With what sounds like poor sales of its new BlackBerry 10 phones, BlackBerry is going back to its roots. In light of yet another poor earnings report, the struggling smartphone maker said it will now narrow its focus on the enterprise market.
In advance of its earnings report next week, BlackBerry announced today that it will lay off 4,500 people and record a GAAP net operating loss of $950 million to $995 million. Most of that loss comes from an inventory charge of $930 million to $960 million for unsold phones.
Sales of its new BlackBerry 10 phones sound pretty bad, but because of the way BlackBerry records sales it’s hard to get a firm number. It said that it will record revenue for 3.7 million phones during its second quarter but that "most" of those units were older, BlackBerry 7 devices. That’s because BlackBerry 10 devices that were shipped during the quarter won’t be recognized until they are sold through to customers. During the quarter, 5.9 million phones were sold through to end customers, which includes shipments made in the first quarter, when BlackBerry 10 phones first launched. The company didn't say how many of those devices were BlackBerry 10 or BlackBerry 7.
In its newest effort to turn things around, BlackBerry said it would refocus on the enterprise and “prosumer” market, offering a package of hardware, software and services. The enterprise is what BlackBerry built its business on, when it delivered the most secure mobile email and messaging platform out there.
BlackBerry began its downhill slide when it failed to keep up with new competitors like the iPhone which people wanted to bring to work. While BlackBerry built its name on the enterprise, it seems that a renewed focus on the enterprise continues to ignore consumerization. Workers want to choose their own phones, rather than have one issued by their company.
It also risks alienating die-hard consumer BlackBerry fans in certain markets. For instance, in some markets like the U.K., BlackBerry is still a popular smartphone among consumers.
The company has been opening up a bit though in a way that could help it keep a foothold in the enterprise. Its server now supports other phones including the iPhone. The upgraded server seems to be selling relatively well; BlackBerry said that it has more than 25,000 commercial and test servers installed, up from 19,000 in July.
Also, tomorrow BlackBerry will introduce its BlackBerry Messenger service to iOS and Android devices.
The company also said it would reduce the number of devices it sells from six to four, including two on the high end and two entry-level phones.
BlackBerry only recently announced that it is looking for strategic alternatives and now says it continues to look for options.