What’s-a-berry? In a world dominated by Android and iOS devices, one can easily forget about the older denizens of the smartphone ecosystem. Not too long ago Nokia once held the lead when it came to market share and BlackBerry was just behind it. But like many of the older titans, they never expected or even prepared for the years to come that would see the huge success of the iPhone and other cheaper Android-powered smartphones.
Nokia got swallowed up by Microsoft and has produced some decent phones that were largely hampered by the dead ecosystem of apps on the Windows Store. Meanwhile, BlackBerry has limped on, attempting to make itself relevant to corporate circles by touting the high level of security its devices incorporate. Then in a last ditch attempt last year, it produced the BlackBerry Priv, the company’s first Android-powered smartphone. I reviewed it and hoped it would be the saving grace of the company, but alas the BlackBerry brand was long dead in the minds of many consumers. Even more recently, they once again reaffirmed their stance on security with the DTEK50, but failed to create nothing more than ripples when it came to sales; the company reported second-quarter results that saw it swing to a loss of $372 million.
But now it looks like BlackBerry is finally letting go and putting the final nail in its smartphone business.
“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.”
– John Chen, CEO of BlackBerry.
And thus the chapter on BlackBerry’s internally built smartphone business closes as it focuses more on software development and services. However, the company still plans to commission smartphones from outside developers, with the only such partner named so far being Indonesia-based BB Merah Putih. John Chen, the CEO has long abstained from promoting the hardware side of BlackBerry since his arrival at the company and now feels its software division is strong enough to power the company when it comes to revenue.
“We remain on track to deliver 30 percent revenue growth in software and services for the full fiscal year. We are revising upward our non-GAAP EPS outlook to a range of breakeven to a five cent loss, compared to the current consensus of a 15 cent loss. This reflects increased confidence based on improving margins and reduced interest expense from the recent refinancing of our debt, as well as planned investments in growth areas.”
