Well, that took long enough. BlackBerry has finally realized that designing and building its own smartphones is a zero sum game when playing in the world of Apple and Samsung. The company was too slow in adapting to changing demands of the average consumer. It didn’t help that the iPhone became a status symbol and made touch work.
“The company plans to end all internal hardware development and will outsource that function to partners,” said CEO John Chen in a statement. “We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold.”
Translation? The company has been in a decade-long in the mobile market and has finally thrown in the towel. It’s been a slow, painful retreat from the consumer smartphone market. In Q2, the company managed to sell 400,000 units for 0.1 percent of the mobile market according to Gartner.
For a public company, those are horrific numbers from the once dominant Blackberry. The last BlackBerry manufactured phone will be the Priv, which was released in November 2015 and was the company’s first Android-powered device. And its last in-house Android phone.
During the launch, Chen said the company would need to sell 5 million phones annually to keep its hardware division opened. He later pushed expectations down to 3 million. Clocking 400,000 units in a quarter would barely hit the half that target and Wall Street was already not pleased.
BlackBerry Already Retreated From Consumers
The news isn’t a shock in that the company hasn’t had a direct push towards consumers for a bit now. They have pivoted towards software and its main end users. Government and enterprise customers in a push to bolster its reputation for security. Companies should stop hailing their security. It’s daring hackers to unleash hell.
BlackBerry’s Q2 financial results show the pivot. The company is highlighting new software like the BlackBerry Radar – it will provide ‘end-to-end asset tracking’ for IoT products. Another is the BlackBerry Hub+ – an Android productivity suite.
Chen is bullish on the company’s software and services division, forecasting a 30 percent revenue growth for the full fiscal year. Revenue isn’t translating to profits. Q2 saw a net loss of $372 million on $334 million in revenue.
Shuttering the smartphone division has earned the company a small vote of confidence from Wall Street. The stock is up on the news as investors always applaud cost cutting measures and BlackBerry finally waking up to it’s never going to catch Apple or Samsung in the consumer mobile market.
Still, it’s sad to see the once omnipresent BlackBerry finally throw in the towel on smartphone design and manufacturing. It was caught flat-footed by the rise of Apple and touchscreen phones and never recovered.