BrandArena: BlackBerry Will No Longer Make New Phones

Thursday, 29 September 2016

BlackBerry Will No Longer Make New Phones

Having struggled to turn around its phone business, BlackBerry said Wednesday that it will stop internal development of smartphones, relying on partners for any future hardware efforts.

The Ontario-based mobile company's CEO John Chen said the firm would minimize its involvement in hardware manufacturing as it seeks to redouble its software efforts.

“The company plans to end all internal hardware development and will outsource that function to partners,” BlackBerry CEO John Chen said in a statement. “This allows us to reduce capital requirements and enhance return on invested capital.”

The company reported a net loss of $372 million, or 71 cents per share, on revenue of $334 million. Excluding certain items, the company said it essentially broke even, on adjusted revenue of $352 million. That was five cents per share better than expected, but revenue was short of the $393.75 million consensus estimate.
Chen had said BlackBerry would exit the phone business if it could not make it profitable.

The Canadian smartphone maker is not venturing out of the smartphone business, but it is just switching from hardware-based company to software oriented one. BlackBerry will continue outsourcing handsets from smartphone makers like TCL and Alcatel and use its own custom Android ROM with focus on security options. BlackBerry had recently launched DTEK 50 smartphone based on Alcatel Idol 4 with DTEK security suite.

The shuttering of BlackBerry’s hardware will not come as much of a surprise to longtime observers. BlackBerry commands less than one percent of the global market and its hardware division, which accounts for more than 65 percent of the company’s research and development expenses, is perceived widely as a drag on internal resources. Wall Street analysts projected BlackBerry’s current course would have led to consecutive losses in 2017 and 2018.

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