After yet another unprofitable quarter, BlackBerry CEO John Chen has announced that the company will rely on partners for hardware, will no longer design smartphones internally, and will shift to a services-only model to insure the company's survival.
"The company plans to end all internal hardware development and will outsource that function to partners," said CEO John Chen in a statement about the tactical shift for the company. "Our financial foundation is strong, and our pivot to software is taking hold."
The change in direction heralded by Chen killing the BlackBerry hardware division comes as no surprise. Chen has declared sales volume targets for hardware division profitability with the media over time, and the company has failed to meet even the most recent 3 million device mark for the Android-based Priv and other devices sold by the company over the last year.
"The fact that we came out with a high end phone [as our first Android device] was probably not as wise as it should have been," Chen told Indian journalists in April. "A lot of enterprise customers have said to us, 'I want to buy your phone but $700 is a little too steep for me. I'm more interested in a $400 device.'"
BlackBerry reported a net loss overall of $372 million for its quarter that ended on August 31, compared with a year-ago profit of $51 million. Revenue fell to $334 million from $490 million posted in the same quarter of 2015.
Services generated BlackBerry revenue of $156 million, with the company claiming that 81% of it is recurring. Hardware generated $105 million in the same time period.