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RIM Needs to Dump the PlayBook

You cannot cure a chronic illness by diverting the patient's attention to a different issue, but that precisely was what {complink 4644|Research In Motion Ltd. (RIM)} tried to do with the BlackBerry PlayBook tablet PC. The device didn't catch on with consumers, and there are now reports the company may be considering ratcheting down production or even killing off the PlayBook. (See: Has RIM Bailed on the BlackBerry PlayBook?.)

RIM has reportedly denied it will terminate production of the PlayBook, but such denials are typical in the manufacturing world; few companies want corporate secrets revealed before a formal announcement. It's also possible RIM is still reviewing what it should do with the PlayBook and that no substantive decision has been taken. While the challenges facing RIM are numerous, its main problem is the harsh competitive climate it ran into when companies like {complink 379|Apple Inc.} began encroaching on its smartphone turf. That problem hasn't gone away, and a weakened RIM distracted with another device is a company in severe jeopardy.

RIM's response to the explosion in demand for the iPad was, in many ways, similar to the kneejerk reaction seen at its rivals, many of which are chasing Apple's innovative design and new product introduction strategies, rather than coming up with their own unique, market-winning plans. Similar to the experience of other companies, including {complink 2376|Hewlett-Packard Co.}, which has terminated production of its TouchPad tablet PC, the PlayBook was a flop; shipments sank to 200,000 units in the fiscal second quarter ended August 27 from 500,000 units in the previous quarter.

In order to determine its future in the tablet PC market, RIM's management must honestly answer the following questions. Can RIM be competitive in the tablet PC market? What's the price point that would make the Playbook competitive? Is the product itself viable against competing devices from Acer, Amazon, Apple, Motorola Mobility, and a host of other rivals? Does RIM have the financial resources to commit itself to a long, drawn-out war for market share in the sector?

I left one additional critical question out of the above list and would like to pose this separately because it is the subject of this blog: Does RIM need to be in the tablet PC market to remain a viable, profitable, and ongoing concern? In my opinion, this is the most important query RIM's management should answer urgently. The answer to this question will decide whether answering the other questions is even necessary.

Until Apple reignited interest in tablet PCs, few OEMs considered the sector important to their futures. RIM was not a contender, and I don't believe the company even considered entering the sector until Apple began making waves there. Its half-hearted response has resulted in more losses and negative press than if it had stayed out.

I don't believe the tablet PC market is essential to RIM's future. What RIM needs right now is to stop the erosion of its market share in the smartphone market; reclaim some leadership in enterprise messaging, where it still has a strong and loyal base (and a widely acknowledged technology edge); and, importantly, put an end to talks of its potential demise. The vultures are gathering around RIM, and the company must demonstrate clearly that talks of its death are premature.

RIM can still enter the tablet PC market in the future with a well thought-out offering that complements its primary BlackBerry smartphone, but right now, the PlayBook isn't up to the competition, and the efforts involve financial and operational costs the company shouldn't be paying.

The BlackBerry smartphone is RIM's bread and butter. It continues to sell in huge volume — although margins are suffering — and shipment is estimated to grow between 27 percent and 37 percent over Q2 shipments, according to the statement announcing fiscal second quarter results. The PlayBook is a distraction a company already in distress does not need.

18 comments on “RIM Needs to Dump the PlayBook

  1. DataCrunch
    October 10, 2011

    I did a little research on tablet sales and tablet projections.  As you can see from the charts below, research analysis firms have a wide array of projection figures for 2012 and beyond.  Gartner seems to be the most optimistic in their forecasts, which is not typical of the larger research firms as they tend to be more conservative typically, as not to risk their reputations on over exaggerated projection figures.

     

    Also, Gartner seems to predict that QNX (RIM’s mobile operating system choice) will have a 10% market share in the tablet space 2015.   Pretty optimistic.

     

     

    Tablet Forecasts (in Millions) in Table Format From Above Chart:

             

    Analyst firm

    2012

    2013

    2014

    2015

    Gartner

    103

    154

    208

     

    iSuppli

    52

         

    ABI Research

         

    80

    Oppenheimer

       

    115

     

    IDC

       

    60

     

    In-Stat

       

    58

     

    Juniper Research

         

    81

     

  2. Parser
    October 11, 2011

    I totally agree. RIM now has Kindle Fire to fight with. One thing is to have hardware and second is to have medium, books, movies , etc. There is a very tougth competition and going back to roots of success would be beneficial. 

  3. saranyatil
    October 11, 2011

    Its high time they should stop selling playbook instead invest the same time and money in bringing out a new tablet which can establish a tough competetion to many other companies.

    They have had great fans for their Blackberry phones if the same should persist in tablet i think a rational shift is required.

  4. jbond
    October 11, 2011

    RIM should definitely dump the PlayBook. With all the competition out there and very minimal margins, RIM needs to focus on updating their Blackberry's and control the hemorrhaging of the company’s value.

