BlackBerry to cease mobile manufacturing

Manufacturing of handsets will be outsourced to partners as it shifts its focus to software

Blackberry is set to stop manufacturing mobile handsets as it shifts its focus towards software and services.

Speaking as BlackBerry released its quarterly results, CEO John Chen said the vendor would look to outsource hardware manufacturing to partners.

BlackBerry also announced its first major software licensing agreement - a deal which will see it license its software and services for the production of handsets in Indonesia.

Chen said: "Our new mobility solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia.

"Under this strategy, we are focusing on software development, including security and applications.

"The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital."

BlackBerry reported a net loss of $372m for the three months ending 31 August, compared to a profit of $51m in the same period last year.

The vendor however saw a strong performance from its software arm, which saw 89 per cent year-on-year growth and reached revenue of $156m.

"We are reaching an inflection point with our strategy," Chen added. "Our financial foundation is strong, and our pivot to software is taking hold.

"In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company's history."

Last month BlackBerry anointed the first Platinum partners to its new partner programme, launched in May this year.

Global vice president of software Richard McLeod said at the time that the vendor would be shifting its focus futher towards software, aided by several acquisitions over the last two-and-a-half years.