Blackberry (NASDAQ:BBRY) Decides to Stop Designing Their Smartphones

52

In a major development, BlackBerry Ltd. (NASDAQ:BBRY) has decided to stop designing their iconic smartphones in-house. The company has been designing their unique phones in-house for the last 14 years.

In 1999, Blackberry was a game changer when the company’s RIM 950 let business people access their email wirelessly on-the-go.

From now on, their partner companies will be given the responsibilities of making these phones. The partners will license Blackberry’s brand and technology. Based out of Waterloo in Canada, Blackberry is now going to focus instead on growing their software business instead. It’s a strategic shift for the company that other mobile manufacturers might also emulate in the coming years.

Last May, Chen had said that they want to find out by September whether Blackberry’s hardware business was profitable.

Issuing a statement, John Chen, the chief executive and chairman, said, “We believe that this is the best way to drive profitability in the device business”. The move is likely to bring down the company’s expenses by a great deal. Equipment and staff requirements are going to be less. Blackberry will have to carry fewer inventories too.

Is It the End of the Blackberry Smartphones?

However, the company has not yet confirmed whether any more unique smartphones is going to be released soon. Chen says, “I always wanted to make sure that we keep having the iconic devices”.

Ben Wood from the CCS Insight consultancy says Blackberry cannot produce their own phones indefinitely to serve small groups of customers. The company has made no secret that they might close down their phone-making business. In fact, Chen has himself conceded in the past that they can consider closing it down if it doesn’t become profitable. In the second quarter, Blackberry could sell 400,000 smartphones, which is less than the previous three months.

The Pressure of Competition

The smartphone market has become very crowded in the last few years. Once a market leader, BlackBerry (NASDAQ:BBRY) has been struggling of late, because of growing competition. Business rivals like Samsung and Apple have come out with modern handsets that have eaten away much of the company’s dominance.

For more than a decade, Blackberry phones have been extremely popular as users just couldn’t part with them. However, Apple showed with the iPhone 2007, that phones can do much more apart from the calls and email. This led Blackberry to overhaul their operating systems so that they could compete.