Finally, Canadian smartphone company, Blackberry Limited, has officially announced would no longer produce smartphones, rather opted to outsource its hardware manufacturing to third-party companies.
This is not a surprise considering the gradual decline in revenue, as the firm seeks to turn its full attention to the more profitable and growing software business, an area where John Chen, Blackberry boss is believed to very active.
In a statement, Blackberry Limited Boss said: “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.”
From Nigeria perspective, Blackberry totally it’s position, as Apple, Samsung, Infinix, Tecno and other smartphone makers continue to explore the largest Africa’s mobile market.
Globally, BlackBerry was shipping up to 20 percent of all smartphones and had more than 40 percent of the smartphone OS share in the U.S., but the firm cannot boast of more than one percent.
BlackBerry shipped only 400,000 phones in its fiscal second quarter, half what it sold in the same period last year. Apple sold more than 40 million iPhones last quarter.
“This is the completion of their exit,” said Colin Gillis, an analyst at BGC Partners. “Chen is a software CEO historically. He’s getting back to what he knows best: higher margins and recurring revenue.”
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Indeed, Blackberry saw the need to diversify its portfolio, taking a bold step to admit that it was not doing well as expected in the mobile market, both in Nigeria and diaspora. Unlike a few years ago when every Nigerian so much desired the likes of Bold series and BB10.
Meanwhile, before this announcement Blackberry had thought that producing Android-powered phones would save its ass from revenue decline. The firm took a bold step to would to announce that it would no longer make B10-powered BlackBerry Classic smartphone. However, would rather focus on Android devices, thus, recording weak sales. Although, it was completely outsourced.
Earlier, Blackberry had already posited that the firm would not hesitate to hands off from producing smartphones and direct it focused on software when the Chen spoke to CNBC.
“If by September, I couldn’t find a way to get there [make a profit], then I need to consider being a software company only seriously.”
According to Chen, Blackberry is reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold.
The new strategy will improve margins and could increase the number of BlackBerry-branded phones sold, Chen said, as manufacturers license the name that still holds considerable sway in emerging markets like Indonesia, South Africa, and Nigeria.
According to Bloomberg, BlackBerry reported that software and services revenue more than doubled in the quarter from a year earlier to $156 million. Still, software revenue was down from the previous quarter’s $266 million, which Chen blamed on patent licensing deals that didn’t carry over into the quarter.
