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Blackberry battles handset losses by shifting focus to software

Blackberry’s transition into a software company has helped alleviate losses in its handset sales after the phone giant reported first quarterly software revenues grew 150 per cent to $137 million over the previous quarter.

The Canadian phone firm’s main focus is no longer on handsets after a long decline in sales resulted in CEO, John Chen, announcing that he wanted to divert between $100 to $200 million in hardware spending into the software arm of the business.

In releasing its first quarterly earnings yesterday the company announced that the introduction of two new phones- the touchscreen, Leap and the classic, Passport- aimed at its traditional base of corporate users failed to reverse the company's slide in the handset market. Despite the launch of the new phones Blackberry only sold 1.1 million during the quarter, a decline of 500,000 from the previous quarter and one of its worst performances ever.

The $137m in software sales have helped counter a reported net loss of $28m (£18m) in the three months to the end of May which is less than the $60m (£38m) loss made over the same period last year.

Chen is aiming to have software sales generate $600m (£380m) of annual revenue by the end of Blackberry’s own fiscal year next March. The company fuelled this push with acquisitions in device management sector such as the Israeli secure document sharing service company, WatchDox.

Digital security appears to be the main driver of Blackberry’s software business, which also purchased German encrypted voice software provider Secusmart last year.

The focus in software looks to be a longstanding business move after Chen told the Financial Times that he was “the strong performance of our software and technology business is key to BlackBerry’s future growth.“

He also said that the company’s “financials reflect increased investments to sales and customer support for our software business. In addition, we are taking steps to make the handset business profitable.”

Following the earnings results Chen also addressed rumours that Blackberry would implement its software in Android phones. In an interview with CNBC he said: "We only build secure phones, and BlackBerry is the most secure phone," Chen said during an interview with CNBC. "So, if I can find a way to secure the Android phone, I will also build that."