BlackBerry Pulls the Plug on Smartphone Production
By Amar Bhatkhandé
After a nearly 15-year run—which is a lifetime in technology—BlackBerry announced it will no longer manufacture smartphones.
Research In Motion, as it was then known, was lauded for its innovation, such as its reputation for data security, as well as its popular QWERTY keyboard. Its popular products were seen in the hands of world leaders, celebrities and business titans. But after hitting a peak of 52.3 million smartphone sales in 2011 (more than 50% share of the global market), BlackBerry was slow to the touchscreen market and faced intense competition from juggernauts Apple and Samsung.
Once Canada’s largest company, the Waterloo, Ontario-based company had its “Waterloo” moment when BlackBerry saw its market cap fall from $83 billion to $4 billion. Smartphones sales have dropped from 600,000 units to 400,000 over the last 3 quarters.
For the 6 months ending August 31, 2016, BlackBerry reported a net loss of just over $1 billion on revenues of $734 million. For the same period last year, it had net income of $119 million on revenues of $1.2 billion. BlackBerry currently has a worldwide smartphone market share of 1%.
While for-sale rumors have surrounded BlackBerry for some time, CEO John Chen indicated he has no such plan. He also has the support of major shareholders, Fairfax Financial Holdings and Primecap Management.
Chen’s strategy is to grow BlackBerry via software development and apps, which have higher profit margins, as well as license its technology. BlackBerry software revenue in the most recent quarter more than doubled to $156 million.
|Global Smartphone Market Share (2015)|