More reports on: Telecom

Smartphone pioneer BlackBerry to no longer make handsets

29 September 2016

Two decades after it unveiled its first keyboard-equipped pager, the company that invented the smartphone is hanging up.

BlackBerry Ltd, which once captured the devotion of the world's business and political elite with its line of devices, took another massive step in its transformation into a software-first company on Wednesday, announcing that it will stop designing and manufacturing the handsets that were the foundation of its reputation for security and mobility.

The company, once known as Research In Motion, will concentrate on software for other companies' devices. While BlackBerrys will still exist, they will be made by other manufacturers that will pay royalties on the sales.

 ''We believe that the phone market is evolving into the intelligence market,'' BlackBerry chief executive officer John Chen said at the company's head office in Waterloo, Ontario. ''[It's] more about the smart of the smartphone, not the phone.''

Citing industry-wide pressures that have squeezed hardware manufacturers to razor-thin margins, Chen reflected on how far BlackBerry has fallen in just a few years from a company worth $80-billion that sold tens of millions of phones a quarter to one that brought in just $105-million in hardware-related revenue and sold only 400,000 phones in its most recent quarter. ''The volume game [in smart phones] is almost suicidal,'' Chen said.

Analysts and investors cheered the move, sending the company's stock up nearly 5 per cent on the day.

''This is an entirely sensible decision and probably an overdue one,'' IDC technology analyst John Jackson said.

BlackBerry's revenue mix is about 44 per cent for software, 30 per cent for hardware (which includes the new Radar IoT fleet tracking gear), and 26 per cent for the ever-shrinking service access fees collected for legacy BlackBerry devices.

Wednesday's moves are expected to affect fewer than 100 jobs, because much of the company's hardware-oriented staff have already been laid off. Chen said remaining engineers will move to QNX and other new business units inside the company.

''Where we are is not a spur-of-the-moment thing,'' Chen said, noting he began laying the groundwork to get out of the expensive business of designing and making the company's smartphones around the time of the release of 2015's BlackBerry Priv a device with a slide-out physical keyboard that was also the company's first phone that ran Google's Android software. As it stands, it may be remembered as the last BlackBerry-designed smartphone consumers had a chance to buy.

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