BlackBerry is out of the smartphone manufacturing business.
CEO John Chen announced the new strategy as part of the Canadian company's Fiscal Q2 2017 report. While the company put more focus on software (including porting its apps to run on Android) over the last year it always retained its capability to design, manufacture and sell hardware. The hardware team was given sales target that would allow the division to run at a profit, but BlackBerry handset sales have been falling short of every target.
Time has now ran out for the hardware division, as Chen explained in the report:
"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."
BlackBerry has already followed this principle with its last handset, The enterprise-focused DTEK50 may have been running BlackBerry's software, but the hardware was a reference design by TCL (which was also used by Alcatael for its Idol 4 smartphone). A quick glance at the specifications for many Android smartphones will show similar chipsets, memory configurations, screen options, and peripherals. Low- and mid-range Android handsets are almost at commodity levels with an 'off-the-shelf' mentality to their construction. These handsets rarely rely on hardware to differentiate the manufacturers in the market, it's almost always in software.
BlackBerry will now focus on the software path that John Chen has been pushing since he took over the CEO role, include licensing its hardened version of Android and the associated secure apps. There's every chance that the BlackBerry name will continue to be found on hardware, but after the upcoming DTEK60 handset this will be through licensing the BlackBerry name, rather than handsets designed and developed directly by the Canadian company.
This should not be a revelation to those following the company - as hardware sales have fallen the software and services have grown. Chen calls this moment an 'inflexion point' in the company's history. That may be the case, but it's one he has been preparing for since taking over the CEO role in November 2013.
Hardware had its chance. From now on, BlackBerry is going to live or die in the cloud.
