Coverage: The end of the CrackBerry

Canada-based Blackberry Ltd. announced Wednesday that it would stop manufacturing its once-popular smartphones, once known as a CrackBerry for their addictive nature, after losing market share to Apple and others.

Ian Austen of the New York Times had the news:

Before being overtaken by iPhones from Apple, BlackBerry’s phones were so popular that they were nicknamed CrackBerry, and President Obama battled security officials to retain his BlackBerry when he took office. But the distressed Canadian company’s decision, announced on Wednesday, means the BlackBerry name will now be found only on handsets made by a group owned by phone companies in Indonesia, which has licensed the brand.

BlackBerry’s market share long ago collapsed to single digits in North America and Europe, despite the introduction of a new operating system and the company’s decision to make phones based on the Android operating system from Google.

The abandoning of the phone business that made BlackBerry a household name is a major step in a strategy begun by John S. Chen, the executive chairman and chief executive, to turn the money-losing company into a software and wireless device security business. When Mr. Chen joined BlackBerry almost three years ago, he made it clear that the fast-declining phone business was living on borrowed time.

Roger Cheng of CNET reported that the company will focus on software and services:

BlackBerry’s decision closes a significant chapter in one of the most storied franchises in the phone industry, and it puts an even higher premium on the company’s shift of focus to software and services. BlackBerry was among the high flyers in the early days of mobile phones. Legions of “CrackBerry” addicts in the white-collar workforce tapped away at its trademark physical keys in the early 2000s.

Like many other companies, BlackBerry failed to anticipate the rise of Apple’s iPhone and of phones running Google’s Android software, which knocked BlackBerry back on its heels for years. Consumers have paid little attention to its phones despite the company’s attempts to modernize the BlackBerry software and, in a last-ditch effort last year, to embrace Android.

It’s been an unstoppable descent. In 2009, BlackBerry controlled one-fifth of the phone market, just behind Nokia. Today, it holds a tiny fraction of 1 percent, according to Gartner.

On Wednesday, BlackBerry posted fiscal second-quarter results that saw it swing to a loss of $372 million, or 71 cents a share, from a year-ago profit of $51 million, or 24 cents a share. Revenue fell by a third to $334 million.

Gerrit de Vynck of Bloomberg News wrote that the company’s margins could improve:

The new strategy will improve margins and could actually increase the number of BlackBerry-branded phones sold, Chen said, as manufacturers license the name that still holds considerable sway in emerging markets like Indonesia, South Africa and Nigeria.

“This is the way for me to ensure the BlackBerry brand is still on a device,” Chen said.

Although BlackBerry’s latest phone, the DTEK50, was already almost completely outsourced, the move is a big symbolic step for a company that once reached a market value of $80 billion. Today, it’s worth about $4.3 billion.