Blackberry will not be manufacturing its smartphones anymore. CEO John Chen announced company’s new strategy, according to which, the company will now be focusing on its software business.
“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.”
The company was facing a major loss manufacturing its devices. It will now be outsourcing the development and design of its smartphones. Some of the outsourcing process has already been occurred. By the end of company’s financial year, the Canadian company will completely transit its hardware business.
The company has signed a deal with Indonesia’s BB Merah Putih to manufacture, distribute, and promote its smartphones in Indonesia as it is the largest market for Blackberry’s handsets. The company has a option to distribute its smartphones outside of Indonesia but the CEO said that it is not likely to do so.
According to the company, software and services unit revenue was $156 million in its second quarter ended on August 31. While hardware unit was $105 million compared to its software business. The company also stated that 81 percent of its software revenue was recurring in the quarter, an increase from the prior quarter.
Blackberry will also be replacing its chief financial officer James Yersh with former Sybase executive Steven Capelli.
Blackberry holds a very small fraction of US smartphone market as it sold around 400,000 smartphones during the second quarter that ended August 31. Blackberry reported that it had a net loss of $372 million in those three months which is equivalent to 71 cents per share.
Blackberry will now completely focus on its software business on which John Chen has been working since he took the CEO role. Blackberry will continue to have its label on the smartphones.
