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BlackBerry Announces Five-Year Strategic Partnership With Foxconn

By Kevin Michaluk on 20 Dec 2013 07:13 am EST
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Coinciding with today's BlackBerry earnings report, the company has also announced a strategic partnership with Foxconn on the manufacturing of BlackBerry devices. 

This is big news for a couple reasons. One, it really shows that BlackBerry under the management of new CEO John Chen is definitely committed to building new BlackBerry phones. For many months there has been a feeling (for lack of a better word) that BlackBerry could be shedding its hardware business to only focus software. It's also further evidence that BlackBerry is in it for the long haul - John Chen isn't  just looking to flip the business. This lines up with what the new CEO told us during our Q&A with him shortly after his appointment. 

The first new BlackBerry device coming out of the Foxconn partnership will be a low-cost smartphone targeting Indonesia and other fast-growing markets.

Read the press release below, and we'll follow up soon with more on what it all means.

BlackBerry Announces Five-Year Strategic Partnership With Foxconn

Companies Strike Joint Development and Manufacturing Agreement

Indonesia Targeted for First Joint Product in Early 2014
WATERLOO, ONTARIO--(Marketwired - Dec. 20, 2013) - BlackBerry Limited (NASDAQ:BBRY)(TSX:BB), a global leader in wireless innovation, announced today that it has entered into a five-year strategic partnership with Foxconn, the world's largest manufacturer of electronic products and components. The initial focus of the partnership will be a smartphone for Indonesia and other fast-growing markets targeting early 2014. 

"This partnership demonstrates BlackBerry's commitment to the device market for the long-term and our determination to remain the innovation leader in secure end-to-end mobile solutions," said John Chen, Executive Chair and CEO of BlackBerry. "Partnering with Foxconn allows BlackBerry to focus on what we do best - iconic design, world-class security, software development and enterprise mobility management - while simultaneously addressing fast-growing markets leveraging Foxconn's scale and efficiency that will allow us to compete more effectively." 

Under the partnership, Foxconn will manufacture products for BlackBerry at facilities in Indonesia and Mexico. BlackBerry will own all of its intellectual property and perform product assurance on devices through the Foxconn partnership, as it does currently with all third-party manufacturers. 

"BlackBerry is an iconic brand with great technology and a loyal international fan base," said Terry Gou, Founder and Chairman, Foxconn. "We are pleased to be working with BlackBerry as it positions itself for future growth and we look forward to a successful strategic partnership in which Foxconn will jointly develop and manufacture new BlackBerry devices in both Indonesia and Mexico for new and existing markets." 

BlackBerry will focus heavily, via internal development, on market segments where its continuous innovations in secure hardware, software and services remain critical and integral to enterprise and government customers. BlackBerry will also drive adoption of its multi-platform BBM (BlackBerry Messenger), deliver real-time, reliable and secure messaging through its Network Operations Center (NOC), and grow its enterprise mobility and mobile device management business through on-premise and cloud-based solutions for cross-platform devices as well as its own. 

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BlackBerry Announces Five-Year Strategic Partnership With Foxconn

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I think that it is too early to tell. But i think that it is worth the wait to see.

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Interesting to see how quickly people's minds shift when something is in their favor. Not talking specifically about you, but CB in general. I remember vividly how the forums would bash Apple for using Foxconn because of the cheap labor and living/working conditions, and people in the forums would take a "moral stand" against Apple.

But I guess all of those people forgot about that and because BBRY is doing it, it's okay.

Just like all the negative people on these forums that think that they are incredibly smart...

Posted via CB10

iphones have crap quality, especially the newer ones. Blackberry has always had superior build quality, whoever was their manufacturer. Now BB devices will also be built by child slave labor, with people jumping off buildings every day. Great move, new CEO...

I agree 100%. This sounds like bad news to me. Not because of the manufacturing of the devices but the conditions at Foxconn.

Posted via CB10

No one cares about the hardware quality as we see. Look at samsung: they have the worst quality. Which company is selling the most phones? Samsung.

But samsung does have the best features like their S-series apps and people love them.

Posted via CB10

No not really unless Foxconn is now making smartphones with their name on it.

