BlackBerry hits reset button



After reporting a $4.4 billion third-quarter loss Friday, BlackBerry said it will focus on developing software and offload much of its hardware production on the technology industry giant Foxconn.

“BlackBerry has established a clear roadmap that will allow it to target a return to improved financial performance in the coming year,” the smartphone maker’s interim chief executive, John Chen, said in a statement.

It’s been a rocky few months for the once-dominant firm, which abandoned plans to go private and replaced its executive team, including its CEO, in the aftermath of a failed attempt to reclaim ground in the consumer smartphone market against Apple and Samsung.

BlackBerry’s strategy is smart and leverages the firm’s reputation for security that comes embedded in its software, analysts said. But it is a drastic departure for the company, which has traditionally touted its hardware, even opting to change its name from Research in Motion to BlackBerry this year to show its commitment to its flagship phones.

Now, that center has shifted.

“It’s not a business of devices first and software to support them,” said Charles Golvin, an independent technology analyst. “The strategic focus today and going forward is to re-emphasize the core value that BlackBerry software delivers.”

In a call with investors, Chen said that more of BlackBerry’s software might soon show up on competitors’ devices.

“I would love to find a way to make our BlackBerry experience work on Apple’s iOS and Google’s Android operating systems,” he said.

BlackBerry isn’t getting out of the hardware game altogether. Under its deal with Foxconn, the Taiwanese firm will make BlackBerry phones for overseas customers, with a particular emphasis on emerging smartphone markets where the Canadian firm still has strong brand loyalty. BlackBerry said it will retain design control and make sure that the phones that bear its name meet its quality standards.

Entering into a partnership with Foxconn also allows the firm to reduce costs without running afoul of foreign ownership concerns raised by the Canadian government this year. Canadian officials rejected Chinese-based Lenovo’s proposal to buy BlackBerry in October, the Toronto Globe and Mail reported, citing national security concerns.

BlackBerry plans to open factories in Indonesia and Mexico, which will get the firm closer to its most devoted customers and the world’s fastest-growing smartphone markets, said Ramon Llamas, a mobile researcher for International Data Corp.

“They’re stationed close to some of the key markets where they want to be deeply entrenched,” Llamas said.