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BlackBerry sells off German product development centre

BlackBerry Chief Executive John Chen holds up the unreleased Blackberry Classic device during the company's annual general meeting for shareholders in Waterloo June 19, 2014.

MARK BLINCH/REUTERS

BlackBerry Ltd. has quietly struck a deal to sell a German research facility as the company continues to streamline its operations.

Volkswagen Infotainment, a newly-formed division of Volkswagen Group focused on developing in-car connectivity technologies, announced on Canada Day it would take over BlackBerry's research and development centre in Bochum, Germany. The companies did not disclose financial terms for the deal, but say it will shift about 200 BlackBerry employees to Volkswagen.

BlackBerry said in an emailed statement Thursday the agreement with Volkswagen is part of the company's "ongoing efforts to return to profitability in [its 2016 fiscal year]."

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Under the leadership of new chief executive John Chen, Waterloo, Ont.-based Blackberry aims to remake itself as an enterprise-focused company and has taken steps to outsource many of its consumer-driven operations.

Last December, the company struck a deal with Taiwanese manufacturer Foxconn to develop some of its consumer handsets. In June, Mr. Chen announced a licensing deal to bring Amazon's mobile app store to BlackBerry smartphones.

"I love [the Amazon deal] because I don't have to spend the money on the consumer side," Mr. Chen said last month. "I could focus on my enterprise side."

Mr. Chen has also said he sees great potential for revenue growth from BlackBerry's QNX software division, which provides the type of machine-to-machine communication services that are expected to power the so-called internet of things.

QNX, the Ottawa-based subsidiary BlackBerry acquired in 2010, has developed a particular specialty around its software platform for in-car connectivity and has increasingly centralized most of that development in Ottawa.

Colin Gillis, BGC Financial senior technology analyst, said he doesn't see the move to sell its German facility as a sign BlackBerry is reducing its focus on the auto sector but rather that it is looking for efficiencies as it works to stop burning cash every quarter.

"Being a niche player means centralizing your assets," he said in an interview Thursday. "You don't need a centre in Germany – focus on Ottawa because there's duplication there anyways."

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BlackBerry first announced plans for the German research facility in 2008, saying at the time it would make an initial investment of $45-million (U.S.) and employ 140 workers to start but could expand to up to 500 jobs over time. It was the company's first research and development centre outside of Ontario.

The company said in its emailed statement that Volkswagen Infotainment will assume the related leasing obligations of the offices and laboratories of the product development centre in Bochum, which is in northwestern Germany.

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About the Author
Telecom Reporter

Christine Dobby covers the Canadian telecom industry for The Globe and Mail. Before joining the Globe in May 2014 she reported for the Financial Post for three years, most recently writing about telecom and media. She has also reported for the Toronto Star and New Brunswick Telegraph-Journal. More

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