Although BlackBerry is not exiting the handset market, the firm will lower the number of smartphones it releases from four to around one or two a year. Of note, the Canadian firm announced a new round of job cuts last week, signaling its turnaround is still far from over.
Why is BlackBerry lowering handset portfolio?
BlackBerry’s renewed focus on software and security, which started after John Chen took over as the CEO, means a reduced focus on hardware where the company is struggling to up its market share. This along with constant job cuts leaves no other option for the company, but to lower the number of phones it roll out a year.
“We are reducing jobs, but it’s not so much as reducing, we are shifting it. Traditionally, we make four phones a year. We are not going to do that anymore. We are going to at least cut it down to a lot less number, maybe two, maybe one,” Chen told Fox Business last week.
On the kind of phones the Canadian firm will be making, Chen smartly noted that it will not be dirt-cheap low-end phones, acknowledging the company will not be able to compete with rivals such as Micromax and Xiaomi in the emerging markers. “The low-end phone is not BlackBerry’s sweet spot,” Chen said.
Explaining why BlackBerry stuck with making devices, Chen said many of company’s core government customers do not allow employees to bring in personal devices. But now super-secure devices such as Boeing Co.’s self-destructing smartphone will aptly replace BlackBerry if it exits the market.
Will it right to depend on software?
BlackBerry’s latest quarter report card supports Chen’s decision to cut back on smartphones. For the first-quarter, BlackBerry sold only 1.1 million devices, which is around the same level when Chen took over as the CEO in 2013.
However, reducing its devices portfolio will make BlackBerry depend more on its software revenues, majority of which comes from BES 12. However, it is unclear if clients prefer BlackBerry’s software on its own or due to its integration with the hardware.
It must be noted that BlackBerry is not alone when it comes to squeezing its smartphone portfolio. Except for Apple, all major players like Samsung, Microsoft and Sony are lowering the number of handset variants to streamline their operations.