BlackBerry will no longer make its own smartphones, the product it once defined.
Before being overtaken by iPhones from Apple, BlackBerry’s phones were so popular that they were nicknamed CrackBerry. But the distressed Canadian company’s decision, announced on Wednesday, means that the BlackBerry name will be found only on handsets made by groups of phone companies in Indonesia that have licensed the brand.
BlackBerry’s market share long ago collapsed to single digits in North America and Europe, despite the introduction of a new operating system and the company’s decision to make phones based on the Android operating system from Google.
The decision to abandon the phone business that made BlackBerry a household name is a major step in a strategy begun by John S. Chen, the executive chairman and chief executive, to turn the money-losing company into a software and wireless device security business. When Chen joined BlackBerry almost three years ago, he made it clear that the fast-declining phone business was living on borrowed time.
“We are reaching an inflection point with our strategy,” Chen told a conference call for analysts on Wednesday.
BlackBerry’s initial responses to the iPhone, the handset that made software the dominant feature of smartphones, were plagued with technical bugs. The arrival of Android phones from a variety of manufacturers, most notably Samsung, rapidly accelerated the decline of BlackBerry’s phone business.
This year, Chen suggested that BlackBerry was continuing to make phones largely at the request of some of its large software customers, a group that includes branches of the U.S. military as well as law enforcement agencies.
On Wednesday’s conference call, however, he dismissed those concerns and said, while offering no detail, that other companies would provide chips and other hardware to meet those customers’ needs.
Chen said other companies had shown interest in licensing BlackBerry’s trademark and its software, but he offered no specifics or indication of whether such deals were likely.
The effect of the shutdown on BlackBerry’s financial results is unclear but it will most likely lead to a much smaller company. The company said on Wednesday that phones accounted for 30 percent of its revenue during its second quarter. Sales of about 400,000 phones generated revenue of $105 million and a loss of $8 million.
Overall, the company lost $372 million after accounting for substantial write-downs on hardware, on sales of $334 million in the quarter.
BB Merah Putih, which is led by PT Tiphone Mobile Indonesia, that country’s largest wireless carrier, will pay licensing fees and royalties to BlackBerry, Chen said.
Another of BlackBerry’s once-mighty brands also left the company on Wednesday. Chen said that the worldwide operation of BBM, the company’s once popular instant message service, was sold to another group in Indonesia.