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Research In Motion consolidating manufacturing in the shift towards BlackBerry 10

Celestica
By Chris Umiastowski on 18 Jun 2012 04:06 pm EDT
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For many years now, Celestica, the Canadian contract manufacturer (CM) with operations all over the world, has been a manufacturing partner with Research In Motion.  For a few years Celestica wouldn't actually make hardware for RIM, but they'd act as a fulfillment center by loading in the carrier-specific OS, packaging up everything into the right box and shipping it off to retail locations in the USA.  

Then, as RIM grew, it expanded its base of contract manufacturers to include Celestica.  For a while, RIM manufacturing made up a significant chunk of Celestica's revenue.  

Today Celestica announced that it will be winding down BlackBerry manufacturing over the next few months.  This is a clear sign that RIM's operational team has decided to consolidate its manufacturing under fewer CMs.  

I remember following RIM in the early days.  They had two form factors - the pager style and the QWERTY PDA style.  That was it.  They had 4 models because they produced each for factor on two networks (DataTAC and Mobitex).  

Then, from 2000 to 2007 we saw RIM expand with so many carriers, in so many markets.  They launched all sorts of form factors from QWERTY to flip phones to candy bar (Pearl) to all-touch (Storm) to slider (Torch).  They had multiple flavors of each (Bold at the high end, Curve below it).  They had CDMA and GSM versions.  

RIM was a company that produced a device variation if the sales guys believed a carrier customer would put in an order for it.  That's how product variations were decided upon at RIM.  

Today the company is starting over by re-writing all of its core apps on BlackBerry 10.  And while they're at it I hope they massively consolidate the number of products they offer to only a few.  

Assuming this is what they're doing, they have no need for so many different contract manufacturing partners.  

I remember them using Celestica, Jabil, Wistron, Flextronics, and Elcoteq.  I'm not saying they used all 5 manufacturers at the same time, but I do believe they were using at least 4 at any given point, along with their own NPI (new product introduction) manufacturing lines in the Kitchener-Waterloo area.

RIM's entire management team has been overhauled.  Everything about the company is starting to change.  There is no logical reason for RIM to need so many manufacturers.  I'm not surprised in the least to see Celestica dropped from the manufacturing strategy.

Nothing against Celestica, of course.  They're a fantastic and well-run company.  But when these consolidations happen, you naturally drop the contract manufacturer who's footprint of factories doesn't line up with your needs, or the one who is least flexible on pricing.

Reader comments

Research In Motion consolidating manufacturing in the shift towards BlackBerry 10

51 Comments

RIM cut down on manufacture because it will concentrate on only a few model of phones. It will concentrate more on the software side(BB10).

I hope they end up back with only 2 or 3 handset types/styles. Devs need a break and BB 10 is a great start. Too many choices on the BB OS platform.

Anyone that wants to see RIM go down, does not see all the work they have been giving the industry all these years. While scaling down is a stark and needed reality of the new RIM, it is hopeful that RIM will operate leaner, meaner and still maintain high quality devices and software until the bleeding stops and the profit grows with BlackBerry 10.

Canadians buy RIM because they are well "Canadian' + they like BB phones. If they continue to move manufacturing and other stuff out of the country don't you think that could hurt RIM's Canadian image.

Some of BB7 is doing in Raleigh, North Carolina and growing.
Manufacturing is done in Taiwan and China
I believe i read somewhere that they are expanding there service in Florida.

Canada and the UK are there rocks basically for high end devices. If people buy because it's Canadian and they are moving away from that then doesn't that hurt RIM more in the end?

I didn't buy my Torch9800 because it's a Canadian company that built it. A lot of the people I work with have either Apple or Android products and we're all Canucks. Apple has proven that it doesn't matter where you manufacture your product (China) as long as you can give people a product they want to use

You are 100% right plafayette. I think there are actually advantages to manufacturing your product in China as it would give you a much higher profit margin on the lower end devices such as the Curves. In addition, the Chinese market is HUGE and everyone is battling it out there, using Chinese labor certainly doesn't hurt your chances in doing business in that country.

