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BlackBerry to Outsource Design and Manufacture of Phones

Experts estimate the company grabbed less than one percent of the mobile device market in Q2.

BlackBerry has announced that it will cease designing and building its own phones, rather, will outsource the development and manufacturing to “partners,” CEO John Chen said in the company’s recent earnings release.

“This allows us to reduce capital requirements and enhance return on invested capital,” said Chen.

The company reported a fiscal second-quarter loss of $372 million, after reporting a profit in the same period a year earlier, but says its software business is strong. “In Q2, we more than doubled our software revenue year over year and delivered the highest gross margin in the company’s history,” said Chen.

The Verge reports Chen as also saying that the company is “reaching an inflection point with our strategy. Our financial foundation is strong, and our pivot to software is taking hold."

A strong software business is needed to counteract what Gartner estimates to be a dramatically low market share in mobile devices. The once-king of smart phones is said to have just 0.1 percent of the market in the second quarter, equating to sales of some 400,400 units.

BlackBerry shares have declined 15 percent since the beginning of the year.

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