Research in Motion: Did PlayBook R&D jeopardize its superphones?

Research in Motion: Did PlayBook R&D jeopardize its superphones?

Summary: Research in Motion reports its fiscal first quarter results on Thursday and analysts are decidedly gloomy about the company's prospects. The big questions: Did RIM's PlayBook tablet launch deliver sales momentum and did that device suck too much wind out of future product development?

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Research in Motion reports its fiscal first quarter results on Thursday and analysts are decidedly gloomy about the company's prospects. The big questions: Did RIM's PlayBook tablet launch deliver sales momentum and did that device suck too much wind out of future product development?

Reading through the research notes on RIM is a bit depressing. RIM isn't Nokia, but analysts are frustrated by the company's delayed products. RIM's Bold 9900 (right) may not ship until September and four more devices based on the BlackBerry OS 7, which used to be known as OS 6.1, may not ship until November. At its BlackBerry World conference, RIM was talking about a June or July ship date.

At a time when RIM should be taking away Nokia's market share it is trying to get much ballyhooed smartphones to market.

Without those devices, RIM is in limbo on the revenue front. And the later those devices come, the more likely RIM's "superphones," devices based on the QNX operating system, will slip farther into 2012. Morgan Stanley analyst Ehud Gelblum says RIM is mired in a "continued product vacuum."

In other words, analysts will be closely monitoring RIM executives and trying to read the product tea leaves. As for the quarter, Wall Street has already factored in a disappointment. Analysts are expecting earnings of $1.32 a share on revenue of $5.15 billion following RIM's recent profit warning.

Gelblum didn't mince words. He said in a research note:

We believe RIM has now squandered nearly every opportunity and competitive advantage it enjoyed through ineffective R&D resource management, delayed product launches and misreads of the competitive environment. With the 9900 launch now likely pushed out til Sept, the remaining BB7 phones now likely just launching in Oct/Nov, and new Playbook models on the way, we believe RIM may have run out of R&D capacity to launch its QNX handset in the CQ1/ FQ4 timeframe it was shooting for.

Among the key items to watch for RIM:

PlayBook sales. Morgan Stanley is expecting RIM to ship 400,000 PlayBooks in the first quarter and then project another 700,000 in the second quarter due to international market expansion. In other words, the PlayBook won't be the iPad, but will have a respectable showing. CIBC analyst Todd Coupland is also projecting sales of 400,000 PlayBooks. Coupland added:

Our view is the PlayBook is a very good product and in spite of a “sloppy launch”, PB appears to have been booking steady sales. Sales above 300,000 units are likely to be viewed as a positive.

When are these new smartphones shipping? Coupland said:

To date, we have only seen scattered blog commentary that RIM’s new products will be delayed for the critical back-to-school selling period. We would like RIM to clarify or at least give some indication as to the progress of major carrier launch dates in order to legitimize the Q2 and F2012 shipment outlook. It would also quicken and improve the ability for RIM to take market share from the struggling Nokia.

Details about these new phones would be nice too. RIM has demonstrated the Touch Bold, but the touchscreen Curve and Torch II are largely mysteries. These details would reveal whether RIM can be competitive with the likes of Apple and HTC as well as continue its international momentum.

Can RIM defend international markets? RIM will take the PlayBook to the international markets where the BlackBerry is strong. What's unclear is how long RIM can continue to thrive abroad with its product vacuum.

Smartphone units and average selling prices. Gelblum expects RIM to ship 13.5 million smartphones and that sum is largely in line with the consensus. The problem is that RIM is falling behind on smartphones---especially in North America. William Blair analyst Anil Doradla said:

Our latest round of channel checks across North America continue to indicate that RIM is losing market share. Relative to three months ago, the market has become more competitive, with pressure from Android (now including several LTE devices) and continued strength from Apple spreading to Verizon. As a result, RIM did not have a smartphone in the top three position at any of the four major North American operators. Additionally, during the quarter RIM saw significant price cuts at AT&T and Sprint.

Across the board, our checks continue to indicate that sales reps are de-emphasizing the sale of RIM devices, and there is an increasing perception of the brand becoming an “e-mail-only device” designed for the business user.

