Maybe RIM should kill the PlayBook

Maybe RIM should kill the PlayBook

Summary: RIM has shot down an analyst report speculating that the company was going to bail on its PlayBook tablet. However, cutting RIM's tablet losses may not be such a bad idea.

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Research in Motion is denying that it is killing the PlayBook, but on further review it may not be such a bad idea. RIM may be battling in an unwinnable war.

Should the PlayBook stay or go?

On Thursday, RIM faced a good bit of hubbub over a research report from Collins Stewart analyst John Vinh, who covers semiconductors. In a research note, Vinh said:

We believe RIM has stopped production of its PlayBook and is actively considering exiting the tablet market. While Quanta last week acknowledged that it had laid off a significant number of production workers from a factory focused on producing the PlayBook, our research indicates that the ODM has essentially halted production of the tablet. Additionally, our due diligence indicates that RIM has canceled development of additional tablet projects.

RIM denied that it will exit the PlayBook and called the speculation pure fiction. Here's RIM's statement via Barrons:

RIM doesn’t typically comment on rumors, but any suggestion that the BlackBerry PlayBook is being discontinued is pure fiction. RIM remains highly committed to the tablet market.

On further review, it's a bit fuzzy what Vinh's due diligence was exactly, but speculation about the future of the PlayBook isn't unwarranted.

Earlier this month, Quanta, which makes the PlayBook, said it would lay off workers at its Linkou plant in Taiwan due to weak demand for RIM's PlayBook.

Quanta acknowledged the layoffs in a statement. Quanta didn't name RIM specifically, but it's common knowledge that the plant referenced is where the PlayBook is manufactured. Roxy Wong, an analyst at Mirae Asset in Hong Kong wrote in a research note:

As the Linkou plant was set up under a special program with RIM, the downsizing cost would be shared by RIM and Quanta. This cost would also include the write-off of the work in progress inventories in Quanta, along with the cost of cutting operators. The details of how the cost will be shared is still unknown, however, we estimate the total cost of laying off the staff would be minor to the P&L.

On that final note, there's no need to cry for Quanta since Amazon's Kindle Fire will pick up any PlayBook slack. Wong estimates that most of the operators will take Quanta's severance package---pro-rated annual salary and six months basic salary.

So RIM has to be at least pondering a retreat given the profit margins pressure the company will see from the likes of Amazon's Kindle Fire and the fact that the PlayBook just isn't selling well. RIM moved 200,000 PlayBooks or half of what was expected in its most recent quarter.

RIM has touted an October software update for the PlayBook that will make good on all of those unkept promises so far: An Android app player and native email and calendar support.

Pulling the plug on the tablet can't be an easy decision. RIM can forge ahead or pull an HP. My hunch is that RIM has to forge ahead so the lack of tablet success doesn't tarnish its QNX operating system---the basis for the company's superphones in 2012.

In the end, it's quite possible that we'll look on HP's decision to cut its TouchPad losses early as a good move. For RIM to be a tablet player, you have to believe that the company will become better at integration. I've had a hand-me-down PlayBook for a day and I have no reason to believe RIM can get its act together.

Here's my last day with the PlayBook:

  • A wipe that turned the PlayBook into a brick.
  • A recovery via BlackBerry Desktop Manager, an extensive download and more time than I care to admit in support forums.
  • Once I go through the activation process, I find that AppWorld can't complete a transaction.
  • I go to AppWorld on the desktop and the service is down for maintenance.
  • I still can't figure out how to update payment information.
  • And my only goal here is to download a game or two and hand the PlayBook to my 4-year-old. And the PlayBook is supposed to be for business.
  • At this point, the PlayBook is a glorified browsing device and is damn close to being thrown off the roof of my hotel.

The bottom line is that any lingering positive feelings I had toward RIM are now wasted. In fact, I'd probably start screaming if I listened to all that optimism from co-CEO Jim Balsillie on the earnings conference call replay. The line between confidence and being delusional is really thin. It's should be clear where I think RIM lands on the confidence-delusional line when it comes to the PlayBook.

In the end, RIM probably should kill the PlayBook, but it can't because QNX is allegedly its future.

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Topics: BlackBerry, Mobility, Security, Tablets

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63 comments
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  • RE: Maybe RIM should kill the PlayBook

    I disagree. RIM needs the playbook, because the future belongs to tablets. There's stuff you simply need la larger screen to do. However, the company should position the device as a business centric tablet and forget all that nonsense about running Android apps in a virtual machine. RIM should run ads boasting of the fact that "This tablet wasn't built to play Angry Birds. It was built to make your business run more smoothly." And then RIM needs to develop the most critical of these apps internally, since the developer community is going to take a while to warm up to the device. The playbook needs a web browser, a office/document viewer, an e-mail client, a calendar, an RDP client, and a few more things like that. Entertainment apps should be a distant afterthought.

