Blackberry hardware goes RIP, but software business is thriving

Once upon a time, BlackBerry was the undisputed king in smartphone/mobile email, both in the corporate realm and on the consumer side. It’s been a long, slow death, but every once in a while, the company peeks its head out to let everyone know it still exists. This time, it seems like BlackBerry Ltd. is taking a leaf out of Google’s books as it is now focusing more on software than hardware when it comes to mobile strategy (or are they?). BlackBerry reported its second quarter financial results which revealed its new software strategy is doing well.

The company reports non-GAAP revenue of $352 million with GAAP revenue of $334 million for the second quarter of fiscal 2017. The non-GAAP revenue is derived from approximately 44 percent for software and services, 26 percent for service access fees (SAF), and 30 percent for mobility solutions.

According to John Chen, Executive Chairman and CEO of BlackBerry, its software strategy is reaching an inflection point.

“In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history. We also completed initial shipments of BlackBerry Radar, an end-to end asset tracking system, and signed a strategic licensing agreement to drive global growth in our BBM consumer business,” Chen said.

BlackBerry’s mobile strategy also falls in line with its software focus. According to Chen, its Mobile Solutions strategy, which includes a device software licensing agreement with a telecom company in Indonesia is showing signs of momentum. Chen also stated that the company will end its hardware development as it focuses more on its software strategy

“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,” continued Chen.

In closing, Chen is confident that BlackBerry will be on track to deliver 30 percent revenue growth in software and services for the full fiscal year.

Focusing on software may bode well for BlackBerry. For years, Google has partnered with the likes of Samsung, LG, HTC, Motorola, and Huawei for its Nexus line of smartphones and tablets, and focused on software, its Android mobile operating system which commands 66.87 percent of the mobile market.

Will BlackBerry be able to pull it off? It’s hard to say. Personally, I forgot they were still around.

Image source: Pixabay

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