BlackBerry will no longer be designing its own smartphones

BlackBerry announces plans to stop making its own phones and concentrate on security software for future growth

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BlackBerry announces plans to stop making its own phones and concentrate on security software for future growth (Source: Nandagopal Rajan)

BlackBerry has announced that it plans to stop making its own smartphones, and will outsource the job instead. The struggling Canadian smartphone maker has announced the move during the briefing of its quarter result.

“BlackBerry is not getting out of the devices business. We are simply adjusting the model for how BlackBerry devices are brought to market,” said the company in a statement.

BlackBerry, which once held the corporate smartphone segment failed to transition in the app-based smartphone era. The company failed to deliver on apps and ecosystem while enterprises switched their loyalty from BlackBerry to iPhones and Galaxy smartphones. BlackBerry has since transitioned to providing security services for other dominant platforms.

“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 CEO John Chen said in an official statement.

He added, “Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia. Under this strategy, we are focusing on software development, including security and applications.”

BlackBerry is not venturing out of the smartphone business, but it is just switching from hardware-based company to software oriented one. BlackBerry will continue outsourcing handsets from smartphone makers like TCL and Alcatel and use its own custom Android ROM with focus on security options. BlackBerry had recently launched DTEK 50 smartphone based on Alcatel Idol 4 with DTEK security suite.

“This is an entirely sensible decision and probably an overdue one. Software revenue and the margin profile associated with that is where the focus should have been, and now can be,” said IDC technology analyst John Jackson.