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BlackBerry Ltd. BB.T +1.18% Chief Executive John Chen last month made a surprising promise: in an internal memo, he told employees that years of layoffs and shrinking had come to an end, and that the company would be scouting for acquisitions.
It was the latest signal from Mr. Chen, who took the reins at the smartphone maker less than a year ago amid mounting losses and declining sales, that his plan to stop competing in the consumer market is showing results. After years of losing market share to Apple Inc. AAPL +0.41% and Samsung Electronics Co. 005930.SE -1.82% , BlackBerry's makeover as a provider of secure smartphone technology for the enterprise market is taking shape.
The maker of what was once the world's dominant smartphone isn't abandoning the hardware business completely—it plans to introduce a handset with a physical keyboard and square screen called the Passport on Sept. 24. But the company has outsourced the production of devices, and is largely focusing away from the consumer market with new phones that target business users.

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Mr. Chen's strategy rests on a plan to generate more profits from the higher-margin mobile security business, along with other new software services. If he succeeds in this overhaul, it will be in part by taking a page from his 13 years at Sybase Inc., a once unprofitable California company that was sold in 2010 to Germany's SAP SAP.XE +0.83% SE for $5.8 billion.
BlackBerry's shares have jumped 68% to $10.89 since Mr. Chen took over in November, but are still 87% below where they stood five years ago. The company's losses, though expected by analysts to narrow, remain substantial.
"That to me says, the ship's turning, but it's going to take a long while," said Robert McWhirter, head of Toronto-based Selective Asset Management Inc. Mr. McWhirter last owned BlackBerry stock about three years ago.
At Sybase, Mr. Chen pursued small but strategic acquisitions and out-delivered on earnings, say those who have worked with him. Small deals led up to a riskier bet in 2006 on text messaging with the purchase of Mobile 365, a move that helped cement his reputation as a turnaround expert.
He says he made the deal only when Sybase was profitable and had the cash. "I remember sitting down with my CFO and saying 'even if I make this bet and it's the wrong bet it will not kill the company,'" Mr. Chen recalled in a recent interview.
Mr. Chen has moved to bolster BlackBerry's offerings for the enterprise market with two small acquisitions since late July. One company offers a product that guards against eavesdropping on mobile devices, and the other helps corporations better control employee device costs.
"The acquisitions are very consistent with [what Mr. Chen did at] Sybase," and "they will always fit very tightly with the strategy," said BlackBerry Chief Operating Officer Marty Beard, one of a core group of former Sybase executives who have followed Mr. Chen to BlackBerry.
"If there is any bet to be made it will be only when BlackBerry is doing well," said Mr. Chen, who regularly works 18-hour days. Much like he did at Sybase, he spent his first months at BlackBerry visiting hundreds of customers to help him identify products with the most potential.
BlackBerry Ltd. Chairman and CEO John Chen Reuters
His initial focus at BlackBerry has been stemming the hemorrhaging in the company's cash flow. In June, Mr. Chen reiterated his target of achieving break-even cash flow in 2015. He also surprised analysts with a quarterly profit that sent BlackBerry's shares soaring. Three months earlier, he surprised the market with news that BlackBerry had achieved its cost-cutting target a quarter ahead of schedule. BlackBerry next reports earnings Sept. 26.
His moves to boost revenue from new software-based services remain largely unproven. That is a reason why Mr. Chen is also pursuing a portfolio of handsets targeting business customers and the emerging markets where the company still has consumer cachet.
The Passport is one of these new devices. The introduction of the square-screened smartphone will be the first global launch of a device for BlackBerry since its BlackBerry 10 phones flopped in 2013. BlackBerry won't talk about the device's features until the launch. But its official blog says the Passport, which will display 50% more characters on each line than the typical device, will appeal to professionals by making documents, spreadsheets and X-rays easier to read.
The Passport is bound to be measured against Apple's recently announced larger-screen iPhone 6 and iPhone 6 Plus, as well as a new mobile payment system. Apple's move to partner with International Business Machines Corp. IBM -0.15% to develop mobile applications for big businesses adds to the pressure.
Apple is already a "tough competitor" for BlackBerry on the device side and "now they are getting into the security domain, which BlackBerry is hoping to reinvent themselves on," said Canaccord Genuity analyst Mike Walkley.
BlackBerry declined to comment on the new Apple devices, which have screens that measure 4.7 inches or 5.5 inches.
The Passport has a 4.5-inch square screen and BlackBerry's signature physical keyboard. The keyboard comes with a twist—it is touch sensitive and can be used to scroll through content on the screen above it.
BlackBerry is also relying on the launch later this year of new mobile device-management software. But some customers have already decided against waiting for the product and adopted rival technology.
BlackBerry's current management software supports its BlackBerry 10 and other devices, but not older BlackBerry models. That deterred some customers from adopting the technology. The latest update to the BlackBerry Enterprise Service will work for all BlackBerrys as well as for rival devices.
That product comes too late for the State of Indiana. About a year ago, the state started to use software made by BlackBerry rival MobileIron Inc. MOBL -1.47% to manage the growing use by its employees of iPhones, and it isn't planning to look at BlackBerry's update for its 6,000 mobile devices when it comes out, said Dewand Neely, an IT executive with the Indiana Office of Technology. "I don't even remember the last time I talked to a BlackBerry representative," Mr. Neely said.