Tag: blackberry smartphones

CEO John Chen did everything he could think of to keep them going, but has finally admitted defeat.

BlackBerry smartphones were once the “it” devices. People loved them so much they were called “crackberries.” Where we see iPhones and Samsung Galaxy phones today, the Canadian handset maker once held a tremendous segment of the market.

Since then, BlackBerry fell from its high throne and has been plummeting for years.

Industry experts have been predicting the demise of BlackBerry smartphones for quite some time. At the same time, the struggling company was determined to keep trying, particularly when John Chen took over as CEO. Chen was quoted repeatedly saying that the brand would not give up on hardware.

In a dramatic turnaround attempt, BlackBerry released one mobile phone after the next. They launched the Passport, a unique square-shaped device, and several others. They even released mobile devices based on Google’s Android operating system instead of the company’s own proprietary OS.

BlackBerry smartphones will no longer be designed, ordered or sold following this fiscal year.

In a press release, Chen announced the end of the company’s 20 year effort in the mobile hardware marketplace. The company first started in mobile devices in 1996 when it was selling two-way pagers. “The company plans to end all internal hardware development and will outsource that function to partners,” said Chen.

This announcement was made closely on the heels of its quarterly revenue report. Investors clearly saw potential in BlackBerry’s intentions to give up smartphones. Despite the notable drop in quarterly revenue, the announcement of the cessation of its hardware production and sales caused shares to climb 3 percent in premarket trading.

The company also announced that BlackBerry smartphones will continue to exist in some markets. This will occur through a royalty-collecting licensing agreement through the PT BB Merah Putih joint venture. That project is led by PT Tiphone Mobile Indonesia Tbk, the biggest wireless carrier in Indonesia. It will produce BlackBerry branded mobile phones running on Android. The mobile devices will be distributed exclusively within Indonesia. At the moment, no other market will see the sale of devices under this brand.

The brand is already struggling to return to a smartphone space that is only increasing in competition.

The attempts being made by BlackBerry to return to a level of success in the smartphone hardware business is certainly an ongoing one, but it appears that the company has been fighting an uphill battle.

Analysts from Scotia Capital are now saying that the company will be reaching a “critical juncture” in 2016.

As much as CEO John Chen has insisted that BlackBerry will not be leaving the hardware industry and while a number of highly strategic moves have been made to help ensure that its smartphones will keep heading to store shelves – and into the hands of consumers and business users – the fact is that it is continuing to lose subscribers and money. In fact, just as the analysts made their prediction, the company also revealed that it would be laying off 125 employees in Canada, in addition to 75 workers in Florida who would also be losing their jobs.

The analysts see a number of different strategic options still left for BlackBerry as this year progresses.

The Scotia Capital analysts said that there are three main strategic options that the Ontario, Canada-based company currently has within its reach. The first would be to step out of hardware while facing a one-time cost that they predict to be around $100 million (USD). The second would be to license its operating system or brand as a whole to another hardware manufacturer. The third would occur if the company’s hardware segment manages to reach profitability this year, in which case it should continue its operations.

A great deal of the decisions that will be made by the company will depend on whether or not its latest smartphone, the Priv slider mobile phone powered by Android, ends up being successful in its sales. Investors have a very close eye on whether or not that key mobile device is managing to appeal to enough consumers to make it worthwhile.

At the same time, BlackBerry has been continuing its evolution as a provider of enterprise software. It could end up spending as much as $1 billion (USD) on the acquisition of companies over the next couple of years and still manage to keep up a net cash balance of $500 million (USD) in that business.