Gerrit De Vynck, Bloomberg:
Finally conceding defeat in a battle lost long ago to Apple Inc. and Samsung Electronics Co., BlackBerry is handing over production of the phones to overseas partners and turning its full attention to the more profitable and growing software business. It’s the formalization of a move in the making since Chief Executive Officer John Chen took over nearly three years ago and outsourced some manufacturing to Foxconn Technology Group. Getting the money-losing smartphone business off BlackBerry’s books will also make it easier for the company to consistently hit profitability.
According to their Q1 2017 results — which were released in June because BlackBerry’s fiscal years are bizarre — their revenue in software services increased by $29 million compared to the year-ago quarter, while revenue from hardware sales and service access fees1 declined by $117 million and $146 million, respectively. Reduced manufacturing costs is how another fruit-themed company helped stem its losses, too.
BlackBerry said it struck a licensing agreement with an Indonesian company to make and distribute branded devices. More deals are in the works with Chinese and Indian manufacturers. It will still design smartphone applications and an extra-secure version of Alphabet Inc.’s Android operating system.
BlackBerry phones — and BBM, their proprietary messaging app — are still fairly popular in Indonesia. However, the iPhone is a significant status symbol there, and their middle class is growing (along with a rapid rise in inequality). If those projections remain accurate, the market for BlackBerry will be eaten up by iPhones and Android phones within just a few years. Maybe BlackBerry can make a comeback, but I doubt it.
Update: Three of the best journalists in tech have compiled a short list of reasons why BlackBerry has struggled with its hardware sales these past few years.
Service access fees apply only to older BlackBerry phones, not their BB10 or Android models. ↩︎