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BlackBerry CEO John Chen pushed aside discussion of a new device at a security summit in New York this week, but has previously suggested three new products are in the works.Chris Young/The Canadian Press

As speculation about BlackBerry's next Android phone launch bubbles, there are signs it is looking to China's fastest-growing smartphone brands for inspiration and possibly partnership.

At a security summit the company hosted in New York this week, CEO John Chen firmly pushed aside discussion of a new device, though he has previously suggested three new products are in the works.

"We believe the company held off announcing new devices to avoid overshadowing the event's focus on software," Paul Treiber, RBC Capital Markets analyst, wrote in a research note. "Management suggested that new device announcements are possible in the next 1-2 weeks."

BlackBerry's first Android device, the Priv, is widely seen as a sales flop. In its June earnings update, the company recognized revenue on fewer than 500,000 smartphones, and its average selling price hit $290, missing targets of $308 or more; the higher target was predicated on a larger volume of the high-end $800-range Privs being sold. Also, on July 5 the company discontinued sales of the BB10-based Classic – a throwback-looking device Mr. Chen had great hopes for when it launched 18 months ago.

Related: The Globe reviews the Priv

BlackBerry filings with the Wifi Alliance and the U.S. FCC indicate Chinese smartphone company TCL is manufacturing a BlackBerry device, prompting speculation of a partnership for a new Android BlackBerry phone.

TCL has released phones under the Alcatel brand name since 2013, but is relatively unknown in North America.

TCL/Alcatel is one of a handful of Chinese phone brands – with Huawei, Oppo, ZTE and Xiaomi – that have managed to take some of Samsung's Android market share in their home territory and are now increasingly expanding to international markets. Gartner expects TCL will sell 13 million to 15 million devices in the second quarter, just behind ZTE.

Competition for Android smartphone sales is fierce as growth slows, and consumers are demanding more features at lower price points.

"In the [global] Android market, the highest growth rate was in 2011, 46 per cent growth year over year. The first half of this year [growth has hovered] around 6 per cent," said Lixin Cheng, president of ZTE North America and chairman and CEO of ZTE USA.

"The high-end market growth has stopped. The consumer has become smarter, and we're providing more value. From 2013 to 2015 the innovation in the segment between $200 to $400 is quite significant, in terms of screen size, camera quality, battery life, computing power, connectivity speed and all those things. ZTE's share of that segment tripled from 11 per cent to 30 per cent."

Gartner analysis pegged ZTE at about 3.1 per cent of global smartphone sales and expects it will sell 14 million to 16 million phones in the second quarter of 2016.

ZTE's neighbours are also roaring along.

"Two Chinese brands ranked within the top five worldwide smartphone vendors in the first quarter of 2015, and represented 11 per cent of the market. In the first quarter of 2016, there were three Chinese brands – Huawei, Oppo and Xiaomi – and they achieved 17 per cent of the market," wrote Anshul Gupta, research director at Gartner, in May. That adds up to 59.9 million phones out of 349 million sold in the quarter.

Those are numbers Mr. Chen can only dream about. With just 0.2 per cent of the global smartphone market, reaching the three to five million phones John Chen has suggested BlackBerry needs to sell annually to make handsets profitable is a tough target.

Mr. Chen has pegged the company's turnaround on growing the security and services software business, but has recently suggested there are some software customers who also demand BlackBerry-branded hardware as a complement to their enterprise security needs.

"Hardware is the front door in many situations to the software. That is why it's still important," says Collin Gillis, analyst with BGC Partners.

In the past, Mr. Chen has said that if he cannot make the hardware unit profitable on its own he would abandon it, perhaps during the company's current fiscal year. That puts BlackBerry in the position of trying to sell, at a profit, devices into one of the most brutally competitive markets just so it has a complementary offering for some clients.

"It's a wild-card option. … Certainly not the reason to invest in the company," says Mr. Gillis.

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