BlackBerry has agreed to license its brand to China-based handset manufacturer TCL Communications.
The companies entered a licensing agreement last week which will allow TCL to design, manufacture and distribute BlackBerry-branded phones globally going forward. The devices made by TCL will be coupled with BlackBerry's security software and service suite.
“BlackBerry will continue to control and develop its security and software solutions, serve its customers and maintain trusted BlackBerry security software, while TCL will manage all sales and distribution and serve as a global distributor of new BlackBerry-branded mobile devices along with dedicated sales teams,” the company said on Thursday.
The agreement is the struggling Canadian smartphone maker’s first licensing deal since its announcement to transition to a software company.
BlackBerry said in September that it would stop producing its smartphone hardware and concentrate on software, a decision which followed a year-long review of the potential profitability of the company's hardware business by CEO John Chen.
The new agreement will give TCL, the fourth-largest handset maker in North America, the right to make and sell BlackBerry-branded smartphones in all countries except India, Sri Lanka, Nepal, Bangladesh and Indonesia, where BlackBerry has already struck local licensing deals.
Prior to this licensing deal, BlackBerry launched two smartphones – the Android-based DTEK50 and DTEK60 - in September and November respectively, which were made under an agreement with TCL.
Industry watchers said this deal might be a boost for BlackBerry from a short-term financial standpoint by reducing BlackBerry's operating risk, working capital requirements and potential R&D spend which would have otherwise gone into designing new phones.
While the deal has an upside, it also exposes BlackBerry to a different kind of a security risk that might drive security-conscious consumers away from the brand and eventually hurt sales.