I still say RIM should make only two types of phones. One with a keyboard and one with a full touch screen. Lower cost. Streamlined processes. More efficient. More profits.

...and that may well be what they're moving toward.

I'm more inclined to believe that RIM will land on 4 handsets: high-spec ("Bold") and low-spec ("Curve") lines, each with keyboard and full-touch models.

That would still represent a huge rationalization of their current product lines.

Agreed. And all of the QWERTY models need to have touch screens as well. And the aspect ratios for the two different models need to be the same as well. Meaning Curve and Bold touch screens are the same ratio and Curve and Bold QWERTY have the same ratio.

Unless they combine CDMA with GSM, there would potentially be 8 models.

edit: don't forget the AWS band for carriers like t-mobile, and WIND.

Correct but the customer doesn't need to know that. The numbering of Blackberries is incredibly confusing.

Like the iPhone; its the same name on AT&T or Verizon. iPhone 4S, that's it, not 9900/9930. Just need to know which carrier you need.

This is where RIM needs to get back to, fewer products and less fuss.

One full touchscreen device and one QWERTY device like the Bold 9900 and that's it.

Sounds like cost reduction. RIM is consolidating, and doesn't feel the need to multi-source (or at least not with as many vendors).

The product range may change, but if they don't produce a small profile keyboard BlackBerry 10 (like the current Bold) they'll lose a lot of customers.

They could just continue to produce the current BB7 models of course.

They had way too many devices, some of which were foolish, like the Pearl Flip. I hope they scale it way down. This will bring out better OSes and don't need customized features and screen ratios for every device which wastes everyone's time; RIM's and developers.

I work for high tech manufacturer, and I can say first hand that RIM has way too many SKU's. Although I am sure they use some common parts, many are unique to one or two devices.

This really complicates several areas, the supply chain, inventory levels, demand forecasting, overstocks, shortages, it goes on and on. Supporting so many products in the field is also expensive, requires a ton of constant training and re-training, then there are on-going software support issues and firmware revs. Then you have certification and compliance. There is the simple stuff like packaging and branding, getting bored Yet? I should mention quantity discounts (lack there of), min orders and "quick turn" up charges.

Too many products confuse the people that have to sell them, so they don't. Apple one phone.

If buyers can't figure out which one they want, they find something easier to figure out, ie, someone else's product.

They could save tons of money, and make their present and new customers a lot happier by cutting many models. They do need several however because some of the markets they are in require different devices. What the right mix is, I haven't a clue, but the present situation is nuts.

Agreed. If you're using a computer to see these posts you just have to look to the advertising to the right of the screen to see eleven (count 'em...) different models that RIM offers. That's just not a good business model. Compare to Apple's iPhone... imagine how much money Apple is saving by having just one model.

Anyone else notice the differences in the tone of the articles regarding this story? For example:

Engadget:
Celestica phases out BlackBerry-related production for RIM

Ottawa Star:
Celestica to stop making BlackBerrys for RIM‎

Canadian Business:
Celestica ending its contract with RIM as BlackBerry maker aims to cuts costs

CBC:
Celestica winds down RIM manufacturing work

Vancouver Sun:
RIM to lose Celestica manufacturing services

Salt Lake Tribue:
Big supplier Celestica to stop making products for RIM

Times of India:
Celestica to stop making Bold 9900, Curve 8520 smartphones for RIM

VentureBeat:
RIM sloughs off manufacturer Celestica as it reevaluates supply chain

TechCrunch:
Celestica, A Canadian Manufacturing Contract Company, Parts Ways With RIM

BetaNews:
RIM Death Watch: Celestica winds down BlackBerry manufacturing

FierceWireless:
RIM loses ODM Celestica as a hardware supplier

Inquirier:
Blackberry manufacturer walks out on Research in Motion

MacGasm:
Celestica Waving Good-Bye To RIM, No Longer Making Their Handsets

DailyTech:
As RIM Waits on BB10, Another Manufacturer Bails on it

Know Your Mobile:
BlackBerry handset manufacturer throws in the towel

StreetInsider:
MORE REALITY: Large RIM (RIMM) Manufacturer Says 'Adieu!'

