BlackBerry to exit hardware business, stop making smartphones, as financial skid continues

AppleInsider

After yet another unprofitable quarter, BlackBerry CEO John Chen has announced that the company will rely on partners for hardware, will no longer design smartphones internally, and will shift to a services-only model to insure the company's survival.

"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 change in direction heralded by Chen killing the BlackBerry hardware division comes as no surprise. Chen has declared sales volume targets for hardware division profitability with the media over time, and the company has failed to meet even the most recent 3 million device mark for the Android-based Priv and other devices sold by the company over the last 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 reported a net loss overall of $372 million for its quarter that ended on August 31, compared with a year-ago profit of $51 million. Revenue fell to $334 million from $490 million posted in the same quarter of 2015.



Services generated BlackBerry revenue of $156 million, with the company claiming that 81% of it is recurring. Hardware generated $105 million in the same time period.

melgross

And yet, the stock is up 5%. Amazing!

scartart

melgross said:

And yet, the stock is up 5%. Amazing!

They have just announced to deal with an unprofitable part of their business, why wouldn't the stock go up?

SpamSandwich

I give them a year before they go belly up.

Soli

It sounds like they will still sell BB-branded devices.

thewhitefalcon

SpamSandwich said:

I give them a year before they go belly up.

Not mentioned here is that part of what BBY considers as "services" is going into full patent troll mode. That'll be quite profitable. 

jbdragon

Why does BlackBerry keep hiring IDIOTS? Anyone with half a brain would have known making Android phones was a completely dumb move!!! How does getting into a crowded Android market help you? How does giving up all control over the OS, and App store and everything else over to Google help you? It doesn't!!! I said right from the start that this was completely DUMB!!!! I did say they should have started being more Innovative like with the Passport. That was a phone completely different from everyone else. Their other dumb move was really making their old phones with higher end specs. People didn't want those old phones in the first place and is why people were fleeing, and yet they continued. I'm actually shocked they didn't drag this Android move another year before giving up. There is no real money to be made making Android phones. At this point it's pretty much a commodity. Think about it. Apple is making over 90% of the profits. Samsung is making most of what's left. Do the simple math and you can see everyone else, LG, Motorola, Sony, etc, etc, etc and fighting over scraps. Lucky if they can even break even. The ONLY real winner with Android is Google! They win no matter what. There's no money in Hardware, but in Services, Yes, in Ad's, YES!!! Google doesn't care who is making phones or if they're making a profit or not, Google still Wins. Someone disappears, there's someone else to take their place. BlackBerry will continue it looks like making dumb moves.

Soli

sog35 said:

why would someone with an Android/iOS device want to buy Blackberry software? LOL

1) BB claims they're SW is the most secure/hardened.

2) They still have physical keyboards on some devices, right?

3) They have an affection for BB.

Note: I'm not saying those are good reasons or that BBs device is more secure, but that's what you get.

SpamSandwich

thewhitefalcon said:

SpamSandwich said:

I give them a year before they go belly up.

Not mentioned here is that part of what BBY considers as "services" is going into full patent troll mode. That'll be quite profitable. 

Possibly, however I believe they've been lapped by the alternatives available to businesses and individuals. There's really no reason to pay for them when there are plenty of free identical services.

macxpress

SpamSandwich said:

I give them a year before they go belly up.

I'll second that....they cannot survive with what they're doing, or are going to do. This company is too far gone to keep its head above water for very much longer. This sounds like what people said of Apple in the mid to late 90's...but they don't have Steve Jobs coming back to save the company either. 

rob53

Soli said:

sog35 said:

why would someone with an Android/iOS device want to buy Blackberry software? LOL

1) BB claims they're SW is the most secure/hardened.

2) They still have physical keyboards on some devices, right?

3) They have an affection for BB.

Note: I'm not saying those are good reasons or that BBs device is more secure, but that's what you get.

Last I heard, BB phones with BB servers was the only system allowed for classified communications within the US government. That's why Obama still uses a BB. Until something else is approved for classified communications, meets all IPPA regulations, and meets all laws and regulations in the business and financial market, BB servers will still be used. BB servers can manage both iPhones and Android mobile devices. There has been some headway by other companies in getting government approval for their MDM systems but I don't know if any of them are approved for classified communications. Once someone else is approved, I see BB finally going away.

canukstorm

sog35 said:

LOL. Finally.

Just waiting for Microsoft to stop making Surface. 

Doubt it.  Surface revenue is growing & all rumors point to them doubling down on hardware with an iMac competitor coming in October and new Surface models Spring 2017.  Plus this interview makes it clear that MS is going after Apple with their Surface line:

http://www.patentlyapple.com/patently-apple/2016/05/microsofts-panay-makes-it-clear-surface-is-to-compete-directly-with-apple.html

clemynx

The only good think of Blackberry in the past years has been their name. Fruit names are always good.
That said, some of their last phones on their own OS were pretty good, even if the ecosystem was terrible.

applesauce007

canukstorm said:

sog35 said:

LOL. Finally.

