BlackBerry stops making phones, to focus on software

Image: The BlackBerry logo is pictured at the BlackBerry campus in Waterloo

It’s official. BlackBerry, the Canadian company that invented the smartphone and addicted legions of road warriors to the “crackberry,” has stopped making its iconic handsets.

Finally conceding defeat in a battle it had long ago lost to Apple and Samsung Electronics, BlackBerry is handing over production of the phones to overseas partners while it turns its full attention to the more profitable and growing software business.

BlackBerry said on Wednesday it struck a licensing agreement with an Indonesian company to make and distribute BlackBerry-branded devices. More deals are in the works with Chinese and Indian manufacturers. It’s the formalization of a move long in the making, ever since Chief Executive Officer John Chen took over nearly three years ago and outsourced some manufacturing to Foxconn Technology Group. BlackBerry, based in Waterloo, Ontario, gained as much as 4.3 per cent to C$10.86 as the market opened in Toronto. It was the biggest intraday jump since July. Getting the money-losing smartphone business off BlackBerry’s books will make it easier for the company to consistently hit profitability. It will still design smartphone applications and an extra-secure version of Alphabet’s Android operating system.

“We are reaching an inflection point with our strategy,” Chen said in a statement announcing the shift as well as quarterly earnings. “Our financial foundation is strong, and our pivot to software is taking hold.”

The new strategy will improve margins and could actually increase the number of BlackBerry-branded phones sold, Chen said, as manufacturer’s license the name that still holds considerable sway in emerging markets like Indonesia, South Africa and Nigeria. Although BlackBerry’s latest phone, the DTEK50, was already almost completely outsourced, the move is a big symbolic step for a company that once reached a market value of $80 billion.

When the BlackBerry 850 was released in 1999, it married a functional keyboard with e-mail capability and essentially ushered in the modern smartphone era.

With a proprietary operating system known for its watertight security, it was an instant hit with… read full story

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