BlackBerry will stop in-house development of phones and outsource it to partners, as the company switches focus to software and security
The struggling company will cease on internal development of hardware, instead outsourcing it to partners. It will focus instead of security and software.
Context & Ripple Effects
This is the endgame of a retreat that began earlier: BlackBerry had already cut undisclosed numbers of device-business staff in 2015 and killed the BB10-powered Classic that July. With a $372M second-quarter loss on the books, the company is now conceding the hardware business entirely — design, manufacturing, and selling all move to partners while BlackBerry keeps the software and security assets.
The move matters because it converts BlackBerry from a phone maker into a licensor of its own brand and security stack. The related coverage shows where that road leads: by 2020, [[a:950195|TCL Communications' licensing deal ends and BlackBerry-branded phones stop being made at all]], meaning the partner-built model bought time rather than a future in handsets.
First-order effects
- BlackBerry's remaining in-house device engineers and manufacturing staff face redundancy or transfer as design, production, and sales shift to external partners who now own the capital costs and inventory risk of handsets.
- The $372M Q2 loss forces the pivot immediately: software and security become the reported growth story investors are asked to underwrite instead of unit shipments.
Second-order effects
- Partners taking on BlackBerry hardware must fund development against a shrinking installed base, which pushes them toward low-volume, niche secure devices rather than competing head-on with mainstream Android and iPhone lineups.
- BlackBerry's revenue mix tilts toward per-device licensing fees and enterprise security contracts, making its margins dependent on how many partner-built units actually ship.
Third-order effects
- If the pattern holds, legacy handset brands exit manufacturing altogether and survive as IP and security licensors — a structure the corpus already shows terminating in 2020 when TCL stops building BlackBerry phones, leaving the brand with no hardware presence.
- The episode becomes a template for distressed hardware firms: shed the factory, keep the patents and security software, and let partners absorb the commodity-device economics.
The trend: Struggling smartphone makers are converting themselves from hardware manufacturers into software-and-licensing companies, with partner-built devices serving as a bridge that eventually disappears.