AT last, the Canadian company that invented the smartphone has stopped production of handsets. This shows admittance of defeat in a battle lost long ago to Apple and Samsung Electronics. With this development, the company said it is handing over production of the phones to overseas partners and turning its full attention to the more profitable and growing software business.Blackberry-curve Hi-Tech gathered that the move is the formalisation 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.
According to him, getting the money-losing smartphone business off BlackBerry’s books will also make it easier for the company to consistently hit profitability. The Waterloo, Ontario based company, gained as much as 7.4 per cent, its biggest intraday jump since December. The shares were trading up 3.8 per cent to C$11.18 as at last weekend in Toronto.
An analyst at BGC Partners, Colin Gillis, said, “This is the completion of their exit. Chen is a software CEO historically. He’s getting back to what he knows best: higher margins and recurring revenue.” For him, Chen should be able to execute his software strategy as long as he keeps costs in line and maintains cash on the balance sheet. BlackBerry said Wednesday it struck a licensing agreement with an Indonesian company to make and distribute BlackBerry-branded devices. It revealed that more deals are in the works with Chinese and Indian manufacturers, saying that it will still design smartphone applications and an extra-secure version of Alphabet Inc.’s Android operating system. “We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold,” said Chen, in a statement announcing the shift as well as quarterly earnings.
The new strategy, he said will improve margins and could actually increase the number of BlackBerry-branded phones sold, as manufacturers license the name that still holds considerable sway in emerging markets like Indonesia, South Africa and Nigeria.
