BlackBerry has been struggling for some time to boost its productivity on smartphone but unfortunately was lacking behind. Now it has announced that it will stop making its own smartphones and will outsource it to partners. The company will now focus on its security software for future growth.
After failing to get its smartphone hardware operations back on track and reporting a net loss of $372 million for second-quarter of the financial year, BlackBerry has finally announced that it will stop its internal smartphone development, and will outsource it to its partners such as TCL and Alcatel.
Last year, CEO John Chen had hinted that if the company couldn’t find a way to turn profitable, it would exit the smartphone hardware business. While the company is exiting the hardware business, it will continue to release BlackBerry branded smartphones – but they won’t be made in-house. The company will now focus on its software business.
Software has been profitable for the company, to the tune of $29 million just last quarter but also thing to note is that BlackBerry phones aren’t disappearing altogether, though. At least not for a while. They’ll just be made by other hardware companies. In fact, they already are.
In July, BlackBerry announced the DTEK 50. Billed as “the world’s most secure Android smartphone,” it’s a device of confusing provenance. The DTEK 50 hardware isn’t BlackBerry hardware. Or, at its core, BlackBerry software either.
Instead, the body was made by Alcatel, while the brains are Android, modified to include the end-to-end security solution that amounts to BlackBerry’s best pitch in an increasingly crowded mobile space.
According to Chen, ”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. 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 added.
Before Android and iOS, BlackBerry once held the corporate smartphone segment. However, it couldn’t hold off in the current app-based smartphone era. The company made quite a few changes to its operating system and released the BB10 OS. It was one of the biggest updates with major changes, such as completely new UI and new app store, to compete with Google’s and Apple’s offering. But the platform lacked quality apps, it was buggy and always seemed to be a half-baked, work in progress software. The company even added support for Android-apps, allowing users to download and install Android-based APK files. But as the apps ran inside an emulator, the experience was not as smooth as having native apps. The hardware was not as enticing as Apple’s iPhones or Samsung’s Galaxy smartphones either.
As users moved away from BlackBerry, the company did try its hands on releasing Android-powered smartphones, loaded with its software services. The BlackBerry Priv with dual edge curved display and physical slide-out QWERTY keyboard was one of the in-house Android smartphones but failed to drive any traction for BlackBerry due to its high price. Also it was more expensive than the latest Samsung or Apple flagship smartphone. The time will judge whether Blackberry will really play smart on its software part or will roll back over to smartphones again.