BlackBerry to outsource handsets, will halt production

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Visitors inspect BlackBerry section at the Mobile Show 2014 exhibition, in Dubai, United Arab Emirates, 14 May 2014.

Visitors inspect BlackBerry section at the Mobile Show 2014 exhibition, in Dubai, United Arab Emirates, 14 May 2014.

OTTAWA – BlackBerry, the Canadian firm that helped pioneer the smartphone market, said on Wednesday it will stop making handsets, outsourcing production to an Indonesian partner.

Handsets with the BlackBerry name will be produced under licence by PT Tiphone Mobile Indonesia Tbk, allowing the Canadian firm to concentrate on software and services, a joint statement by the firms said.

BlackBerry, which a decade ago was among the largest smartphone makers, has seen its global market share slip to less than one percent amid domination by Apple and Android devices.

As the market shifted, BlackBerry has sought to refocus on software, including security applications, and the latest announcement takes the company out of the handset market entirely.

"We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold," said chief executive John Chen, pointing to a doubling of software revenue in the past fiscal year.

"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 invested capital."

The Waterloo, the Ontario-based company has made several efforts in recent years to find new customer niches as its smartphone handset sales continued to stagnate in the face of competition.

It had hoped its first Android operating smartphone launched last year would help restore the company to its former glory. But sales were lacklustre.

Earlier this year, BlackBerry announced it was killing off its Classic smartphone with a physical keyboard –once the workhorse of the smartphone market – as part of a modernisation of its line-up.

But the company has continued to bleed red, posting on Wednesday a $372-million (R5,1-billion) loss in its second quarter ending August 31, and $334m in revenues.