Ten years ago, BlackBerry dominated the emerging smartphone space. Its phones were characterised by a QWERTY keyboard, a feature that made them popular with enterprise audiences, and basic support for third-party “apps,” a term that was still relatively obscure. However, in 2007, BlackBerry came up against a new rival. Apple unveiled the iPhone, a product launch that many believe initiated BlackBerry’s demise.
BlackBerry never managed to respond to the iPhone. It continued to produce and market its classic QWERTY devices, failing to seriously react to the growing numbers of touchscreen smartphones being snapped up by consumers. BlackBerry launched a touchscreen phone in 2008, the BlackBerry Storm, but it received poor reviews and didn’t attract the same attention as the all-new iPhone.
BlackBerry’s next touchscreen phone came in 2010. The BlackBerry Z10 included a new interface designed specifically for touch. By this point, the winds of change were already firmly against BlackBerry, however. The iPhone and devices running Google’s Android had already firmly established themselves, gaining mass connotation with the term “smartphone” in the process.
In the same year, Microsoft launched Windows Phone 7. The platform never became popular but further cemented the decline of BlackBerry’s mobile business. Next to the shiny interfaces of iOS, Android and Windows Phone, BlackBerry’s OS was presented as an aging ecosystem barely holding itself together on new phones.
The company took three years to rebuild its software, finally launching its all-new BB10 operating system in January 2013. Six years after the original iPhone, both Apple and Google had already convinced most consumers to switch to their modern, feature-filled ecosystems.
Since then, BlackBerry has launched only a handful of smartphones. It has failed to attract app developers to its proprietary operating system and fallen out of favour with most consumers. The company’s strong security software has been its saving grace, enabling BlackBerrys to remain the handsets of choice in sensitive corporate and government environments.
In October 2015, BlackBerry tried to resurrect itself with the launch of its first Android-powered smartphone, the Priv. A flagship device with a $700 price tag, the Priv failed to meet internal sales targets and received mixed reviews. Critics noted that build quality and camera performance were lacking from such a high-end device. BlackBerry CEO John Chen later admitted the phone was too expensive and the wrong device to launch.
Fast forward almost a year later and BlackBerry has launched just one more phone since, the security-minded DTEK50. The company has been unable to make its mobile business financially viable. Poor sales and lack of consumer and developer interest have forced the company to withdraw from the industry, the final blow for what was once a pioneer and world leader in smartphones.
In a statement today, BlackBerry said it is pursuing a new “strategic direction” for its mobile business. Instead of building phones itself, it will outsource all hardware development to external companies. Its name may still appear on devices but the company will have no involvement in their creation.
“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,” said BlackBerry CEO John Chen. “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.”
The DTEK50 was the first hint at BlackBerry’s move to outsourcing its phone business. The device is actually a rebranded Alcatel Idol 4. BlackBerry has hardly altered the hardware, except to add its own logo. Instead, it has concentrated on expanding Android with the security features it is famed for, an approach that it will continue to use going forward.
BlackBerry’s departure from smartphones is far from unexpected. Chen has previously said he would exit the market if the Priv and DTEK50 failed to become popular. He is now following through on that statement, allowing BlackBerry to concentrate on what it does best in today’s market without the huge losses associated with its smartphone business.
For consumers, it’s the end for one of the most successful phone companies to date. It follows Finland’s Nokia in falling victim to the transition to smartphones, a phenomenon that the two pioneering companies were largely responsible for creating.