If we start seeing partnerships with Chinese smartphone makers maybe

Just as my prediction. But need to make differentiation, only BB10 native device should have full security features.

Posted via CB10

Very positive announcement to compete in the low cost market segment. No, they are not leaving the hardware game!

Z10 goodness

It depends on what they consider low end. The Q5 was the most low end BlackBerry 10 device released in 2013 with its $400 price tag.

The BlackBerry Q5 is limited to 8GB system memory and no HDMI port and provided with lower quality build overall. This smartphone is not worth more than USD250.00 off-contract yet its was priced and remains priced at approximately USD100.00 above the appropriate price. Don't get me wrong I want a BlackBerry Q5 but there was no reason to go budget-class on a device priced as at mid-tier level. If BlackBerry had designed the BlackBerry Q5 to be identical to the BlackBerry Bold 9700/9780/9790 with 16GB system memory and HDMI with a trackpad and the same build quality, the original pricing would have been justified. Yes, I do miss using my BlackBerry Bold 9700 especially from the perspective of the form-factor but am happy with the advances made with BlackBerry OS 10. A BlackBerry Bold running BlackBerry OS 10 would have been killer.

IMHO probably one of the best moves they could make for the hardware business.

BlackBerry is small compared to Foxconn and I assume they managed to negotiate a resonable deal for small series production. Further more they can easily upscale and utilize the power of Foxconn's huge manufactoring facilities.

Question is still if BlackBerry has the ressources to continue development of BB10 and design some interesting hardware devices.

Mr. Chen did not mention anything about BB10 but only QNX and this is the second time he does so.

If someone asked me to make a *crazy* guess for the future of BlackBerry 10 devices, I would say

"BlackBerry will make a QNX powered Android device with added MDM and security features. The BlackBerry 10 operating system will be continue to exist as a security enhanced Android device"

I say think about it like Android.

Kit Kat is a software version of Android.

BB10 is a software version of QNX.

QNX is the OS because you'll eventually have a BB11, BB12, and (hopefully) etc etc.

And with QNX being the beast that it is, a software licensing route seems to be on the horizon. And I don't mind that. You can still have your BlackBerry device but make money with other hardware too. It's the Google approach.

I would more concider QNX is the kernel of the BB (1x) OS, because BB OS10 is more or less built on top of QNX. You can have QNX as a stand alone product.

Kit Kat (or any other Android release) is a version if Android and there is nothing you can separate.

The problem is that BB10 devices are NOT selling making both the HW and the OS business potential parts to be sold/closed.

I agree with you with regards to licensing: I have always hoped that other handset makers would license BB OS 10 as the Android market is way too crowdet and only Samsung is making money.

So you telling me you don't remember Chen saying ""...The changes we are making demonstrate our commitment to innovating for current customers who count on BlackBerry, and the new users who are just learning how powerful and compelling the BlackBerry 10 platform can be."?

Posted via CB10

Yes I am telling you that :-)

No - what I am saying is, that BlackBerry has a HUGE problem, as very few people is buying their new devices. The main issue so far, has been lack of apps and a very high initial pricing.

I am a BlackBerry partner and would love for them to succed, but they completely missed (or misunderstood the impact of) the consumerization.

It seems as they will resolve the app gap with 10.2.1 with the improved Android runtime + something I cannot share as I am under NDA. But there is a loooooooong way from that point, until they start selling enough devices and start making money.

BlackBerry can NOT stop making BB 10 devices as this removes the whole reason for BES 10 (other MDM vendors have better products for iOS and Android as well as support for Windows Phone). BBM is NOT feature complete on iOS/Android yet, so BB 10 is so far the "show off" platform.

I am not saying it will happen, but at some point Mr. Chen (or a future CEO) has to decide to keep the nonprofitable business divisions or shut them down. Until further they need to keep the HW division running because too much of their other business is depending on it.

So my prediction is, that they will cut the costs as much as possible on the BB OS development team as well as the hardware design teams and manufactoring plants (the Foxconn deal seems to show that).

Just to make my oppinion clear: I would LOVE for BlackBerry to increase sales of the handsets. I just don't believe it will happen without them licensing BB OS 10 to other manufactors. I think is it difficult to land an agreement as long as they continue to manufactor themselves.

