One of the first measures that Chen took was to enter into a deal with Asia-based mobile company Foxconn, to take over the task of design, production, and distribution of Blackberry phones for the next five years. Foxconn was expected to manufacture the new phones at its factories in Indonesia and Mexico. However, the phones manufactured by Foxconn were targeted at developing markets. BlackBerry was expected to design the hardware and software of its costlier phones that were mostly sold in European and North American markets.
As of 2013, phones accounted for 61% of Blackberry sales. The company made an annual loss of US$ 5.9 billion that was mainly due to writing off unsold phones and spare parts. The deal enabled Blackberry to alleviate the task of manufacturing hardware, reduce cost of manufacture, share a certain amount of inventory risk with Foxconn, and gain a higher proportion of the profit on the sale of each phone. Chen added, “The hardware business was losing money and was a chokehold. I’ve relieved that.”30