BlackBerry folds on hardware business; will instead concentrate on software

BlackBerry BBM, BlackBerry Android smartphone

So it actually happened! BlackBerry has finally decided to call it quits as far as in-house production of smartphones go thereby ending an era in a niche that was dominated by the Canadian company for years.

Software and services have always been a strong point for BlackBerry and while the success in smartphones did take the Ontario-based company to new heights, launch of iPhones and Android-powered handsets effectively meant that BlackBerry couldn’t survive in this segment because of too much competition. BlackBerry revealed in a press note that it has reached a deal to outsource production of its phones to an Indonesian partner PT Tiphone Mobile Indonesia Tbk and now it will be concentrating completely on software and services.

With increased penetration of iPhones and Android-powered smartphones, there was a huge shift in the market and things didn’t go well for BlackBerry as more and more developed jumped the iOS and Android bandwagon.

BlackBerry has now realised for good that hardware isn’t its strong point and instead it needs to refocus on software, including security applications.

“We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold,” said chief executive John Chen, pointing to a doubling of software revenue in the last fiscal year. “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.”

BlackBerry tried several times to revive its smartphone business, but things never really went past the red line. After ditching its own BlackBerry OS, the Canadian firm decided to plough the Android field by releasing its first Android-operating smartphone, but that too didn’t go well and owing to lackluster sales, time had come for BlackBerry to down the curtains on its production business.

Earlier this year, BlackBerry announced it was killing off its Classic smartphone with a physical keyboard — once the workhorse of the smartphone market — as part of a modernization of its lineup.

But the company has continued to bleed red, posting on Wednesday a US$372 million loss in its second quarter ending August 31. Revenues also fell to US$334 million, from US$490 million during the same period last year. The company did not report details on its smartphone shipments.