and was also famed for its QWERTY physical keyboard. However the Canadian company has struggled against modern handsets, from the likes of Apple and Samsung.

BlackBerry had shown efforts in reinventing itself but focusing on security, as it launched the DTEK50 and called it's the world's most secure Android smartphone. Other efforts have included BlackBerry's Hub+ for Android and its IoT system BlackBerry Radar.

John Chen, the company's executive chairman and chief executive, said: "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."

Since Chen was appointed CEO, he had been pushing for a software driven strategy, including licensing its hardened version of Android and the associated secure apps, he believes this will not only improve margins but also increase the number of devices sold.

Despite ending its hardware development, BlackBerry has reported a year-on-year growth in GAAP software and services revenue for Q2 fiscal 2017, to which shares then rose in pre-market trading.

"We remain on track to deliver 30 percent revenue growth in software and services for the full fiscal year.  We are revising upward our non-GAAP EPS outlook to a range of breakeven to a five cent loss, compared to the current consensus of a 15 cent loss.  This reflects increased confidence based on improving margins and reduced interest expense from the recent refinancing of our debt, as well as planned investments in growth areas," added Chen.

BlackBerry also revealed that James Yersh, is leaving his role as chief financial officer at the end of October for personal reasons. He will be replaced by Steven Capelli, the former Sybase executive.

 

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