Talk about variation. :-)

I think you fail to see what he was pointing out.... we know that RIM broke up with Celestica. But if you look at those titles, they pretty much set the tone right off the bat which is a negative one.

This forsakenWasteOfSpace is claiming that RIM is dead. For those of us who are paying attention on a daily basis, we know better. The POS is just a troll.

yea, and BGR has taken it upon itself to spin this as another doom and gloom story for RIM. No surprise there.

In fact, this is likely RIM phasing out old manufacturers associated with BBOS7 and transitioning to more capable manufacturers required for the premium BB10 phones.

The press release said the phase out will occur over the next 3-6 months. Sounds to me like a time horizon for BB10 introduction.

Did you expect anything less from the morons over at iBGR? RIM could release the best selling, most innovative handset or tablet on the market and iBGR would make up some bullsh_t negative story about it. I wish RIM would file a cease and desist order against Geller and his regime of iBot iDiots as they aren't just reporting on negative news, they are actually putting a negative spin on any news about RIM.

Here's the thing. RIM outsources to Celestica. For anyone to think that someone giving Celestica business would be ok with Celestica withdrawing services would be asinine. It's like saying I have you build my product but you're firing me. How does that make sense? RIM is streamlining. Period.

Canadian media is like any other media, they eat their own. Also most tech writers are clueless, I think they pick names Out of a hat to assign stories.

I seriously don't read the news, as often as I did a few years ago as it's lies, made up shit, hyped up shit, negativity, even the most POSITIVE NEWS is negative, even the most TRUTHFUL is spun as lies.

If I was to ever make the news, it would be like it is: THE TRUTH, POSITIVE. I don't tell bullshit, I don't spin it either.

Did I not say I do report news in my area via the web? :)

only two types of handsets.
One with keyboard and other full touch screen to each their own( as far as the users go).
effective and longterm.

This is a good start. To refocus all their efforts on just a few models rather than throw whatever they got at their consumers hoping one of their models appeal to their customers. If they make just two really good models, people would be more willing to plunk down cold hard cash. People stick to their phone for a contract term anyways, no need for a hundred models when people only buy one phone every 2-3 years.

If it were RIM's decision, wouldn't they be the ones saying goodbye? From all the articles I've read Celectica dumped RIM. Not the other way round.

thanks chris.
again your wording helps more to understand that they weren't the only manufacturer. people think they were the one and only.

Oh, so Mexico is out of the picture? My 9900 was made in Mexico. Not a single glitch.

Oh well, all for the best.

The way Chris worded it, I didn't take anything negative from it.

Excuse me while I crush some more.

I guess I fail to see how this announcement is bad news in the first place. Whether you are a healthy company or struggling company, doesn't is make sense to be a cost conscious as possible and streamline/simplify your supply chain? Would you say it was the smartest move ever if Apple did it, but, because RIM is doing it, it is negative news?

I was thinking the same thing about the media.. why do they take RIM's good news and also make it negative ALL THE TIME! I'd like to know who their sources are and if they got the real reason behind Celestica.

My take is RIM let Celestica know that with BB10 and the change in direction of their current product portfolio, Celestica services/manufacturing is no longer required.

Some of us need to read between the lines and think why now? We all know BB10 is coming in a few months, current product is taking a backseat and RIM globally is still growing.. doesn't that make more sense than Celestical kicking out 20% of their business on a whim?

Bold 9900,32GB Playbook

They are moving on with a new platform plain and simple! It is amazing how the media spins things without getting the story right. Also it doesn't help that RIM doesn't make a comment on this!