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Foxconn to develop some BlackBerry phones, in wake of quarterly loss

The move marks a major change in strategy for BlackBerry

By Martyn Williams
December 20, 2013 09:51 AM ET

IDG News Service - BlackBerry is turning to Foxconn, the world's largest contract manufacturer of electronics, to jointly develop and produce some models of handset, the two companies said on Friday.

 

The deal, announced as the company reported another quarterly loss, marks a major change in strategy at BlackBerry and is the first step away from the hardware market by the struggling phone maker, which until now had developed its own devices.

Working jointly with Foxconn, the partnership will begin with joint development of a handset for the Indonesian market, said John Chen, CEO of BlackBerry, in a conference call with analysts. Indonesia is one of BlackBerry's most important markets.

The phone will be produced at a new factory Foxconn is building in Indonesia and is expected to be available in the country in March or April 2014, said Chen.

"I've already held one in my hand that runs our BB10 software," said Chen, referring to the company's latest operating system, BlackBerry 10.

But going forward, Chen said he wants to shift more design and development work to Foxconn, especially for handsets aimed at developing markets.

"We're taking advantage of their efficiencies, their parts, their ability with logistics," he said. "Over time, I'd love them to design more handsets for us and I'd just do some really cool, high-end devices."

Chen said BlackBerry's designers in North America will focus on smartphones aimed at enterprise users in the short term.

"That does not imply over the long term that we won't get ourselves back into the consumer space, but in the foreseeable future until we get our finances back on solid footing, that is what we will do," said Chen.

BlackBerry's latest financial results, which were announced alongside the Foxconn deal, show the company has a lot to do before it gets back to that solid footing.

Revenue in the September to November quarter was $1.2 billion, down 56 percent on the same quarter of 2012. The company recorded a net loss of $4.4 billion against a net profit of $9 million in the year-earlier quarter.

The figures represent a turbulent year for the company, which once ruled the mobile messaging market. The company's new BlackBerry 10 operating system received a cool response from consumer and enterprise users, who are increasingly turning to smartphones based on Apple's iOS and Google's Android operating system.

Later in the year, BlackBerry's board said it was talking with several companies regarding an acquisition of the company. Those talks ended in November when the board said it had decided to take a $1 billion loan from a consortium of companies led by Canada's Fairfax Financial Holdings and delist its stock.

Chen, former CEO of Sybase, was named to head the company at the same time.

"Going forward, we have a reasonable plan to invest, a clean balance sheet and we're strong in cash. We're no longer worrying about whether we are going to be around," Chen said Friday

Martyn Williams covers mobile telecoms, Silicon Valley and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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