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BlackBerry to axe all internal smartphone production

Alex Yau
September 28, 2016

The news follows significant declines in smartphone shipments, down from more than 52 million in 2011 to seven million last year

BlackBerry is to cease all internal development of smartphones, instead outsourcing the manufacturing to third party companies.

The announcement was made by CEO John Chen today (September 28) as he outlined the company’s recent financials for the three months ending August 31. He confirmed the Canadian manufacturer’s mobile arm will be focused on software development instead.

Chen claimed the decision would help increase return on capital. He said: “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 production, including security and applications.”

“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 investment capital.”

BlackBerry revealed Q2 revenues of £256 million for the three months ending August 31 this year. These latest figures mark a year-on-year decline from over £376 million.

It has been manufacturing its own handsets for the last 14 years, but its performance in the area has declined recently.

In June, Chen had notably given the hardware arm of the company a year to ship at least five million handsets. He said: “The device business must be profitable because we don’t want to run a business that drags onto the bottom line. We’ve got to get there this year.”

The manufacturer, whose recent handset is the DTEK50 smartphone, held just 0.2 per cent market share last year according to Gartner. The former market leader had only sold seven million handsets in that period, a significant decline from 52.3 million in 2011. Forecasters have predicted that it would only ship 3.2 million handsets this year.

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