It looks like BlackBerry-branded (NASDAQ: BBRY) devices have a future after all. Canada-based BlackBerry and China-based TCL Communication have entered into a long-term licensing agreement where the latter would design, manufacture and distribute BlackBerry-branded devices in exchange for an undisclosed royalty fee. This might be a booster for BlackBerry from a short-term financial standpoint, but it also exposes the Canadian company to a few security risks that might tarnish its reputation in the world of mobile security permanently and eventually hurt its sales. Let’s take a closer look to have a better understanding of this deal.
(Image Source)
Happy days are back?
Let me start by saying that designing, manufacturing, distributing and then retailing smartphones is an expensive exercise altogether. There are various kinds of risks involved at each step of the way. BlackBerry was outsourcing its manufacturing role to international partners such as Wistron and Foxconn for its previous devices, but it was only with DTEK50 and DTEK60 that the smartphone vendor outsourced all of the above-mentioned verticals to lower its operating and financial risks.
However, the licensing deal with TCL isn’t just for one device; it rather extends to all future BlackBerry smartphones. So BlackBerry won’t have to spend its limited resources on designing handsets, then manufacturing them, keeping their inventory and then distributing them to its channel partners going forward. This means we can expect a significant drop in BlackBerry’s R&D expenses, working capital requirements and assets allocated for keeping a stock of inventory.
[Source:-Seeking Alpha]