Indeed, Doradla's channel checks on RIM are downright alarming at U.S. carriers. At Verizon, the top three phones were Apple's iPhone, HTC's Thunderbolt and Samsung Droid Charge. At AT&T, the iPhone, HTC Inspire and Samsung Infuse were the top three. Sprint was led by Samsung's Epic 4G, HTC's Evo and Google's Nexus S. T-Mobile's top three phones were the Samsung Galaxy S, T-Mobile G2x and MyTouch 4G. All of those carriers as recently as December had RIM devices in the top three spots.

Topics: Enterprise Software, Hardware, Mobility, BlackBerry, Smartphones

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44 comments
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  • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

    Instead of RIM, their name should be changed to RIP.
    gtdworak
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @gtdworak witty
      the.moog
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @gtdworak Or Rimjob...
      snoop0x7b
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @gtdworak How about Roll up the RIM?
      sparent
  • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

    I've yet to discover the appeal of BB. I've had one as my work phone for about four years now and for me, it was functional at best while feature phones were the norm. Now I'm just reminded of how inferior it is to even my original Moto Droid. Especially web browsing...

    We'll see what the Playbook does for RIM. I must admit from what I've seen of it, QNX looks pretty good and it's a compelling device.
    tech_monster
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @tech_monster
      I agree with your statement on the Playbook. I have one and generally I like it. It has a great screen, nice "gesture" interface and I like the 7" form factor over the iPad's 9.7". It will also "bridge" to RIM's phones for 3G (and with future phones 4G) internet access...for free! Genius.

      However, and its BIG however, why they are taking so long to introduce an email/PIM client is alarming, especially since there is at least one 3rd party app for it. However, RIM will not allow it on their app store. Why? Because they don't want it to cannibalize their own email/PIM client when it is finally available. Pathetic.

      They need to get the apps out and the new phones out to complete the picture. Analysts are growing frustrated with RIM's "secrecy" and honesty about its timing.

      Get on the ball RIM and be upfront with investors and your customers. You are losing credibility.
      ryork272
      • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

        @ryork272
        What is the 3rd party app, and can i get it some "other" way?
        x I'm tc
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @tech_monster
      As for Web Browsing, you are right, but do you take advantage of AutoText and all of the shortcuts available that make a BB much more productive than any other phone?
      If you learn just a few shortcuts, you will find that nothing compares.
      John Hanks
      • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

        @john@... Well in all fairness to android, once you start using swype and voice to text the quick-text shortcut advantage goes away.
        snoop0x7b
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @tech_monster I'm in agreement. I've always had a fascination with the tablet, but I don't watn an iPad and the android offers are lackluster so far (even though I am an android developer). I'm interested in what the playbook will hold.
      snoop0x7b
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @tech_monster
      I have a Blackberry Curve, and it is hateful. I know why people call users Crackberry addicts - bacause it is so fucking fiddly and horrible to use. Woerse then my preceeding HTC 710 WinMo with slidy keyboard.

      Give me my wife's iPhone 3GS any day.
      neil.postlethwaite
  • I wish I could remember the ZDNet blogger who

    essentially said RIM is dead, they just don't know it yet, a week or so after the original iPhone launched. He was totally lambasted in the talkbacks, but it looks like he was spot on in his analysis. Maybe the blog author could do a search through previous articles on ZDNet.
    fr_gough
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @fr_gough <br>Well, RIM wasn't dead in June 2007. It had a crisis and a meta-crisis, which would be, I'd say, could it recognize the crisis.<br><br>Perhaps you read "The Innovator's Dilemma"? It started out as a Harvard Business Review article. The case studies included hard drive manufacturers and construction equipment makers. The former group provides a reasonable approximation to the cellphone/smartphone market.<br><br>In 2007, the iPhone had no facility for adding apps. It was priced as unlocked when it was single-carrier and contract bound. No cut and paste. It didn't look like it was a threat to RIM's core business customer.<br><br>Here's a day-after-release Zdnet rewrite of a WSJ article from 2007:<br><br><a href="http://www.zdnet.com/blog/blackberry/analysts-predict-minimal-iphone-impact-on-blackberry-sales-stock/284" target="_blank" rel="nofollow">http://www.zdnet.com/blog/blackberry/analysts-predict-minimal-iphone-impact-on-blackberry-sales-stock/284</a><br><br>We may Nelson Muntz that, but it wasn't that wack a thing to say that summer. Apple kept evolving the product and built from a base it understood into a sector that it could not have won with a direct assault.<br><br>I find it amazing how rarely Sun Tzu is mentioned when describing Apple's approach. Maybe because Apple doesn't say it, they just do it?<br><br>RIM may have missed a window in 2006 [the touch interface] and in 2007 [the app development pipeline and store] and 2009 [the tablet], but there are windows open now. Finding them, of course, is the real trick.
      DannyO_0x98
      • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

