BlackBerry’s mobile device business is costing it billions, but the Canadian company that pioneered the smartphone is determined to stay in the game. Its latest strategy is a partnership with China’s Foxconn, best known as the manufacturer of Apple’s iPhone and iPad. The first product produced by the partnership will be a 3G phone based on the BB 10 operating system. The device will be aimed at developing markets, with plans to launch first in Indonesia.
Meanwhile BlackBerry’s North American products continue to sit on the shelves, forcing the company to take a $1.6 billion inventory charge in the fourth quarter. BlackBerry (BBRY) also took a $2.7 billion pre-tax charge against long-lived assets. Even without these charges BlackBerry would have lost money last quarter; losses totaled $4.4 billion on revenue of $1.2 billion. Revenue was down 56% from the year-ago quarter and down 24% from the previous quarter.
This is BlackBerry’s first earnings report since it brought on software veteran and turnaround specialist John Chen as CEO. Today BlackBerry said that it is now organized as four distinct business units: enterprise services, messaging (BlackBerry Messenger), devices and the QNX embedded business. Details about QNX should emerge next month, as the unit is set to unveil new technology in automotive and cloud services at CES in early January.
BlackBerry says its mobile device management business is growing, with over 30,000 BES10 commercial and test servers installed to date, up from 25,000 in September 2013. The unit claims 80,000 global enterprise customers.
The partnership with Foxconn could fit nicely with the other part of BlackBerry’s business that is growing: BBM. Many BBM users are in the same developing markets that BlackBerry could target with Foxconn-made devices. But most of these people are not using BBM on a BlackBerry device. This fall BlackBerry finally launched the very popular messaging service as an iOS and Android app. Since then the BBM user base has more than doubled, with more than 40 million new users downloading the app during the last two months. BlackBerry also has at least a dozen phone manufacturers and distributors committed to preload BBM on Android devices. So BBM alone will not be enough to enable the BlackBerry/Foxconn phone to compete with Android; the device will also need to compete on price.
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