BlackBerry on Wednesday said it would cease internal development of its hardware and will transfer that function to its partners. While the BlackBerry-branded devices will remain on the market, BlackBerry itself will focus completely on software and will not invest in development of devices. The move edges the company closer to exiting the hardware business after years of considering such a move.

“The company plans to end all internal hardware development and will outsource that function to partners,” said John Chen, CEO and chairman of BlackBerry. “This allows us to reduce capital requirements and enhance return on invested capital," continued Chen.

Less than three years ago BlackBerry inked a strategic partnership with Foxconn, under which the two companies jointly developed certain BlackBerry-branded smartphones. Foxconn then built the hardware and managed the entire inventory associated with these devices. Now, the company intends to cease all of its hardware-related R&D activities and outsource this function to others.BlackBerry will now focus on development of extra-secured versions of Google’s Android operating system (recently the company introduced its own version of Android 6.0 that is used on the DTEK50 smartphone) as well as applications with enhanced security available through its BlackBerry Hub+ service.

In addition to Foxconn, BlackBerry has worked with other hardware makers. BlackBerry’s DTEK50 smartphone released earlier this year resembles Alcatel’s Idol 4 handset developed by Chinese TCL. Therefore, right now BlackBerry has at least two partners, which can build smartphones carrying the well-known brand all by themselves. In fact, this deal with BlackBerry puts TCL into an interesting position because it now can make handsets both under BlackBerry and Palm brands (in addition to Alcatel trademark, which TCL uses for its smartphones).

Today, BlackBerry also announced its first licensing agreement with joint venture PT Merah Putih, an Indonesia-based company. Under the terms of the agreement, the latter manages production and distribution of BlackBerry-branded devices running the BlackBerry’s Android software. While it is not completely clear to which degree PT Merah Putih develops its hardware in-house (typically, such companies outsource design of their products to others), it is more than likely that the actual devices are made by an ODM, such as Foxconn or TCL.

BlackBerry has been considering an exit from the hardware business for several years now, ever since the company appointed John Chen as CEO. The head of the company has said on multiple occasions that software and security technologies are the main strength for BlackBerry and warned that the firm could drop hardware completely if this business is not profitable. As it appears, BlackBerry will cease development of its smartphones, but will allow others to do it. Therefore, BlackBerry-branded devices will remain on the market, but the company will not spend big money on their development.

Source: BlackBerry

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  • BrokenCrayons - Wednesday, September 28, 2016 - link

    Blackberry shedding hardware development is no surprise. In fact, what is a surprise is the company's desire to continue attempting to function at all rather than just shutting down. I think what'd be best for them at this point is to start offering their security features via Google Play. If they went ad-supported, they could develop Blackberry-themed SMS apps, mail, and a UI dress up for free. The company would have to be pretty small at that point, but I think the best use of the brand identity is in putting their paw print logo on Android apps.
  • Cliff34 - Wednesday, September 28, 2016 - link

    I think they should stick with what they used to be good in...create a secured device for business use. I say forget about ad-supported. Focus on building a secure system for business use then focus on marketing to Multi-national corporations. Don't go into the consumer market. Just focus on that. The niche might be small but at least it is highly profitable.
  • BrokenCrayons - Thursday, September 29, 2016 - link

    The business focus is what got them into the situation they're in now. By morphing the company into an ad-supported security app developer firm, they can implode the company's operations gracefully. There's really no good reason for businesses to use their technologies. As someone who had to deal with a BES server on a daily basis, I'd be happy to see them pursue other interests. In particular, focusing on non-data-harvesting, non-spyware applications would put them into a market where there are almost no competitors. An auto-secure app that would block a handset from logging and passing data on to Alphabet for Google's lustful creeping might be a stunning success.
  • Shadow7037932 - Thursday, September 29, 2016 - link

    No, they didn't get on board with the new fangled thing called Android. If they had made their own custom Android spinoff like all the other OEMs they probably would have been fine.
  • ddriver - Wednesday, September 28, 2016 - link

    That's right, forget the hardware and focus on the hype. You will need quite a lot of hype to make dummies pay a premium for a brand that failed to produce anything worthy for years.
  • SeleniumGlow - Wednesday, September 28, 2016 - link

    What I hoped was that Blackberry would license out their Blackberry OS to other phone manufacturers like Windows did (or does?). It was a well designed OS in my point of view.
  • melgross - Wednesday, September 28, 2016 - link

    Great idea. Win Phone is pretty much dead as well. I remember when Ballmer mocked the iPhone, saying that he would rather have Win Mobile on 80% of smartphones.
  • ImSpartacus - Wednesday, September 28, 2016 - link

    Would anyone license that from them? That might be a tough sell.

    The os could be perfectly good, but it's way too late in the game.
  • goatfajitas - Thursday, September 29, 2016 - link

    Exactly. You can't come along 3-4 years late with an OS that is as good and expect people to switch. if you are going to get people to switch it needs to be significantly better. In 2007, IOS was significantly better than Palm OS and BB OS... And it got huge. Then a few years later Android came along offering a huge feature set with many things that IOS lacked... And it got huge. Then a few years later BB OS10 came along and was up there with IOS and Android, but it really doesn't do anything the others dont. A better gesture based UI maybe but that was borrowed from Palm's WebOS in 2009, which also failed... Anyhow, BB OS10 is pretty good, but not good enough to make large amounts of people want to switch... Not even close.
  • BillBear - Wednesday, September 28, 2016 - link

    Does anybody remember when the iPhone was doomed because it didn't have a physical keyboard?

    Good times.

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