BlackBerry Reveals Layoffs In Effort To Turn Around Struggling Device Business

BlackBerry said Friday it will lay off an unspecified number of employees in its device unit as part of a continued effort to make its struggling smartphone business profitable.

The layoffs come in the midst of a major push by the Waterloo, Ontario, company to stabilize its weak revenue through consolidating its device software, hardware and application businesses, according to the company.

BlackBerry did not specify to CRN how many employees would be impacted by the consolidation. The company employs about 7,000 people globally, according to its website.

[Related: Partners: The Channel Will Play A Key Role In BlackBerry's Revenue Turnaround]

"Our intention is to reallocate resources in ways that will best enable us to capitalize on growth opportunities while driving toward sustainable profitability across all facets of our business," according to a statement issued by BlackBerry. "One of our priorities is making our device business profitable. At the same time, we must grow software and licensing revenues. You will see in the coming months a significant ramping up in our customer-facing activities in sales and marketing."

Partners, for their part, remain bullish on BlackBerry products despite the layoffs, stressing that the downsizing is necessary as part of BlackBerry's overall restructuring efforts to boost sales in its smartphone business.

"The company has made some very tough decisions, taken prudent and direct action to determine their core strengths and excise the areas of the business that were not part of the recovery plan," Douglas Grosfield, president and CEO of Xylotek Solutions, a Cambridge, Ontario-based BlackBerry partner, told CRN via email. "It's not an easy or a pleasant undertaking, [it's] difficult for anyone to accomplish, and in the competitive smartphone market, the turnaround has been nothing short of remarkable.

"The latest changes simply are a result of the requirement for flexibility in an ever-changing smartphone landscape, and in line with Blackberry's stated vision for the future of the company," he added.

BlackBerry has struggled as Apple and Samsung have continued to dominate the smartphone market.

Nonetheless, BlackBerry has continued to release enterprise-targeted mobile products in 2015, launching the midrange, 4.5-inch BlackBerry Leap and, in partnership with Samsung and IBM, the SecuTablet, an ultra-secure version of the Samsung Galaxy Tab S 10.5 with BlackBerry's micro-SD card.

At the same time, the company has also staked a claim in security software for mobile users, such as its BES12 cross-security platform, which allows company management of employee devices and apps utilizing iOS, Android, Windows Phone and BlackBerry.

After posting several back-to-back losing quarters, BlackBerryeported a profit for its second quarter in March, marking a slow turnaround as it focuses on pushing security-based software bundles to entice the enterprise market.

Robby Hill, founder and CEO of HillSouth, a Florence, S.C.-based BlackBerry partner, recalled BlackBerry's layoffs in 2013, when it let go 4,500 employees. These layoffs are part of the company's efforts to become "stronger and nimbler," he said.

"I remember when the company made its first large layoffs a few years ago -- they did a great job explaining to customers and partners why and how it was only to make the company stronger and nimbler," said Hill. "This time it seems that BlackBerry is focusing its layoffs in the struggling hardware side of its business, which should lend itself to explaining to customers that the software remains the business focus."

Moving forward, BlackBerry said it will continue investing in bringing in new talent to support areas of strategic focus around software, enterprise, security and the Internet of Things.

PUBLISHED MAY 26, 2015