"It seems as they will resolve the app gap with 10.2.1 with the improved Android runtime."

That is like saying I run GNU/Linux as the host operating system with the Oracle VirtualBox virtualization software just so I can ultimately run Microsoft Windows applications 90%+ of the time. The BlackBerry Android Subsystem was a mistake from the outset because it diverted development effort from BlackBerry OS 10 and it signalled to end-users and mobile applicatio developers that BlackBerry is not 100% committed to BlackBerry OS 10.

100% agree.

It seems as a "good idea" at the time, but before BB10 launched TH hoped to sell tens of millions of BB10 devices and having a huge app selection at launch was one of their strategic decisions.

It's the hen and egg: Nobody will buy BB10 devices if apps are not there and no apps are being developed if the users are not buying. If you look at it that way the Android (+HTML5 +Adobe Air) approach makes sense.

But I am all with you: Having one, single, clean development path is much, much nicer and sends a clear signal to the developers. The end users don't care that much IMHO.

I disagree, BlackBerry as it currently stands is not as competitive as it could be. It is trying and that is why the CEO is making the decision to use fox conn. When BlackBerry can sell phones for around the same price as their competitors, there will be a new business landscape.

Posted via CB10

Foxconn factory in Indonesia... hmm... I hope they (blackberry) aren't stumbled (anymore) into bureaucratic bullcrap of the country's stupid law (which consisting of corrupt officials)

Posted with my *scratched and bruised* Q10 SQN-3 from Indonesia via CB 10!

I'm curious what this new device will be. It sounds like it might be some kind of low cost device for emerging markets.

1. I guess we won't see any more posts on Crackberry forums deriding other OEMs for using Foxconn et al.

2. I think the 'low cost market' ship is already sailing, probably too little, too late. With BBM on even cheaper Android devices that are sweeping the market these days, the Indonesian and African markets are probably not the safety net they once were.

Is that the next excuse now for the too little to late thinking?

BlackBerry have had their hand in the emerging markets for a while with their os7 devices with bis

The push for low cost bb10 is what I was hoping to see in the next generation of bb10 devices.

Why is it always to little to late with BlackBerry when they're trying to improve their market share.

BBM isn't the only reason ppl buy it.

Enterprise would probably like a cheap device to give to their employees.

From what I've seen and experienced so far, low-cost Android devices are laggy and poorly built. If the new device is as good as a Curve in build quality and performs as well as a Q5, then there's a distinctive advantage over cheap Androids if BlackBerry can convey it properly.

Posted via CB10

1. low cost devices made in 2013 aren't poorly built and they run Android 4.2+ pretty well. Newer devices coming out early next year with the new Octacore Mediatek chipset will run Android 4.4 kitkat as fluidly as the Z10 can run BB10...for $150!

2. App gap is still immense, and Android app piracy in developing markets make Android platforms far more attractive than Blackberry 10.

3. BBM gets feature parity between BB10 and Android early next month. Last hurdle drops.

BlackBerry blew it with the Q5.

Considering Chen stated that for the foreseeable future, BlackBerry is pulling out of consumer hand set and will only design enterprise hand set for North America. Time to stock up on Z30 phones!

Poetry in Motion

That is a joke. Apple couldn't even spend its current cash reserves over five years. And every version of the iPhone continues to outsell the prior one. That trend has to reverse itself before Apple even stops making record profits, much less starts losing money.

I think this is a good move. Focus on the money makers and outsource the other stuff.

And since BlackBerry won't have to worry about hardware management, we may see better looking devices. The devices now aren't hideous but could be better.

The Qtr wasn't A nail in the coffin. There's still air to breathe. Chen is moving quick. He's moving and if you're not keeping up, you're gone.

I'm not going to praise his efforts as "he's the man" but I do like where the focus is - BES is what got them on the map, BBM is what got the consumer interest, and QNX is what's expanding their revenue opportunities. Sticking with the bread and butter is the way to go.

Your choice as a phone maker is use horrible manufacturers like Foxconn--as your competitors do--or get out of the phone business. This CEO apparently wants to stay in the phone business.

