After yet another unprofitable quarter, BlackBerry CEO John Chen has announced that the Canada-based company will carry the BlackBerry label in the future but rely on partners for hardware. End of an era is exiting the in-house development process, as it thought BlackBerry could continue building hardware forever, regardless of how successful, or unsuccessful. In this case, BlackBerry made it clear that it won’t be building hardware anymore and that’s what we are here to taking care about.
Given the fact after moving away from its own operating system in favor of launching the BlackBerry Priv powered by Android, it seems that the company has finally achieved the tipping point, and as such has called time on its hardware business, admitting the defeat in the business it once dominated after it yet failed to make money altogether after posting a net loss of $372 million.
Should be admitted that BlackBerry has been massively struggling with its mobile business which literally dwarfed into almost insignificance by the likes of Apple, Samsung, and others in recent years. Many processes and efforts have been put in place to try and resolve those issues, such as BlackBerry hardware powered by an open-source Android OS, but the continual financial crises, poor sales and high device return rates have damaged and forced the company to call an end to it all.
John Chen, the company’s Chief Executive Officer highlighted how BlackBerry will be proceeding with that change, with a great focus on outsourcing hardware development:
“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 move away from hardware came alongside the announcement that the company reported a $372 million net loss on revenue of just $334 million. No longer developing or building its own hardware means that BlackBerry can also now move on to focus on its software business, which has doubled revenues year over year:
“We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold. In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history.”
It has been an undeniable day for BlackBerry, with the financial and hardware announcements also being accompanied by the news that current Chief Financial Officer, James Yersh, has left the company for personal reasons. He was filled by Steeve Capelli, who has a pre-exiting relationship with CEO Chen thanks to both individuals serving at Sybase. Now that it have to be extremely interesting to see how the company performs on the back of this announcement.
Note: The company is said to manufacture, distribute and promote BlackBerry-branded devices running BlackBerry’s own secured Android software and applications. Yersh will remain with BlackBerry through October 31 and will assist with the transition.