BlackBerry to outsource smartphones

BlackBerry built a reputation for innovative smartphone technology and in 1999 rolled out its RIM 950 allowing on-the-go wireless email. The move announced on Wednesday signals a strategic shift for the company.

The Canadian company said it will now focus on growing its software business. "We believe that this is the best way to drive profitability in the device business," chairman and CEO John Chen said in a statement on Wednesday.

All development for BlackBerry-branded phones is to be left to the company's partners, which will license its technology and brand. It plans to make the move by February 28, when the company's financial year ends.

Blackberry has signed one agreement already with a telecom joint venture in Indonesia - BB Merah Putih. The move will reduce BlackBerry's expenses by cutting out the need to carry inventory and by lowering the number of staff and reducing the amount of equipment it needs to hold.

The introduction of the iPhone in 2007 by Apple showed that phones can handle much more than email and phone calls. Blackberry was late in overhauling its operating system to compete. It now holds a small fraction of the US smartphone market. In the second quarter the company sold about 400,000 smartphones, compared to Apple selling 40 million iPhones in its most recent quarter.

BlackBerry announced this year it was killing off its Classic smartphone with a physical keyboard as part of a modernization of its lineup. It had hoped its first Android-operating smartphone launched last year would help restore the company to its former glory, but sales have been weak.

The company's revenues fell to $334 million (297 million euros) from $490 million last year.

jbh (AFP, AP)