CEO John Chen of Blackberry has announced that the company would no longer be making phones first hand, but will move to outsource its hardware manufacturing to third-parties.
In his statement;
“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,” said Chen,. “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.”
He repeated his assertion earlier this year, when he said to 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.”
Once a major force in the mobile phone realm, BlackBerry has been struggling in the hardware market for a while. In 2007, when it was known as Research in Motion (RIM), BlackBerry saw its share value peak at $236. In recent times, that figure has hovered at around the $7 mark.
In 2009, it was shipping up to 20 percent of all smartphones globally, and claimed more than 40 percent of the smartphone OS share in the U.S., but recently those numbers have fallen to less than one percent.
“We are reaching an inflection point with our strategy,” added Chen, in a statement that evidently sought to bury the biggest news in the company’s history. “Our financial foundation is strong, and our pivot to software is taking hold. In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history. We also completed initial shipments of BlackBerry Radar, an end-to end asset tracking system, and signed a strategic licensing agreement to drive global growth in our BBM consumer business.”
This news comes two months after BlackBerry revealed it would no longer make B10-powered BlackBerry Classic smartphone, but would rather focus on Android devices. Despite reports of weak sales of its first Android smartphone, BlackBerry Priv, reports surfaced in June came out that the it was working on three new Android handsets. The first of these follow-up Android phones officially came to light in July, with the mid-range DTEK50 which launched in eight countries.
While it might not be making it’s phones firsthand anymore, it will continue production using the services of external bodies to make its hardware. Nevertheless, this is a major turning point not just in the company’s history, but across the entire mobile phone industry.
Source: venturebeat.com