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BlackBerry gives up on handset design at last

Almost two decades after the first BlackBerry, the firm goes software-only, licensing its brand and designs to partners

Mobile vendors find it so hard to let go of devices – Google and Microsoft are still clinging on against all logic, but BlackBerry has finally abandoned its once-beloved handsets and will adopt a brand licensing strategy rather as Nokia has done.

Ever since John Chen took over as CEO in 2012, it has seemed probable that he would finally kill off the device business, which in recent times has even lost most of its enterprise faithful. The failure to adjust to the rise of iPhone-like handsets, and the adoption of BYOD (bring your own device) policies in many companies, helped topple the BlackBerry from its perch and it now has less than 2% market share.

Chen has clung to the business, launching a new keyboard phone, to pull on sentimental heart-strings, as well as the security-focused Priv. The bulk of the device making has been progressively cut back and outsourced, however, and now will die altogether.

Chen said in a statement: “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 first partner is Indonesian manufacturer, PT Tiphone Mobile Indonesia, which will license the BlackBerry name and make handsets for that country, one of the Canadian firm’s most successful markets in recent times. The newly formed joint venture is called PT BB Merah Putih and Chen said it had “extensive background in providing innovative mobile services to their customers, making the newly formed joint venture the perfect partner to offer trusted BlackBerry secure mobile software that is available exclusively to Indonesian customers. BlackBerry is a brand which Indonesians trust and respect.”

BlackBerry still owns some patents associated with its phones, but its main business is now in enterprise mobile software and security.

Chen added: “BlackBerry is no longer just about the smartphone, but the smart in the phone. Working with trusted partners to extend the reach and availability of our secure mobility software remains a key focus for the Mobility Solutions unit and this joint venture is just one of our next steps in making our software licensing strategy successful.”

It has been a long demise for the BlackBerry hardware, but the death knell really sounded when it tried to launch a new operating system, BB10, based on the technology it acquired from QNX. BB10 and its associated handsets failed to make a dent in the power base of Android and iOS, and after that, it was downhill all the way. Chen took over but refused to kill the hardware business – however, he steadily cut it back and in April 2015 said BlackBerry would only launch one smartphone a year.

A year later, rumors were swirling that the firm would not even do that, after disappointing sales of the Android-based Priv, and now those are confirmed. Seizing on the post-Snowden consumer market’s concerns for privacy, as well as the traditional healthy paranoia of its enterprise customers, the Priv was positioned as a hyper-secure phone. The device itself received encouraging reviews, but the high end market was always going to be a low volume venture for BlackBerry, especially as the model was priced at $700. Chen admitted in an interview earlier this year that the Priv was “too high end a product”.

“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,” admitted Chen. “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’.”

Now BlackBerry will focus wholeheartedly on its enterprise software platforms, which have gone fully cross-OS since 2014.

While it may be most associated with corporate mobile services such as messaging, device management and security, the real gold lies in big data. Former head of business services John Sim said when the cross-platform software strategy was unveiled that device management “is just a commodity, so we don’t look to make a lot of money from it. It’s important to have it, but really it’s not about managing the devices. It’s really about managing the data, the applications, the things people are doing on the devices. That’s where the secret sauce is; that’s where we are focused.”

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