BlackBerry focused on software, not on smartphones, CEO says
Device sales accounted for half of the company’s revenue its last fiscal year
BlackBerry Ltd. may be forced to stop making smartphones if turnaround efforts fail to gain traction, chief executive officer John Chen said in an interview Thursday.
The company could still reduce the number of models, discontinue low-end devices and focus more on professionals and government workers to bring the smartphone business back to profitability, Chen said.
“That’s the most ideal case,” Chen said. “At a certain point in time, the economics take over.”
BlackBerry’s smartphone revenue fell 31 per cent to $263 million in the most recent quarter from a year earlier.
If the current state continues for a “long time” and drags down the company’s shareholders and balance sheet, it wouldn’t be right to keep going, Chen said.
Since taking over a year and a half ago, Chen has outsourced manufacturing to several Taiwanese firms to cut costs and also allowed the Waterloo, Ont.-based company’s software to work on devices made by other manufacturers.
He’s still got a long way to go before the software business becomes dominant. Smartphones accounted for nearly half of the revenue for the company’s fiscal year that ended in February.
BlackBerry cited an average analyst estimate in its annual general meeting presentation in June that showed the device business’s proportion of revenue growing this year, even as Chen works to double software sales to $500 million.
Since joining BlackBerry, Chen’s focus has been on building and acquiring software that helps companies communicate and work securely without worrying about hackers, regardless of what kind of mobile device they’re using.
A key reason that BlackBerry’s stuck with devices is that many of its core government customers don’t let their employees use personal devices for work.
The development of other super-secure devices, like Boeing Co.’s self-destructing smartphone, could fill that gap if BlackBerry were to exit the market, Chen said.