BlackBerry In Consultation Period To Close Swedish Operations [Updated]

Earlier this week smartphone maker BlackBerry confirmed it acquired Israel’s WatchDox to build out its security software business, but it looks like it may be downsizing elsewhere. According to reports from Swedish news sites, BlackBerry is closing down its software design operations in Sweden — a business that grew out of its acquisition of UI startup The Astonishing Tribe in 2010.

News site Rapidus and financial newspaper Svenska Dagbladet both note that Hans Björkqvist, a regional manager for the Swedish trade union Unionen, says that Blackberry is now in a consultation period with the union over closing operations.

A BlackBerry spokesperson has now confirmed to the WSJ that it is in consultations with the union. A consultation with a representative of a group of employees that may be laid off is one step in the closure process.

“At this time, we are considering the closure of our offices in Sweden [and] since this may impact approximately 100 employees, we are now initiating consultations with the employees’ trade unions,” the spokesperson said. “Our intention is to reallocate resources in ways that will best enable us to capitalize on growth opportunities across all facets of our business.”

One report from Swedish site 8till5 noted layoffs of 100 in Malmo; Rapidus and SvD both say it will be just over 150 employees: 93 in Malmö and 60 in Gothenburg.

Numerous BlackBerry spokespeople that we have tried to contact to confirm the details have not responded to our requests for comment. When reached by phone, a switchboard operator in BlackBerry’s Swedish office in Malmö told TechCrunch that she was instructed not to comment on the report.

Assuming the numbers are accurate, it’s not clear what operations will be affected, and where that work will shift. The WSJ reports that the Swedish team was working on BlackBerry 10 and other smartphone designs.

BlackBerry’s acquisition of The Astonishing Tribe for SEK800,000,000 (about $92 million) made a lot of waves when it happened nearly five years ago. The Swedish design firm was behind the user interface of the first Android phone, the G1, and at the time of the acquisition was (presciently) working on custom home screens for Android devices.

As BlackBerry noted at the time, it bought TAT in part to work on the UI for its ultimately ill-fated PlayBook tablet, but also to lend design expertise to other touchscreen products developed by BlackBerry, specifically smartphones and connected car systems.

2010 was a very different state of affairs in the mobile world. While BlackBerry was already seeing some of the impact of Android and iOS popularity on its own handset sales, it wasn’t out of the game altogether and still had a chance to turn things around.

Figures from Gartner from 2010 show that BlackBerry (or Research In Motion as it was called then) was just two percentage points behind Apple’s iOS in smartphone market share, with around 15% of all sales, ranking number four in a market still dominated by Nokia. Still, it was already starting its slip: a year before, in 2009, RIM was number two just behind Nokia’s Symbian.

Fast-forward to today and Gartner says that in the last quarter BlackBerry had just 0.6% of all smartphone sales.

Under its current CEO John Chen, BlackBerry has been trying to make a gradual shift as a business over the last several quarters, to focus more on software and return to its enterprise roots — which is where the WatchDox acquisition fits in.

As we pointed out earlier in the week when we reported on the WatchDox acquisition, BlackBerry actually posted a profit last quarter of $28 million, but on declining revenues of $660 million, down from $976 million a year before. In other words, profit was largely down to drastic cost cutting, not business growth. Indeed, as Rapidus notes, the company laid off more than 1,800 employees in the last financial year.

Updated with comment from BlackBerry.