BlackBerry won’t manufacture smartphones anymore, focus on software

BlackBerry Ltd. posted a 31.8% fall in its second-quarter revenue earnings, prompting it to put an end all internal hardware development including those involving smartphones. The company will now focus primarily on its software business.

The Ontario-based company, Waterloo, reported the company suffered a net loss of $372 million, or 71 cents a share, while earning a revenue of $334 million. A year ago, it reported a profit of $51 million, or 24 cents a share, on revenue of $490 million. Excluding one-time items, the company said it broke even.

“BlackBerry is not getting out of the devices business. We are simply adjusting the model for how BlackBerry devices are brought to market,” said the company in a statement.

Once among the biggest players in the handset manufacturing industry, BlackBerry failed build an app-centric ecosystem to compete with the likes of Apple’s iOS and Google’s Android. The company has since then transitioned to providing security services for other platforms.

“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,” Blackberry CEO John Chen said in an official statement.

“Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia. Under this strategy, we are focusing on software development, including security and applications,” Chen added.

Even though BlackBerry won’t be manufacturing handsets anymore, it is not completely getting out of the smartphone business. The company will simply transition from a hardware-based company to software-focused one

Reportedly, BlackBerry will continue outsourcing handsets from smartphone makers like Alcatel , TCL and use its own custom Android ROM, which boast of added security options.

Following the announcement, IDC technology analyst John Jackson said, “This is an entirely sensible decision and probably an overdue one. Software revenue and the margin profile associated with that is where the focus should have been, and now can be.”