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BlackBerry's Shift To Outsourcing All Hardware Work Is Smart Move, Partners Say

The company is looking to build its business of selling security software with the help of the channel.

BlackBerry Wednesday said it will no longer do any hardware development work itself and will instead outsource the work, as the company seeks to ramp up its security software business with the help of channel partners.

The plan is to continue selling BlackBerry-branded smartphones running the company's Android software, but design and manufacturing will be outsourced to other entities, including a company in Indonesia, BlackBerry said.

"I think it's a smart move, because now they can focus on what they do best, and that's security," said Rick Jordan, director of sales and strategic alliances at Toronto-based Tenet Computer Group, a longtime BlackBerry partner. "Hardware was a good piece, but that wasn't really their business. Really their business is the 'smarts' in the smartphone."

In May, BlackBerry debuted an overhauled Enterprise Partner program focused on working with channel partners in the realm of providing secure mobile business software.

[Related: BlackBerry Revamps Enterprise Partner Program As Channels Look To Secure Mobile Business Solutions]

"At the end of the day, it's exciting times for BlackBerry," Jordan said. "It's a big ship, and it takes awhile to turn. But with the focus on security, hopefully it's a win-win for solution providers and ISVs like us."

In a statement Wednesday, BlackBerry said it "plans to end all internal hardware development and will outsource that function to partners."

"This allows us to reduce capital requirements and enhance return on invested capital," the company said in the statement.

Steven Kantorowitz, president of CelPro Associates, a BlackBerry partner based in New York, said the move by BlackBerry isn't a huge surprise given the announcement in July that the firm would stop manufacturing its Classic smartphone with a physical keyboard.

"Nobody's buying their smartphones anymore. The only thing they had was the QWERTY keyboard with Classic," Kantorowitz said.

He added, "They basically want to become the IBM of mobility, in terms of not having the machines. IBM gave up the computer business to become a software and consulting business. I think BlackBerry is modeling what they're doing on that. And IBM seems to be thriving, and I think they see that."

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