        @DannyO_0x98
        I totally agree with you. RIM has had opportunity. The intro of the iPhone was not their doom. THEY are their doom. Its time for serious upper management changes at RIM while they still have a chance.
        ryork272
      • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

        @DannyO_0x98
        "In 2007, the iPhone had no facility for adding apps. It was priced as unlocked when it was single-carrier and contract bound. No cut and paste. "

        And yet just because it has an Apple on it, the iPhone was hugely successful, despite its completely useless state at launch. Says it all really. RIM's phones are boring, but at least they work. Apple don't even have to release something that works - the money will still roll in.
        12312332123
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @fr_gough
      I don't agree that RIM was "dead" when the first iPhone was released. That is completely false. RIM had opportunity to respond and didn't. The Torch was a pathetic attempt. Under powered and bogus resolution - that is the issue. They simply cannot get it right. They've had opportunity. Horrendous execution.
      ryork272
      • The blog author was making a prognostication.

        Kind of like someone who has received a lethal dose of radiation. After an initial shock, they feel fine for days or even weeks and then, bam, they go into a tailspin and die within a few days.
        fr_gough
  • RIP versus RIM?

    I simply do not understand the unique culture of monopoly and duopoly that permeates the tech sector. The need to go beyond pointing out RIM's faults and predict, if not demand, it's demise. All so two of the world's largest and most powerful companies can have complete control of the mobile device market. The Hyundai-Kia group became the forth largest auto company here in North America by unit sales, ahead of Toyota and Honda. How long their run at forth spot will last is yet to be seen. North American car buyers were happy to see Hyundai-Kia survive their earlier product and marketing foibles and survive as a thriving company - improving our choice and driving competition. I personally hope that not only does RIM survive, it is able to thrive and put a competitive boot to the derri?re of Apple, Google, Microsoft and Nokia. Why would the market want it any other way?
    jsweeny
    • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

      @jsweeny

      What makes tech unique is that almost everything requires follow on "stuff" to make it viable. If you buy a cassette tape player and no one makes tape for it, your new tech toy becomes an expensive door stop. In the smart phone/tablet world, if you don't hit critical mass, no one will bother to write apps and you end up with just what the base unit provides.

      Cars are in the other end of the spectrum. I can buy gas that burns in most cars and such things as tires and tune up parts are sufficently universal that I can continue to drive a Yugo even if there are no dealers if I want.

      It is interesting to note that even in cars consumers are a nervous bunch. Look what happend to the value of a Pontiac when GM announced that they were ending the brand even though they announced that any GM dealer would continue to servie them.
      sbf95070
      • RE: Research in Motion: Did PlayBook R&D jeopardize its superphones?

        @sbf95070

        There is no question that car consumers are a nervous bunch, a fickle bunch. That is precisely my point. Car consumers want choice for their ever changing tastes and needs. If the car consuming market behaved like the tech market, we would have been cheering on the demise of the North American manufacturers. I would be reading headlines like: "Has Hyundai-Kia recent sales spelled the end of Honda and Toyota?" Any auto press editor that let such a ludicrous headline out the door would be fired immediately. Only the tech press allows such bombastic statements and panders to such ridiculous sentiments. For all it's power and influence at it's peak, GM never had anything like the power Apple has over the fifth estate. Thank God for that. I am glad their is real competition and real choice. Look no further than hybrids and EVs as the result of a level playing field.
        jsweeny