In what should not be a surprise to anyone, Blackberry CEO John Chen has announced the company will shut down its hardware division, and will shift to a software model in a bid to help the company survive. The news comes in the wake of another unprofitable quarter for the former smartphone leader.
“The company plans to end all internal hardware development and will outsource that function to partners,” said CEO John Chen in a statement about the tactical shift for the company. “Our financial foundation is strong, and our pivot to software is taking hold.”
The retargeting of the company’s focus is not surprising, considering its struggle to meet even the most modest targets for hardware sales. Blackberry’s Android-based Priv device, along with other devices sold by the company, has failed to reach any forecasted sales numbers in the past year.
“The fact that we came out with a high end phone [as our first Android device] was probably not as wise as it should have been,” Chen told Indian journalists in April. “A lot of enterprise customers have said to us, ‘I want to buy your phone but $700 is a little too steep for me. I’m more interested in a $400 device.'”
Blackberry took a $372 million overall net loss for the quarter ending August 31, compared with a year ago net profit of $51 million. The company saw quarterly revenue fall from $490 million to $334 million year-to-year. Services brought in $156 million for Blackberry during the quarter, (81% of it recurring), ahile hardware garnered only $105 million over over the same period.
The company was once a leading maker of smartphones – popular with private sector and government users – due to its ease of use and security features. The company failed to respond quickly enough to the rise of both Apple’s iPhone, and the multiple flavors of Android devices, and quickly fell from favor with both the corporate and consumer markets.