Posted via CB10

Apple criticized for year about using Foxconn because of poor labour standards and slavery for the most part. Apple finally moves production back to north America for that very reason. Now BlackBerry moves manufacturing to the same dive facility? Not good in my books.

Posted via CB10 on Z10|10.2.1.1055

I understand the controversy of using a company like Foxconn after hearing for years of their abuses, but Apple has not moved their manufacturing away from them. They only moved the manufacturing of Mac Pros to Austin. They haven't stopped using Foxconn from what I know.

Posted via CB10

Apple moved production to America for the Mac Pro only. iPhones and all other product lines are still produced overseas.

Foxconn: welcome to Indonesia
BlackBerry: welcome to Indonesia (you should do this earlier, people remember that once you build hardware in Malaysia while your big(gest) market is in Indonesia. You hurt many people feeling at that time). A little too late, but worth the try.

Posted via CB10

They need to take that low cost device, make it perfect and sell it to every market. It better be a $200USD device off the bat. Still, I'm liking their confidence. Hopefully they can pull this off.

Posted via CB10

I think this is a great step forward for Blackberry, this will cut it's cost of production for devices manufactured in Indonesia. However, I still wonder about the Mexico's production facilities, don't get me wrong I have nothing against Mexicans but I think it is very important for Blackberry to cut it's cost of production and outsourcing or partnerships like this is a very positive step forward.

I believe with this the Blackberry market share will slowly and surely increase again as there are plenty of people out there who would not mind trying out a Blackberry smartphone if the price is right.

As long as their high end devices are still assembled on this continent, preferably in Canada, I will keep buying them. For low cost, you have to use the same supply chain that your low cost competition uses.

Look at it this way - there is now a greater chance that working conditions at Foxconn will improve.

Posted via CB10

They will but not for consumers. Enterprise only for the foreseeable future. I don't believe we will see another BlackBerry phone available to consumers in North America.

Poetry in Motion

Ha, sounds like they are ditching the US market to me. I've only ever owned BlackBerrys but if there's no new device in 2014 this will be my last

Posted via CB10

Chen just mentioned development and manufacturing HANDSETS....

He mentioned SECURE Enterprise Environment.

He also mentioned reaching CONSUMERS...

Guys, it's not getting abandoned...

He mentioned STRONG CASH POSTION enough to achieve turnaround.

Man this guy has is figured out and is on track!!!!

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

Low cost phone with the high cost of human suffering? Foxconn's human rights abuses are legendary. If they expand their deal to manufacture phones for North America It will be time for me to reconsider my next phone purchase.

Z10 Running 10.2.1.1055 Take that Mr App Gap!

CHEN mentioned faster hardware design turnaround,
Foxconn, no more handset overstock issues, etc...

New device for Indonesia, highly competitive...

Some very HIGH END phones in pipeline...

FOUR parts units for BBRY

QNX
BBM
HANDSETS
ENTERPRISE SOFTWARE

Market aggressively, enter the market..

Instagram app... Prosumer, using BBM 90min a day, how to monetize...

Channels, partnerships... REVENUE...

JUST WOW...

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

Just that Foxconn thing doesn't sit well, hope they can clean up and sort things out for workers...

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

Yeah they installed nets on their buildings to catch all the workers who were jumping to their deaths.

Z10 Running 10.2.1.1055 Take that Mr App Gap!

CHEN on QNX during webcast....

QNX, build out already strong position,
Microkernel, machine-to-machine integration....

(looks we can have our cars talk and bridge to our berries "coming soon"...)

My name is Prem, I'm using BBM ... from my QuZe10 ...whatarhyme...

So am I to assume,next time I buy or upgrade my BlackBerry device, that it was made by a worker who is denied pretty much every right a counterpart in the west takes for granted, and where a living wage is not even an idea?

These are after all the same assholes whose solution to the high level of suicides amongst their slaves, sorry I mean workers, was to put nets outside the windows of their living quarters, never mind improving working conditions, increasing their wages and treating them like human beings instead of production units.

What will the new BlackBerry slogan " I Believe I Can Fly " instead of "Keep Moving"?!?!

Cartman says: Screw you guys I'm going home!

