BlackBerry to stop designing its own smartphones

Image: visualspace via iStock

BlackBerry has announced that it is to stop designing and manufacturing its own smartphones in-house.

The company said it will focus on producing software whilst outsourcing hardware development to partners.

BlackBerry chief executive John Chen said in May that he would know by September whether the loss-making side of the business was going to turn around and become profitable again.

Announcing the firm’s decision, Mr Chen said: “We are focusing on software development, 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 invested capital.”

It is not yet clear when any further BlackBerry smartphones will be released, but there has been speculation over a new device when details were apparently accidentally uploaded to the company’s website.

Mr Chen did add that BlackBerry would sell more devices, including one with the physical keyboard the company was known for.

When BlackBerry launched, it was the top choice for businesses, according to The Financial Times. However, it has found itself squeezed out of the market by companies such as Apple and Samsung, which dominate today.

Analyst firm CMC Markets said that in 2013, BlackBerry had 85 million subscribers around the world. In March this year, however, this had fallen to 23 million.

The company said it sold 400,000 smartphones in the second quarter, which was fewer than in the three months prior.

Ben Wood, chief of research at analyst firm CCS Insight, said BlackBerry “lacks the scale to be competitive in devices,” adding that the company “can’t keep producing its own phones indefinitely just to serve a small subset of its clients addicted to its home-grown devices”.

Mr Wood said: “This does not come as a surprise at all – BlackBerry had made no secret of the fact that it might shut down its own phone making business.

"Pushing it out to a third party is a sensible solution but any manufacturer making BlackBerry branded devices will ultimately face the same challenges if it can achieve sufficient scale.”