    RIM can and will be viable without a tablet, assuming they get back to the basics and start being innovative again instead of playing catch up to Apple and Samsung.

    RIM's main customers are still business professionals, many of them who aren't concerned about all the “game like features” offered on the new smartphones. Get back to focusing on them and they will be able to hold their ground.

     

  5. mfbertozzi
    October 11, 2011

    Well, even Bolaji's editorial focuses on new product from RIM, I would like to leave on the board an opinion on a different topic that is, in a such way, correlated. RIM is trying to recover its leader position by the delivering of new products, but after all, RIM's users want and really need services from them based on messaging platform. We are experiencing a dramatical outage of messaging server, then I believe new products coming is a good news, but it is also really important to preserve continuity with right SLA on basic services. Isn't it?

  6. JADEN
    October 11, 2011

    If RIM dumped the PlayBook, this could save the company from waisting money in the short run but in longer term, that could have some negative repercussions.  For one thing, killing the PlayBook would double as a vote of no confidence in the QNX operating system of PlayBook, on which the company has pinned the buk of its hope for a turn around.  Killing the device too would remove a significant element of RIM, hobbling its chances of competing on equal footing with Apple and others.

  7. AnalyzeThis
    October 11, 2011

    @JADEN, QNX won't die with the PlayBook. It'll be on their phones. And not very impressive phones, from the sounds of things.

    RIM shouldn't try to compete head-to-head with Apple anyhow: they'll never, ever win. They just can't even hope to match Apple when it comes to the mainstream consumer market. Why would a casual consumer buy a PlayBook over an iPad? There are very few viable reasons. You can't even play Angry Birds on a PlayBook (and yes, I am aware of PlayBook's Android app compatibility thing… but this doesn't work as you'd expect).

    RIM needs to buckle down and focus on what they do best: phones for business and enterprise users. If they can't manage to re-capture that market, RIM won't be competing with anyone because they'll be out of business completely.

  8. Taimoor Zubar
    October 11, 2011

    Bolaji, do you think it would be a good move if RIM decides to ship PlayBook with Android OS? I was going through the specs of PlayBook and surprisingly it does seem pretty strong on the hardware side. They may launch it as a separate PlayBook model and still continue with Blackberry OS on other models. After all, companies like Samsung, Creative and Motorolla are already doing it and so far their products have been fairly successful.

  9. Clairvoyant
    October 11, 2011

    I don't think RIM should give up on the Playbook. It is a good product and has got RIM into the tablet market. They should not just give up and let the bigger seller win without trying more options. I had heard that RIM may be looking at allowing the Playbook to run Android applications as Taimoorz mentioned. I think this is a very good idea to allow the Playbook to become more attrative to potential buyers.

  10. _hm
    October 11, 2011

    To do this, RIM must get new management.

  11. Hawk
    October 11, 2011

    @_HM, The company may need a new management but it may not get one until it's almost dead. Investors may have to step in and execute the change the company so urgently require.

  12. bolaji ojo
    October 11, 2011

    @TaimoorZ, If RIM's goal is to be another player in the tablet market then it can opt for Google Android. However, this too wouldn't represent a fundamental change in strategy. The OS is not the obstacle to PlayBook market acceptance; the main challenge is Apple's dominance and that's not going to go away even if RIM goes with the Android.

    Rivals to Apple cannot compete against the iPad simply on OS alone. Their products just have to be that much better and the pricing has to be more favorable. That's currently not the case.

  13. bolaji ojo
    October 11, 2011

    @Clairvoyant, The PlayBook is a distraction to RIM right now at a time it should be devoting resources to the Blackberry smartphone. The company could end up losing a lot more than tablet PC market share if it cannot figure out how to keep the Blackberry competitive.

  14. DataCrunch
    October 12, 2011

    More bad news for RIM as for 3 days straight, millions of BlackBerry users worldwide are without text messaging services as RIM is having issues and failures with its network.

  15. bolaji ojo
    October 12, 2011

    @Dave, The round of negative press is corrosive and the company cannot afford to be mired in this. The problems with its Blackberry server may not be related to its ongoing market share loss in the smartphone segment but it adds to the image of a company slowly losing control of its operation. I hope they take care of these issues quickly.

  16. Mr. Roques
    October 12, 2011

    As I said in the poll, I think they need to stay in the market. There should be a study about how probable is it for someone that buys an iPad, to have an iPhone. They need to create that ecosystem that users feel comfortable in, have my blackberry that syncs with my tablet that syncs with the cloud, etc.

    I think they need to change the name… I'm pretty sure no one here associates the word Play with RIM. The blackberry is not a toy (no nice games, etc) and they openly say they are going for the enterprise user … so why name it playbook?

  17. Anne
    October 26, 2011

    RIM's playBook tablet is for only Blackberry addicts.

  18. Clairvoyant
    October 26, 2011

    I wouldn't necessarily agree, Anne. I've used the RIM PlayBook before and I'm no Blackberry addict. There are many useful applications on the Playbook for anyone to use.

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