BlackBerry, the company that invented smartphones, has just announced they will no longer be manufacturing the devices after 14 years in the business.
The QWERTY-keyboard-equipped-smartphones were once the ideal choice for professionals and executives alike, but heavy competition from touch-screen rival companies, Apple and Samsung have left BlackBerry conceding their defeat once and for all. Even President Obama, who was once a very committed BlackBerry fan, has reportedly ditched his gadget for its Samsung counterpart.
According to BlackBerry, they have now allocated the phone production aspect to their overseas partners so they can direct their full attention to BlackBerry’s more growing and profitable software business. “This allows us to reduce capital requirements and enhance return on invested capital,” said John Chen, BlackBerry’s executive chairman and chief executive.
John Jackson, an IDC analyst, said the decision to cease smartphone production was entirely sensible and overdue. “Software revenue and the margin profile associated with that is where the focus should have been, and now can be,” he said. CMC Markets also agreed with the decision, but said it marked the end of an era for a “company once considered one of the world’s major smartphone vendors.”
At BlackBerry’s peak in 2013, there were 85 million subscribers, however the numbers had fallen to 23 million by March 2016. Because of the increasing performance of Android and iOS softwares, the heavy competition eventually won out.
BlackBerry lost $425 million in the last quarter, but they made a profit of $51 million at the same time last year. Their shares increased in pre-market trading following the revelation of better than expected earnings for their second quarter, and amended earning expectations for the entire year to a range of zero to five cents per share, compared with current market expectations of a 15 cent loss.
According to CMC, traders are now focusing on the 89% revenue growth their software business has achieved this year. They are optimistic about their decision and are looking forward to the evolution of the BlackBerry company.
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