    Will this work to rescue RIM? I don't know. But RIM cannot comepete with Apple, Amazon or Android when it comes to building an entertainment tablet. The company needs to convince enterpise users that they need a secure device for their employees with a secure app market. They should also set up a team to develop bespoke tablet apps for corporate customers at a reasonable cost.

    Will this work? Again, i have no idea, but i suspect it's their only hope.
    dsf3g
    • I think any idea that the Playbook had...

      @dsf3g

      I think any idea that the Playbook as you put it "It was built to make your business run more smoothly." went away when Lenovo released their Business tablet. They had a good idea but went about it halfway and on the cheap end.
      http://www.lenovo.com/products/us/tablet/thinkpad
      lenohere
      • RE: Maybe RIM should kill the PlayBook

        @lenohere

        I'd say that Lenovo's move just validates that there's a market for this sort of thing. And taht's where RIM should be looking to carve out a niche. And unlike the Lenovo tablet, a Blackberry will never put your data at risk in the same way as a tablet that has access to the Android market.
        dsf3g
    • RE: Maybe RIM should kill the PlayBook

      @dsf3g

      People tend to forget that Apple's Ipad has more busines apps than all of RIMS apps combined.

      What makes IPad superior is not just ingenius design. Its also marketing. Apple focuses on portraying the Ipad as a magical device that you just got to have. The competion foucuses on how fast their web browsing is, how fast their CPU is, or how fast it is on a 4G network. If people want speed they would use their laptops. Because when it comes to raw speed, nothing beats a laptop. Apple invented the modern Tablet Experience. The competion just does not get it. They think just because you make it people will buy it. It's the Ipad magic people are drawn to. Sure there are people who are desperately seeking to futility for a company to best apple at mobile products.
      Not posible because they will release an even beter product and experience.
      Bakabaka
  • No way

    The PlayBook has a huge following and alot of people really like it. QNX is the best OS out there. But Android had huge issues in its early days a year ago, and it still does. So lay off. Give this company some time to reorganize itself so it can deliver. Cheerleading its demise just isn't good for consumers and its not ethical as it effects the careers of some of the most talented in the industry. Apple had lots of trouble making its devices a success and they spent forever learning and reorganizing after multiple failures.

    For me, the PlayBook's price point that was off. It just wasn't worth $499-699. To go toe to toe with Apple's iPad and thus get compared directly to it is a bad move. They should have hit a lower price point to begin with, so they could have played the "but it costs less" card.

    I think RIM made the right move to knock it down to $299. The market at this price point is untapped and this is a much better contender than the Fire. This is a solid piece of hardware and while I sympathize with your experience, these are issues that RIM will be on top of. There is no doubt providing the ultimate user experience is the only way to compete with Apple, and as an enterprise company, this is something new to RIM. It's learning the hard way, but please give this company a chance. It was just rated as the best employer in Canada today.
    techman31
    • Well said

      @techman31
      happyharry_z
    • RE: Maybe RIM should kill the PlayBook

      @techman31
      At the very least, RIM needs to see if they can tough it out in this market for another six months. Yes, discount the hardware, get it out there. The more users, the more developer support (which is the REAL Achilles' Heel right now).

      The thing to remember is that QNX is RIM's future phone platform as well. That the platform is already available gives the current devs experience that they'll need if they want to develop for the new phones as well.

      Finally, System software 2.0 is due out by the end of October. RIM has committed to FINALLY having that native PIM/e-mail app in place as well as the Android Player. THAT will make a difference.

      It's a nice device. Am I suffering a little iPad envy? Sure, but I'll get over it.
      BuckedUp
      • RE: Maybe RIM should kill the PlayBook

        I'm still waiting for the tablet market to come to me. I want a tablet that is easy enough to carry around with me when out with the family, and smart enough to handle straightforward office tasks when I'm traveling. Then I can stop trying to conduct google map searches on a smartphone and get a map that's large enough to read ... and get a phone that's just a phone and isn't trying to download flash at the same time. And then I can give up my laptop and get a powerful desktop for my office. Seems like RIM could really turn a corner on the market if they marketed a phone+tablet combo that really worked and only charged for one data plan instead of two.
        Wilson_Energy
    • RE: Maybe RIM should kill the PlayBook

