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BlackBerry CEO hints 2016 is make-or-break year for its phones

John Chen says that if BlackBerry's smartphone business doesn't turn a profit next year, he'll have to "think twice" about it.

BlackBerry CEO John Chen (right) shows off his company's first Android phone during a chat with Recode's Walt Mossberg. Shara Tibken/CNET

HALF MOON BAY, California -- BlackBerry CEO John Chen has set a deadline for the recovery of the company's smartphone business.

Chen, speaking here Thursday at the Code Mobile conference, said BlackBerry's hardware business needs to turn a profit next year. "Otherwise, I have to think twice about what I do there," he said.

His comments start the clock on how quickly BlackBerry needs to move to turn around its ailing smartphone business. If the company's hardware business fails to deliver, it could mark the end of the BlackBerry smartphone.

On Friday, Chen published a blog post downplaying his comments, noting that he has previously said that he would not stay in the device business if it doesn't turn a profit. "We are doing everything possible to make our devices profitable," he said.

Chen's remarks come after the Canadian company reported last month continued declines in smartphone sales. It sold just 800,000 BlackBerrys in the quarter, or a third of its total from a year ago. At the time, Chen acknowledged that he was disappointed in the performance of the phone business.

In response to the slide in sales, BlackBerry confirmed in October that it was building a smartphone powered by Google's Android mobile software. The move represents a radical break from the company's typical strategy of using its own BlackBerry software.

The company will pin its hopes on Google's software and on BlackBerry's first Android smartphone, the Priv. The Priv, with a name meant to signify "privilege" and "privacy," is a touchscreen smartphone with a slide-out physical keyboard.

The Priv emerges as Chen tries to shift BlackBerry's focus away from hardware and toward software and services. The company has made a number of small acquisitions that have bulked up its security and software offerings as it reinforces its push to serve large, regulated industries and government clients.

When asked whether BlackBerry would make smartphones running on its own BlackBerry 10 software in two years, Chen said the answer "is going to be dictated by the business case."

If the company can work all of BlackBerry 10's vaunted security features and other attributes into Android, it won't have to create a BB 10 device, Chen said, adding that customers care only about the high level of certification and control, regardless of the software.

Chen praised the work with Android, noting that BlackBerry could eventually add its own software and services on top of another handset maker's product, and that he didn't necessarily have to be in the hardware business.

Chen himself is a man more comfortable in the enterprise software side of tech, best known for turning around Sybase before selling it to business software giant SAP in 2010.

Updated on 3:13 p.m. PT: To include further comments from the BlackBerry CEO.