BlackBerry is done making smartphones, will focus solely on software now

Ailing Canadian smartphone manufacturer BlackBerry will not manufacture smartphones any more. Instead, the company will focus solely on software, something that it is already very good at. Since the information comes straight from the horse’s mouth, well, that’s all that there is to it. “The company plans to end all internal hardware development and will outsource that function to partners,” company CEO John Chen said in a statement.

There are essentially two takeaways from this piece of information. One is that, moving on there will not be any BlackBerry-made phones in the market. At the same time, this does not mean the end of BlackBerry-branded phones in the market. Essentially, BlackBerry will stop making its own phones and instead outsource the job to third-party manufacturers, something on the lines of what Google used to do with its Nexus-branded phones.

The move will “allow us to reduce capital requirements and enhance return on invested capital,” Chen added.

Also Read: DTEK50 is the Android phone BlackBerry should have launched years ago

Since BlackBerry will not make phones any more, ideally, the Priv should be its last home-built smartphone. The move isn’t very surprising though as BlackBerry has been gradually moving towards its ‘new strategic direction for mobility solutions.’ The recently launched DTEK 50 was, in fact, a re-branded Alcatel Idol 4. The company is expected to launch a successor to it, touted to be called the DTEK 60, which is again being rumoured to be a re-branded Alcatel Idol 4S.

Shifting focus towards software, at large, makes more sense for BlackBerry. If its Q2 fiscal 2017 report data is to be gone by, the company seems to be doing very well on this front. It has reported 89 per cent year over year growth in software and services revenue in Q2 2017.

“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,” Chen said.

The same however cannot be said about its hardware — smartphone — business. The Priv, although a pretty good smartphone, has been largely critcicised for its atrocious pricing. Also, many have contended that BlackBerry was a little late to join the flagship Android bandwagon as opposed to its peers. A strategy that involves focusing its efforts on refining software while outsourcing hardware job to companies like Alcatel should work well, because it reflects change and change can be good some times.