Just waiting for Microsoft to stop making Surface. 

Doubt it.  Surface revenue is growing & all rumors point to them doubling down on hardware with an iMac competitor coming in October and new Surface models Spring 2017.  Plus this interview makes it clear that MS is going after Apple with their Surface line:

http://www.patentlyapple.com/patently-apple/2016/05/microsofts-panay-makes-it-clear-surface-is-to-compete-directly-with-apple.html

Surface is losing the battle any way you slice it.  HP makes better Windows Laptops and Apple makes better tablets and laptops.
A tablet with a fan is just ridiculous.  The Surface advantage use to be its pen but the Apple Pencil has blown that away.
I give them another year or two before they call it quits.
 
http://appleinsider.com/articles/16/07/19/despite-9-growth-microsoft-surface-sales-remain-stuck-at-around-1m-units

macxpress

canukstorm said:

sog35 said:

LOL. Finally.

Just waiting for Microsoft to stop making Surface. 

Doubt it.  Surface revenue is growing & all rumors point to them doubling down on hardware with an iMac competitor coming in October and new Surface models Spring 2017.  Plus this interview makes it clear that MS is going after Apple with their Surface line:

http://www.patentlyapple.com/patently-apple/2016/05/microsofts-panay-makes-it-clear-surface-is-to-compete-directly-with-apple.html

Microsoft is also playing with fire too...they're directly competing with other PC vendors whether they think they are or not and I have a hard time believing this is not running HP, Dell, etc the wrong way. They also have a hard time figuring out what at Apple they want to put the Surface up against. One time its the iPad (which outsells it), then its the MacBook Air (which probably also outsells it...maybe not), then its the MacBook Pro (which definitely outsells it). Once this touchscreen fad closes the surface won't be as great as they make it out to be. I see so many people (including what we buy at school here) that "think" they want a touchscreen computer and 9.9/10 times they never end up using it for much in the end (if at all). I know a few people that have them and all but one or two hates it. For something so expensive it should not have the issues it has. 

Soli

rob53 said:

Soli said:

sog35 said:

why would someone with an Android/iOS device want to buy Blackberry software? LOL

1) BB claims they're SW is the most secure/hardened.

2) They still have physical keyboards on some devices, right?

3) They have an affection for BB.

Note: I'm not saying those are good reasons or that BBs device is more secure, but that's what you get.

Last I heard, BB phones with BB servers was the only system allowed for classified communications within the US government. That's why Obama still uses a BB. Until something else is approved for classified communications, meets all IPPA regulations, and meets all laws and regulations in the business and financial market, BB servers will still be used. BB servers can manage both iPhones and Android mobile devices. There has been some headway by other companies in getting government approval for their MDM systems but I don't know if any of them are approved for classified communications. Once someone else is approved, I see BB finally going away.

I'm under the impression iOS and Androokid have been both been approved from certain HW vendors and models.

• http://federalnewsradio.com/defense/2014/10/dod-to-ramp-up-deployment-of-apple-android-smartphones/

holyone

Yeah two down (Nokia, BB), how many left ?

appex

So, these are the kids that made fun of apple iPhone when launched...

robertwalter

"Our financial foundation is strong, and our pivot to software is taking hold."

What a clown; doesn't even realize the pivot to software was forced upon them in 2007 by a black swan external event and cemented into place by dolt co-CEO's in subsequent years.

He is only a continuation of the bad management that has brought BB to having one foot in the grave and the other on a banana peel. 

coolfactor

Blackberry... "Research in Motion" ... circling down the drain.

coolfactor

applesauce007 said:

canukstorm said:

sog35 said:

LOL. Finally.

Just waiting for Microsoft to stop making Surface. 

Doubt it.  Surface revenue is growing & all rumors point to them doubling down on hardware with an iMac competitor coming in October and new Surface models Spring 2017.  Plus this interview makes it clear that MS is going after Apple with their Surface line:

http://www.patentlyapple.com/patently-apple/2016/05/microsofts-panay-makes-it-clear-surface-is-to-compete-directly-with-apple.html

Surface is losing the battle any way you slice it.  HP makes better Windows Laptops and Apple makes better tablets and laptops.
A tablet with a fan is just ridiculous.  The Surface advantage use to be its pen but the Apple Pencil has blown that away.
I give them another year or two before they call it quits.
 
http://appleinsider.com/articles/16/07/19/despite-9-growth-microsoft-surface-sales-remain-stuck-at-around-1m-units

I don't see Microsoft Surface going anywhere. They have the capital to weather the storm, and there will be enough suckers that continue financing them for years to come.