Earlier today, BlackBerry confirmed it is to stop building its hardware in-house, as it moves toward a licensing model to cut costs. Now, we have a better idea what this may look like, as the Canadian company officially announces its first licensing partnership.
A new joint venture called “BB Merah Putih” has been set up in Indonesia, led by PT Tiphone, an affiliate of one of Indonesia’s biggest mobile carriers, Telkomsel.
BlackBerry has a track record in Indonesia, which the company says has traditionally been its biggest market for devices, as well as for usage of its BBM messaging service. Just a few months back, BlackBerry inked a deal with PT Elang Mahkota Teknologi Tbk, one of the biggest media and technology businesses in Indonesia, to expand BBM’s footprint.
As part of this latest joint venture, BB Merah Putih will “source, distribute, and market BlackBerry handsets in Indonesia,” according to a statement, and the unit will have “full access” to BlackBerry’s software smarts, including its own security-focused form of Android. The new devices will be produced locally in Indonesia, though it’s not entirely clear whether they will be made by BB Merah Putih itself or whether it’s looking for multiple third-party manufacturers to license the entire brand to. But Ralph Pini, chief operating officer and general manager at BlackBerry’s Mobility Solutions arm, did say: “We will also work with our partners to define a competitive hardware portfolio, leverage their distribution scale, and access new channels.”
Ultimately, the cost of making hardware in-house has proved too financially burdensome for BlackBerry, and with its latest Q2 financials revealing that the company made a mere $352 million in the last quarter — down by $1.3 billion in the last three years — it’s clear that software is the best route forward. And, naturally, BlackBerry is quick to affirm that software is the most important part of a phone, anyway.
“I have been in the device business for many years, and I can tell you at the end of the day, no matter the screen size, color, or form factor, what’s most important to our customers is the software,” said Pini. “Ultimately, the future of the smartphone industry is about ‘the smart’ in the phone, and less about the form factor. This plays perfectly to our robust software portfolio and positions us well for the future.”
BlackBerry’s trajectory here mirrors that of another former mobile phone giant, Nokia, which is making moves to re-enter the device realm through strategic licensing arrangements, after selling its mobile phone business to Microsoft several years back. The power of the brand is potent.
“BlackBerry is a brand which Indonesians trust and respect, and this partnership will allow us to provide the type of mobile experience that our customers have come to expect with the productivity and security that the BlackBerry brand delivers,” added Tan Lie Pin, CEO of PT Tiphone.
So, in the future, we can still expect to see new BlackBerry-branded phones in the wild, they just won’t be made by BlackBerry anymore.