      @techman31 That really doesn't say much for the rest of Canada!<br><br>Product pricing is a science and an art all rolled into one. But at its core is the perceived value of the product to its market, which itself is based on the capability and quality and genuine value for money. If you don't know that, you have absolutely no business selling anything to anyone.<br><br>And yes I do know what I'm talking about. I've never once reduced the price of anything. I have however constantly raised the price until the 'tyre kickers' stopped asking the price. It takes balls of steel to do that. But unless I'm the best in my field, I don't play. I've sold $1000 items in a market where the closest competitor was pricing at $300, and the rest from $75-$200. Guess who not only sold the most and of course made the most profit? But I also of course had the best product by a long long way.<br><br>That is the game RIM should have played. Instead they got greedy, misunderstood what a tablet device should be and needs to be, and tried to use it to drive Blackberry sales. Dumb dumb dumb. They deserve to fail.<br><br>Having said that, I think the Playbook is a sexy device [build-wise, more to my taste than the iPad], that seems to have a decent UI. But if you need a Blackberry to take advantage of all its functionality, it's utterly useless to me. And I most definitely am the very market RIM needs to win.<br><br>All so easy to work out. All so easy to lose out and then lose everything.
      Graham Ellison
  • Yes, Apple has already killed the PlayBook

    RIM should just make it official.

    No one can compete against Apple in the iPad market.

    It can't be done.

    Apple is too big, too strong, too ruthless.

    It is a sick market.

    We all lose.
    toddybottom
    • Isn't &quot;ruthless&quot; a good quality where business is concerned?

      @toddybottom ... You say it like it is a bad thing. As long as RIM can afford it I think they should keep developing QNX and strive to give it a foothold in the mobile market which means keep supporting and developing the playbook. After all if they don't RIM at least on these boards will become another HP. Amazon made it's move and like I said before sure Apple has a lead and an edge, but that's what competition is all about... If everyone starts out equal in ability then why play a game? Why compete at all if you don't have someone to beat? I live a good underdog story one of the very reasons I have been an Apple fan for so many years and I have to tell you when Appke came from no where to lead the pack with the iPod it was like the Red Sox winning the series:). So if Apple can do it... Anyone can!

      Pagan jim
      James Quinn
      • I didn't say it like it was a bad thing

        @James Quinn <br>Stop being an idiot.
        Apple should be ruthless.

        That doesn't change the fact that the market is sick.

        Now go away. Your horrible English is an insult to English speakers everywhere.
        toddybottom
      • Um no:)

        @Toddybottom... Just saying... Well it came off as a negative and years ago I could have said the same about the PC market but look at it now MS does not have 98% market share instead something like the high 80's. Apple's is slowly growing and there is always a hope for Linux:). It is early yet and things do change. After all there was a time when Apple owned the PC market with something like a market share in the mid to high 70's back in the day.

        Pagan jim
        James Quinn
      • Do you live in a basement suite?

        @James Quinn
        You come across as someone who has had very little success in life.

        Let me guess, you are old and living in a basement suite?

        Your little smiley faces make you look like a 12 year old girl and your spelling makes me think that you were held back many years in school until the school system finally got rid of you.

        You never have anything to offer and you constantly fail to understand even the most basic of concepts that are being discussed.
        toddybottom
      • There is only one thing I want to know from you my friend.

        @Toddybottom ... Are you having as much fun as I when we spar? I'd hate to think I'm the only one:)

        Pagan Jim
        James Quinn
      • I'll take that as a yes

        @James Quinn
        How sad for you.
        toddybottom
      • And I'll take the fact that you keep coming back and keep

        @Toddybottom ... trying to insult rather than chat as a yes to my question. Despite your claims to insult by my poor English and your negative opinion of myself you rather enjoy our discussions... Such that they are:)<br><br>Pagan j
        James Quinn
    • RE: Maybe RIM should kill the PlayBook

      @toddybottom
      I disagree that it's a "sick" market. Yes, the iPad is an unqualified success, but that doesn't mean that we have to hand it a monopoly.

      RIM's TabletOS is actually very nice. Great interface (MILES better than Android) and good performance. And since RIM has committed to moving its phone line to QNX, there's really no harm in staying in the tablet space for now.

      I hope they don't have to take too big a loss to clear out their current inventories, but those of us who are committed to this device are crossing our fingers and hoping the TabletOS 2.0 release will generate some new buzz.
      BuckedUp
    • RE: Maybe RIM should kill the PlayBook

      @toddybottom Agreed fully. And it's getting sicker.
      <a href="http://www.kecioyun.com/" title="oyun">oyun</a>
      oyungame
  • Playbook is dead and that's good for RIM

    It has lost them millions and was going to lose them millions and millions more. Nobody wants it. BestBuy has crates full of them they cant sell. They are instituting a permanent $200 price cut just to get rid of them, just like they did with touchpads. The workers are laid off. They are not coming back. It's DEAD. But thats good for RIM because they cant afford the losses and they need to focus on saving their company. Which means their BB handhelds. They too are tanking and qnx is a cluster f***. The only way for RIM to remain viable, let alone relevant, is to make a very strong enterprise push with Windows Phone based devices. They need to pull the enterprise version of a Nokia partnership with MS and they need it ASAP.
    Johnny Vegas