Foxconn should change their corporate moniker into a bastardized version of the Tyrell Corporation from "Blade Runner"..."less than human is our business"!

Cartman says: Screw you guys I'm going home!

I would like to make a suggestion. I own a blackberry Bluetooth mini speaker, and it has to be one of the best products that they came out with. With some improvement, ie, make it more weather proof, and one with a higher quality sound. They could sell a boat load of them. The clip on feature works great! Even if there was a cheaper version to gain the low cost and emerging markets.

Posted via CB10

It seems to me that BBRY realise that they are unable in current form to make a low cost ($200) phone without a radical change to the supply chain - the Foxconn partnership looks like being just that.

Let's wait and see what unfolds...

Z10 STL100-2 10.2.1.1055 DTAC 3G

Kiss the guaranteed security of BlackBerry activated against a BlackBerry Enterprise Service / Server goodbye. Once the Chinese get their mitts on the internals of these smartphones all your data belongs to Beijing.

guys... its clear, during APEC conference last October, Foxconn ceo told Reuters/media that they will open new factory in Indonesia in 2014 (on progress) seems like BB will be their first customer. Anyway ideal price range 150-200$ and should be integrated with playstore. unless no hope.

Posted via CB10

The Google Moto G is selling for $179 here in the US and it is running the latest version of Android 4.4 (or it will be in a few weeks). The price point has to be lower than the Moto G. I'm thinking a $100 to $150 is what they should target.

Foxconn is a horrible company. They have suicide nets around their building due to so many suicides because of a hopeless work conditions. China works with them and forces young educated people to work there for 10 dollars day to allow them to finish their degrees. There are lots of videos of this crap online. Really sad that good people have to suffer because people want their nice new phone every year. Give your kid an iPhone this Xmas, maybe you'll be lucky and get one without blood on it...

Posted via my Z30

Stop the whining already on where it will be made. Go protest it else where

Posted via CB10 from my BlackBerry Z10

My immediate thought is that there must be some kind of participation in the BBRY equity by Foxcon at least partly by way of sweat equity etc. I cannot think that Foxcon is committed to 5 long years for the partnership, as well as manufacturing design assistance (sounds like so) and other intangible assistance, without expecting some kind of return. BBRY is rapidly burning cash reserve and this might be one of the smart moves concocted by John Chen. At least, it has a sound of "strategic" move, not imaginable under the Heins reign.

Seems like markets are enjoying and BBRY stock is more than 7$... a good profit for those who entered at 6$ levels.. :)
And good news to push BB10 to her masses

Posted via CB10

People bitch about a low cost BlackBerry and then proceed to bitch when BlackBerry actually takes steps to correct the pricing problem. Hilarious!!!

Cue multiple threads about suicide nets, slave labor, and poor work conditions....ignoring the fact that mosy of our tech is made at such factories.....not to mention our entire clothing industry. and all those Christmas ornaments we love sooooo much.

Posted via CB10

Stupid haters.
Give blackberry a break, move the hell on and just enjoy your devices unless you have buyer's remorse, SELL THEM and BUY A BLACKBERRY! Idiots.

Posted via CB10

Now the NSA and other Government agencies will not buy the phones manufactured from Foxconn due to security issues.
And the average customers too will doubt the quality and the issue of human rights violations has always been there....
Couldn't they get *any* other manufacturer to make handsets?

Posted via CB10

1) this tie up with foxconn can only be for 1 reason and 1 reason only: cheaper phone production.

2) and for the above reason, I hate this tie up. Foxconn has been known to have exploited their workers: poor working conditions, low wages, long hours

3) will the qc remain tight? I rarely, if ever, have problems with my bb phones as compared to those using samsung and iphoneys

3 BBs in 3 years. 9000 > 9900 > Q10. send from Q10

A low-cost smartphone may not be the savior of BlackBerry... with the current price of Z10, it should be considered now as low-cost smartphone with a premium built-in OS... and yet, it is not improving BlackBerry status quo...

Mr. Chen should look deeper than "low-cost" smartphone strategy...

Posted via CB10

It's good that they are choosing Foxconn. It's probably the only manufacturer that makes electronics that are durable.

Posted via CB10