New BlackBerry smartphone is coming
New BlackBerry smartphone is comingReuters

BlackBerry has lost the battle, but it is not yet defeated. The Canadian company posted its second quarter earnings report on Wednesday, where it revealed a new business approach. After the company's Mobility Solutions division incurred an $8 million loss in a single quarter, BlackBerry CEO John Chen has terminated all in-house production of its phones.

That's not entirely a surprise, as Chen said earlier this year that he would steer the company away from the handset business if it wasn't making profits by September. Well, the time's up and Chen has lived up to his word.

Is this the end of BlackBerry phones?

Not so soon. BlackBerry has only ended the in-house production of its phones, and it will outsource that function to its partners, who will then design, build and sell the devices. This strategy will benefit BlackBerry as it would save on capital.

"Our new Mobility Solutions strategy is showing signs of momentum, including our first major device software licensing agreement with a telecom joint venture in Indonesia. Under this strategy, we are focusing on software development, including security and applications," Chen said.

"The company plans to end all internal hardware development and will outsource that function to partners. This allows us to reduce capital requirements and enhance return on invested capital," he added.

The biggest bet is on software

"Our financial foundation is strong, and our pivot to software is taking hold," Chen said. During the quarter, the company more than doubled on the software revenue year over year and delivered highest gross margin in its history. BlackBerry is focused and on track to deliver 30 per cent revenue growth in software and services for the entire fiscal year.

BlackBerry has come a long way on the software front, which is where the big money is. Even though it had limited itself secure, enterprise email solutions in the past, the company's productivity software is now available on Android, instant messaging app BBM is still popular among users of different platforms and QNX platform powers self-driving cars.

BlackBerry also completed the initial shipments of Radar, a hardware and software device which helps shipping companies track their orders in real-time.

Read the complete BlackBerry Q2 earnings report.