Poor BlackBerry PlayBook sales drag on RIM earnings

Lacklustre uptake for the BlackBerry tablet has contributed to a 50-percent drop in profits for RIM, which is counting on an upcoming software update to revive its fortunes
Written by Ben Woods, Contributor

The BlackBerry PlayBook tablet saw a shortfall of 400,000 against expected shipments in the last three months, Research In Motion said during a quarterly earnings report.

BlackBerry PlayBook

RIM shipped just 200,000 BlackBerry PlayBook tablets in the second quarter, as its earnings more than halved year-on-year. Photo credit: Ben Woods

The Canadian smartphone maker shipped 200,000 of the QNX-based tablets during its fiscal second quarter, which ended on 27 August, it said on Thursday. In handsets, it sold around 10.6 million units, also below targets.

The weak performance resulted in a drop in quarterly revenue at $4.2bn (£2.65bn), down 15 percent on the previous quarter and down 10 percent from $4.6bn the previous year. Profit dropped by more than half year-on-year, from $797m to $329m.

"The results show the challenging time for RIM. It is a transition period between BlackBerry OS and QNX, and it really shows they need to refresh the portfolio and speed up the roadmaps," said IDC mobile analyst Francisco Jeronimo. "They need to catch up with competitors in terms of applications, form factors and touchscreen, and that's what they are doing [with the recent BlackBerry 7 launches]."

PlayBook limitations

In an earnings conference call, RIM co-chief executive Mike Lazaridis said while the PlayBook shipment figure was well below where they would like it to be, the company believes planned software updates will buoy PlayBook sales in the future.

"We recognise that the current availability of content and applications for PlayBook has limited the near-term uptake of the device in the market, and we are actively working with key partners to deliver the most desired applications and content to our targeted market segments," Lazaridis said.

The PlayBook launched without support for RIM's popular native email and collaboration service, BlackBerry Enterprise Server. In addition, the BlackBerry App World marketplace that hosts applications for the BlackBerry tablet and handsets lags behind rivals, with around 40,000 titles for download. In contrast, around one million apps have been developed for Apple iOS and Google Android combined, according to Appsfire.

Update bundle

Instead of introducing native email and other features on a drip-feed basis, RIM plans to bundle them into a "major new software release" for the tablet, Lazaridis said. The company expects to show off the upgrade at its DevCon conference in October and it will be released "thereafter", he added.

The results show the challenging time for RIM. It is a transition period between BlackBerry OS and QNX, and it really shows they need to refresh the portfolio.
– Francisco Jeronimo, Gartner

In addition to adding native email, contact and calendar support, RIM plans to make improvements to BlackBerry Bridge, which lets people pair their PlayBook with a RIM handset for access to those collaboration tools. Another feature will allow Android apps to run on the device, while the new BlackBerry video store will provide access to 10,000 titles for rental or purchase.

To help drive sales for the rest of the year, Lazaridis said RIM will introduce discounts and promotional programmes for both enterprise and consumer BlackBerry buyers.

Despite the disappointing  earnings results, IDC mobile analyst Francisco Jeronimo said he expects RIM to move into a more prosperous period with the launch of new BlackBerry 7-based handsets.

"I'm expecting this tough period to continue into next quarter, but to improve after," Jeronimo told ZDNet UK. "Even next quarter, the expectation is for shipments to grow at around 20 percent. Which is a good sign, because BlackBerry 7 was only recently launched, so they are right in the middle of a transition."

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