Blackberry Announces Shut down on smartphone business

-Advertisement-

After 14 years of making handsets, BlackBerry is shutting down its phone business. Back in the days of Blackberry Bold and Curve, the company’s devices were once the phone of choice for professionals, providing emails access on the move, but BlackBerry has strained to stay shoulder to shoulder with the competition from rivals Samsung and Apple as smartphone users increasingly like touchscreens better.

Canadian company has struggled to compete with them as mobile users opt for touchscreens shifts focus to software

Competitive Threats

The company could sell out piecemeal to a bigger company like Samsung or Dell Technologies’ VMWare. Similarly, it could be the right price for a private-equity takeover for the Canadian company given its shrivelled market value. It makes no sense for BlackBerry to stay a public company, in so many ways. The most important software for blackberry at the moment is the device management suite. 

Microsoft Corporation, IBM and VMWare are taking market share by bundling them in with other business-focused software they sell despite having device management products. There is still is still a lot of competitive threats in the device management sector of the technology industry. The market is crowded despite Blackberry having acquired Good Technologies, one of its key competitors in a deal worth $425 million in 2015.  The company’s device management software helps businesses keep sensitive communication within the organisation and keep track of their employees’ phones. 

Breaking Even 

The company will still have to prove that he can continue to expand the software business in an increasingly competitive space though investors appear to be relieved that BlackBerry finally threw in the towel on handsets. Compared to what it said was a current consensus of a 15-cent loss, BlackBerry anticipates a loss of 5 cents or to hit break-even for the full year.

Revenue in the second quarter was $325 million, falling short of analysts’ projections for $390 million. Compared with analysts’ estimations for a loss of 5 cents, the company’s adjusted earnings were at break-even. Due to patent licensing deals that didn’t carry over into the quarter, software revenue was down from the previous quarter’s $266 million. Still, BlackBerry said software and services revenue more than doubled in the quarter from a year earlier to $156 million.

Keyboard Fans

BlackBerry virtually ushered in the modern smartphone era when it married a functional keyboard with e-mail capability since the BlackBerry 850 was released in 1999. They were an instant hit with business executives and heads of state alike. The devices became universal and extended the workday onto commuter trains and into restaurants and homes due to the proprietary operating system known for its watertight security.

Things started to go sideways for the company in 2007 when the iPhone debuted with its app store and a touchscreen interface. The lure of apps ultimately sent nearly all its users to devices running iOS and Android. Only a few that didn’t want to give up BlackBerry’s simplicity and physical keyboard remained.

The Continuation of the Blackberry Brand

The company is still dedicated to maintaining the blackberry brand by outsourcing its hardware services and ensure that the blackberry name is still on devices.  The move is a significant symbolic step for a company that once reached a market value of $80 billion.  The DTEK50, BlackBerry’s latest phone was already almost entirely outsourced. The company’s current work is estimated at $4.3 billion. As manufacturers increasingly license the name that still holds considerable sway in emerging markets like Nigeria, South Africa and Indonesia, this move could actually increase the number of BlackBerry-branded phones sold and improve margins. The company will still create smartphone applications and an extra-secure version of Alphabet Inc.’s Android operating system. The company is planning on making production deals with Chinese and Indian manufacturers in an effort distribute branded devices. One of the deals is actually done as BlackBerry reported that it struck a licensing agreement with an Indonesian company.

Conceding Defeat

Blackberry’s Chief Executive Officer John Chen in an attempt to make it easier for the company to consistently hit profitability decided to get the money-losing smartphone business off BlackBerry’s books. The company outsourced some manufacturing to Foxconn Technology Group. The company is turning its full resources to the more profitable and growing software business by handing over production of the phones to overseas partners. Others view this as Blackberry finally conceding defeat in a battle lost long ago to Samsung Electronics and Apple Inc.

End of an Era

The move by Blackberry Inc. to stop making handsets is hard but necessary. It is sure the end of an era in the smartphone manufacturing industry. The company will now solely focus on making software in a bid to increase revenue with the hopes that the company will regain its lost glory as a tech giant. As long as the company maintains cash on the balance sheet and keeps costs in line, it may be able to stay in business and probably rise to the helm of software production.

How to comment on this post? You must be logged into your Facebook account to drop your thoughts about this post in the comment box below;