BlackBerry to outsource handsets, will halt manufacturing

BlackBerry introduced Wednesday it might halt in-house manufacturing of smartphones, marking the tip of an period for the once-dominant Canadian tech agency.

Ontario-based BlackBerry stated it had reached a deal to outsource manufacturing of its telephones to an Indonesian associate, and would as a substitute consider software program and companies.

Handsets with the BlackBerry title can be produced below license by PT Tiphone Cellular Indonesia Tbk, a press release by the corporations stated.

BlackBerry, which a decade in the past was among the many world’s largest smartphone makers, has seen its world market share slip to lower than one p.c as Apple and Android gadgets have dominated.

Because the market shifted, BlackBerry has sought to refocus on software program, together with safety purposes, and the most recent announcement takes the corporate out of the handset market totally.

“We’re reaching an inflection level with our technique. Our monetary basis is powerful, and our pivot to software program is taking maintain,” stated chief government John Chen, pointing to a doubling of software program income within the final fiscal 12 months.

“The corporate plans to finish all inner {hardware} growth and can outsource that perform to companions. This permits us to scale back capital necessities and improve return on invested capital.”

The Waterloo, Ontario-based firm has made a number of efforts lately to seek out new buyer niches as its smartphone handset gross sales continued to stagnate within the face of competitors.

It had hoped its first Android-operating smartphone launched final 12 months would assist restore the corporate to its former glory.

However gross sales had been lackluster.

Earlier this 12 months, BlackBerry introduced it was killing off its Traditional smartphone with a bodily keyboard—as soon as the workhorse of the smartphone market—as a part of a modernization of its lineup.

However the firm has continued to bleed purple, posting on Wednesday a US$372 million loss in its second quarter ending August 31.

Revenues additionally fell to US$334 million, from US$490 million throughout the identical interval final 12 months. The corporate didn’t report particulars on its smartphone shipments.

Rebooting BlackBerry

Some analysts praised the choice to get out of smartphone gross sales, at a time when the worldwide smartphone market has turned comparatively flat.

“The gadgets enterprise has been a distraction for each BlackBerry and buyers for quite a few years now,” Worldwide Knowledge Company analyst John Jackson instructed AFP.

The tip is “excellent news,” he stated, noting an uptick in BlackBerry’s inventory value in morning buying and selling.

Shares rose greater than 4 p.c to US$8.22 in New York at 11:00 am native time (1500 GMT). This value, nonetheless, stays far beneath a five-year excessive set in October 2011 of US$23.97.

Initially often known as Analysis in Movement, the corporate launched its first internet-connected gadgets within the early 2000s, and earned a devoted following of “CrackBerry” addicts.

However its luster light with the introduction of the iPhone in 2007 and the massive variety of low-costs Android handsets that adopted.

By transferring out of {hardware}, BlackBerry can concentrate on its numerous enterprise companies corresponding to messaging, cybersecurity and monitoring linked gadgets.

Jackson stated the transfer “ought to assist buyers, BlackBerry prospects, and the corporate itself focus squarely on the software program and companies enterprise which is fiercely aggressive in its personal proper, but additionally the enterprise that BlackBerry has been in all alongside.”

Nonetheless analyst Michael Walkley at Canaccord Genuity stated the brand new technique has dangers as effectively.

“We consider the lowered concentrate on {hardware} might have an hostile impression on its put in base of loyal BlackBerry {hardware} prospects, doubtlessly switching to new software program and safety options on competing smartphones over time,” he stated in a analysis notice.

© 2016 AFP