Troubled smartphone maker BlackBerry said it will trim its future smartphone portfolio to four devices from six, as lacklustre sales of its Z10 device means it is set for an almost $1 billion loss in the quarter to 31 August.
The company is set to focus its efforts on the enterprise and prosumer segments, meaning the end of the BlackBerry consumer proposition – part of its business which has generated a significant chunk of its device volumes in the past.
In line with this, it will narrow its portfolio to four devices, two QWERTY and two “all-touch”, with one of each form factor for high-end and entry level customers.
Most concerning for BlackBerry, the company said it “expects to recognise hardware revenue on approximately 3.7 million BlackBerry smartphones”, of which “most” were devices powered by the ageing Blackberry 7 platform.
It said that this was “in part because certain BlackBerry 10 devices that were shipped in the quarter will not be recognised until those devices are sold through to end customers”, and that during the quarter, around 5.9 million BlackBerry smartphones were sold through to end customers, “which included shipments made prior to the second quarter and which reduced the Company’s inventory in channel”.
With “intense competition” impacting demand, the company is expecting to report a charge against “inventory and supply commitments” of $930 million to $960 million, which is “primarily attributable to BlackBerry Z10 devices”.
In line with this, and following the introduction of the BlackBerry Z30, the company intends to “re-tier” the Z10 to “make it available to a broader, entry-level audience”.
But with the Z30 being essentially an incremental upgrade to the Z10 – aside from the larger screen – it is not clear why this will be much more of a sales success than the previous device.
BlackBerry has also not provided an update on the reception received by its Q-series smartphones (Q5 and Q10), which feature QWERTY keypads.
Earlier this year, Bert Nordberg, a director of BlackBerry and the former CEO of Sony Ericsson, suggested that the company could continue as a “niche” maker of smartphones.
With it now focusing on enterprise and prosumer, and trimming its product line, this path appears to have been thrust upon it.
But this path also has some pitfalls. Firstly, BlackBerry will no longer be able to benefit from the same economies of scale associated with larger shipment volumes, and may find it is less well positioned to secure components than its rivals.
And any hope of creating a third ecosystem to rival Google’s Android and Apple’s iOS have also gone out the window, as its focus will mean lower volumes and fewer consumer users – making it a far less appealing target to developers than it was previously.