BlackBerry has Abandons Its Phone

“We have decided to discontinue all the handset hardware development,” BlackBerry’s chief executive, John S. Chen, said on Wednesday. Credit Brendan Mcdermid/Reuters

HALIFAX, Nova Scotia — Stepping away from its signature product, BlackBerry will no longer make its own smartphones, the device it once defined.

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.

“We have decided to discontinue all the handset hardware development,” Mr. Chen said Wednesday on a conference call for analysts. “We believe that this is the best way to drive profitability in the device business.”

With the move, BlackBerry follows the lead of several other technology companies, notably Nokia, which have turned into software businesses. Mr. Chen, however, must now demonstrate that he can generate offsetting revenue.

BlackBerry’s initial responses to the iPhone, which was released in 2007 and was the handset that made software the dominant feature of smartphones, were plagued with technical bugs and poor performance. The arrival of Android phones from a variety of manufacturers, most notably Samsung, rapidly accelerated the decline of BlackBerry’s phone business.

After a series of delays, BlackBerry 10, an operating system that was a more effective competitor, did not appear until early 2013. But iPhones and Android phones were well-established by that time, and the new operating system was met with indifference from consumers and app developers.

This year, Mr. Chen suggested that BlackBerry was continuing to make phones largely at the request of some of its large software customers, a group that includes branches of the United States military as well as law enforcement agencies.

On the conference call on Wednesday, he dismissed those concerns and said, while offering no details, that other companies would provide chips and other hardware to meet those customers’ needs.

He also acknowledged that BlackBerry software on Android phones was not as secure as its BlackBerry 10 offerings. Mr. Chen promised, though, without offering a schedule, that BlackBerry would “take Android up to the same level of security as BB10.”

BlackBerry has the option of reselling the phones carrying its brand name and made by BB Merah Putih in Indonesia throughout the rest of the world. But Mr. Chen said the company had decided not to exercise that option. As a result, he said, sales of BlackBerry phones outside Indonesia will finish before the end of February 2017, the close of the company’s fiscal year.

Mr. Chen said other companies had shown interest in licensing BlackBerry’s trademark and its software, but he offered no specifics or indication of whether such deals were likely.

In the short term, the shutdown will most likely add to a crucial problem facing BlackBerry: declining revenue. The company said on Wednesday that phones accounted for 30 percent of its revenue during its second fiscal quarter, which ended Aug. 31. Sales of about 400,000 phones generated revenue of $105 million and a loss of $8 million.

Despite growth in its software, BlackBerry’s overall sales of $334 million during the quarter were well below the $490 million posted during the same period last year. The company lost $372 million during the quarter after accounting for substantial write-downs.

BB Merah Putih, which is led by PT Tiphone Mobile Indonesia, that country’s largest wireless carrier, will pay licensing fees and royalties to BlackBerry, Mr. Chen said.

In recent years, BlackBerry has cut thousands of jobs and closed several operating centers, including one in this city, over the last three years. A company spokeswoman declined to discuss any future layoffs.