Blackberry Quits Phone-Making In-House

blackberry-phones

Blackberry has left the business of making handsets 14 years after releasing its first product. The company confirmed this in a statement on Wednesday . . .

BlackBerry is a line of smartphones and services designed and marketed by BlackBerry Limited (formerly known as Research In Motion/RIM)

Blackberry’s manufacture of hardware, henceforth, will be outsourced to other companies. The decision stemmed from the lower than expected second quarter earnings of $352 million, which also fell short of Wall Street forecasts. John Chen, Blackberry CEO said the company’s new direction is software development, including apps and security rather than subcontracting to partners.

blackberry-ceo-john-chen-holds-the-blackberry-priv-photographer-seongjoon-cho-bloomberg

Photo: The BlackBerry Priv, which CEO John Chen is pictured holding, was introduced just last year. (Photographer: SeongJoon Cho/Bloomberg)

Reports indicate that BlackBerry has finally thrown in the towel and will no longer design and build its own phones in-house. The Canadian company has faced an onslaught of competition from Apple, Samsung and other smartphone makers. The company will start outsourcing the production of its phones to outside partners, it said on Wednesday.

This is a strategic move by Blackberry and represents BlackBerry’s efforts to reposition itself as a software company and will free up resources that were previously spent on its struggling hardware business.

In a statement, the CEO of Blackberry, John Chen 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.

We are reaching an inflection point with our strategy, our financial foundation is strong, and our pivot to software is taking hold.”

This move away from manufacturing of Blackberry phones stems from negative returns to the company. Blackberry has in recent years recorded poor sales as costumers opted for Android and iPhone devices. Again, BlackBerry phones used to be ubiquitous but fell out of favor in the last several years. The company has been trying to shift to software and services, and has seen some success, with revenue from that division more than doubling in the second quarter to $156 million.

One of the most famous Blackberry users is the U.S. President Barack Obama – who brandished his classic Blackberry phone soon after he was sworn in to his first term in the White House.

©2016 Madjack Business Report • Blackberry

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Blackberry Quits Phone-Making In-House