BlackBerry pulls plug on phones

WHEN John Chen became CEO of BlackBerry in 2013, one of his first acts was to confiscate his wife’s Samsung smartphone.

“There were a couple of parties we went to, and, when my wife brought out the Samsung, everyone kind of looked at me funny,” he once said.

This week, Chen admitted his wife had been right all along, as he announced BlackBerry was pulling out of the smartphone business. Customers in some countries will still be able to buy handsets with the BlackBerry badge, but these will be made by third-party companies that license the brand.

Chen said BlackBerry was in discussions with companies in India and China.

The decision to quit the hardware business comes after a string of failed bids to revive the company’s smartphones. At the company’s zenith in 2008, BlackBerrys accounted for one out of every five smartphone sales.

But it struggled to keep pace with competition from Apple and Samsung, and now its share of the smartphone market barely registers, at 0.1%, according to research company Gartner.

Chen joined BlackBerry as CEO at a time of existential crisis for the company and quickly slashed 4 500 jobs to try to stem its losses.

He launched a string of smartphones — from the large, square Passport to cheaper devices aimed at consumers in emerging markets — but none of them sold in meaningful quantities.

A veteran of enterprise software companies such as Sybase, which he sold to SAP for $5.8-billion (about R80.5-billion) in 2010, Chen is pinning the company’s future on the industry he knows best. In recent years, he has tried to turn the group into a software and services company, aimed at organisations that pride security above all else.

To that end, he has made a series of small acquisitions of groups such as Good Technology, a mobile security provider.

But he has some way to go before the company is a leading enterprise software group.

Although software sales jumped to $156-million in the most recent quarter, from $74-million in the same period last year, the company still generated more revenue from hardware and the fees that older BlackBerry users still pay.

Together, non-software revenue streams accounted for nearly $200-million of sales in the company’s second quarter. — © The Financial Times