Plummeting Sales Forces Blackberry To Stop Phone Production

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BlackBerry, the Canadian firm that helped pioneer the smartphone market, said Wednesday it will stop making handsets, outsourcing production to an Indonesian partner.

Handsets with the BlackBerry name will be produced under license by PT Tiphone Mobile Indonesia Tbk, allowing the Canadian firm to concentrate on software and services, a statement by the firms said.

BlackBerry, which a decade ago was among the largest smartphone makers, has seen its global market share slip to less than one percent amid domination by Apple and Android devices.

As the market shifted, BlackBerry has sought to refocus on software, including security applications, and the latest announcement takes the company out of the handset market entirely.

“We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold,” said chief executive John Chen, pointing to a doubling of software revenue in the last fiscal year.

“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 Waterloo, Ontario-based company has made several efforts in recent years to find new customer niches as its smartphone handset sales continued to stagnate in the face of competition.

It had hoped its first Android-operating smartphone launched last year would help restore the company to its former glory.

But sales were lackluster.

Earlier this year, BlackBerry announced it was killing off its Classic smartphone with a physical keyboard — once the workhorse of the smartphone market — as part of a modernization of its lineup.

But the company has continued to bleed red, posting on Wednesday a US$372 million loss in its second quarter ending August 31, and US$334 million in revenues.

 

Source: Punch

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