UPDATED 00:41 EDT / SEPTEMBER 29 2016

NEWS

End of an era as BlackBerry to stop developing and making its own phones

Marking an end of an era, BlackBerry Ltd. has announced that it will stop developing and making its own phones.

The once famous phone maker’s decision to abandon the phone business follows a strategic move by the company to shift its business model towards software and security development, a strategy that had already started to deliver results for it in 2015.

BlackBerry as a name on phones though is not going to disappear completely, with the company instead allowing partners to design, build and sell branded devices to save on capital, although at this stage only one partner has signed on, Indonesia’s PT BB Merah Putih.

News of the decision to exit the phonemaking business was announced alongside BlackBerry’s second-quarter financials. The company reported revenues of $352 million, down 28 percent from the same quarter of 2015 and missing analysts predictions of $396 million.

Of those numbers, non-GAAP software and services revenue came in at $156 million. BlackBerry noted that it had around 3,000 enterprise customer wins in the quarter with approximately 81 percent of the second-quarter software and services revenue being recurring.

The loss for the quarter came in at 5 cents a share. The company revised its losses for the full year, predicting that it would lose between 5 cents a share and break-even, well ahead of market predictions of a yearly loss of 16 cents a share.

“We are reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold,” BlackBerry Executive Chairman and Chief Executive Officer John Chen said in a statement. “In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history.”

Overdue

While the passing of the once-great BlackBerry as a phone maker is a sad day for anyone who remembers its products fondly, it has been long overdue.

BlackBerry’s downfall was twofold. At first, it missed the fundamental revolution in phones that was led by the introduction of the iPhone in 2007, and then in scrambling to catch up they decided to build their own operating system at a time where the market was dividing itself between the closed iPhone iOS and the open-source Android.

The company did eventually come around to supporting Android, having launched a number of Android-powered phones, but by that stage, it was far too late for BlackBerry to regain its by now long lost market share.

Stock in BlackBerry surged 5.71 percent on the news and financial results, closing the day’s trading at $8.33 a share. Manufacturing and development of phones at BlackBerry will cease in February.

Image credit: janitors/Flickr/CC by 2.0

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