If you thought BlackBerry could continue building hardware forever, regardless of how successful, or unsuccessful – as the case may be – that hardware was, then it appears that you would be wrong.
After moving away from its own proprietary operating system in favor of launching the BlackBerry Priv powered by Android, it seems that the company has finally reached the tipping point, and as such has called time on its hardware business altogether after a net loss of $372 million.
BlackBerry hasn’t exactly been able to hide the fact that it has a massively struggling mobile business that has been literally dwarfed into almost insignificance by the likes of Apple, Samsung, and others in recent years. Many processes and efforts have been put in place to try and resolve those issues, such as the aforementioned move across to BlackBerry hardware powered by Android, but the continual financial losses, poor sales and high device return rates have forced the company to call an end to it all.
The company’s current Chief Executive Officer, John Chen highlighted how BlackBerry will be proceeding with that change, with a great focus on outsourcing hardware development:
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 move away from hardware came alongside the announcement that the company reported a $372 million net loss on revenue of just $334 million. No longer developing and building its own hardware means that BlackBerry can also now continue to focus on its software business, which has doubled revenues year over year:
We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold. In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history.
It has been an interesting day for BlackBerry, with the financial and hardware announcements also being accompanied by the news that current Chief Financial Officer, James Yersh, has left the company for personal reasons. He is immediately succeeded by Steven Capelli, who has a pre-existing relationship with CEO Chen thanks to both individuals serving at Sybase at one time or another. It’ll be extremely interesting to see how the company performs on the back of this announcement.