Court documents in Silent Circle, Geeksphone case reveal Blackphone maker has laid off 15% of its staff, faces uncertain future
it made less than $10 million http://www.forbes.com/... Don A. Bailey / @donandrewbailey : Security and privacy are not a products. They are core components of great products. The numbers help prove this. http://twitter.com/...
Context & Ripple Effects
The arc here runs through ownership and money: in early 2015 Silent Circle raised $50M and bought out Geeksphone's stake to take full control of Blackphone, then followed with the Blackphone 2 and Blackphone+ tablet. A year later it was re-hiring co-founder Jon Callas back from Apple. Now court filings in the very same Geeksphone relationship expose the numbers behind that expansion — under $10 million in revenue and a 15% staff cut.
The timing matters: within roughly a week of these documents surfacing, Silent Circle closed another $50M Series C, so investors doubled down just as litigation disclosed how thin the hardware business actually was. Don Bailey's framing — that security is a component of good products rather than a product itself — cuts directly at whether a dedicated secure handset can carry a company.
First-order effects
- Silent Circle sheds 15% of its staff, with the disclosure forced by active litigation against Geeksphone rather than a voluntary announcement — the worst possible channel for bad news about a privacy company.
- Revealed sub-$10M revenue confirms Blackphone hardware alone never approached scale, putting the burden of the business case squarely on the freshly closed Series C capital.
Second-order effects
- The renewed Geeksphone dispute over a JV Silent Circle already bought out signals that exiting an unhappy partnership doesn't end its costs — legal exposure now competes with R&D for the new funding.
- Rivals selling security as a feature inside mainstream devices gain the argument: a specialist handset vendor shrinking while raising rescue-scale capital is evidence for Bailey's thesis that buyers won't pay a premium for privacy hardware alone.
Third-order effects
- If the pattern holds, dedicated secure-device makers either pivot to licensing software and services or get absorbed, leaving device-level privacy to be bundled by large platform vendors.
- Litigation becoming the disclosure mechanism for private security companies' finances raises diligence stakes for later-stage investors in this category — capital will increasingly price governance and partnership history alongside technology.
The trend: Standalone privacy-hardware businesses are giving way to security embedded in mainstream platforms, with venture rounds deciding which niche vendors survive the transition.