BlackBerry Ltd (BBRY) Might Quit Handset Market To Focus On Corporate [Update]


BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) could, in the near future, consider about exiting the handset business in case it remains unprofitable. This revelation comes from the CEO of the company John Chen. The Canadian company is considering about expanding its corporate reach with investments, acquisitions and partnerships.

“If I cannot make money on handsets, I will not be in the handset business,” John Chen said in an interview.

Declining market share for BlackBerry

Chen is no longer willing to depend on the handsets for revenue, and if enough cash is not generated it might just stop its manufacturing altogether. The company has plans to focus more on the software business.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB), in 2009, was the leader in the smartphone market. It had a global market share of about 20% then. Within the last 5 years, things have change dramatically, in the smartphone market, with increasing competition from players like Nokia, Samsung, Apple, HTC.

In the past 5 years, the market share of BlackBerry for smartphones has fallen down to less than 2% by the end of 2013. Last month i.e. in March, the Canadian company reported a loss of $423 million for the January to March quarter. The revenues for the company fell by 64%.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) is looking forward to teaming up or investing in companies that are a part of regulated industry. Healthcare, Financial and Legal services industry are few examples of such regulated industries that require highly secure communications. The CEO expects the company to be cash flow neutral by 2015, and by 2016, it would turn profitable.

Focus on enterprise business

Chen noticed that BlackBerry’s messaging application, Blackberry Messenger, was downloaded by 20 million new users after they made it available on Apple’s IOS and Google’s Android platform, in the last month. A differentiating factor with BBM is that it facilitates text messaging and comes with no extra charges.

BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) enjoys the heritage in the space of safe and secure enterprise-grade communications platform. BlackBerry’s BES (BlackBerry Enterprise Server) platform for long has been viewed as a safe and secure platform that governments, banks and other businesses could rely upon for the confidentiality and safety of their data.

Therefore, the CEO has come up with a turnaround strategy and wants to reap maximum benefits of its secure services that protect mobile devices. It has a good base of corporate and government clients and would try to reap maximum business from them.

Update: John Chen clarified that his statement was taken out of context. The CEO clarified, ” I want to assure you that I have no intention of selling off or abandoning this business any time soon.‎ I know you still love your BlackBerry devices………Rest assured, we continue to fight. We have not given up and we are not leaving the Devices business.”