With a Research In Motion earnings announcement and investors call happening later today (we'll be live blogging it at 5pm ET here on the CrackBerry blogs), per usual we're seeing the stories ramp up on the internet as analysts start voicing their predictions about how RIM is doing and what the future holds. I always like reading these stories. I talk to a lot of analysts on a regular basis (they reach out to me as they know I know my sh!t), so it's fun to see which ones say things that line up with my thinking, and which ones say things that I don't agree with (overall, I have a pretty solid track record for getting things right).
In regards to the BlackBerry PlayBook, the last 24 hours has produced a couple of interesting analyst quotes, which I think make it worth me following up and adding my thirty six cents on. Brian Blair from Wedge Partners wrote in one of his notes:
Last quarter RIM talked about shipping 500,000 units but did not speak of sell-through for obvious reasons... Channel fill could turn up another decent shipment number this year in the 500,000 - 700,000 unit range but we believe sell-through has been weak enough that that number will trend down over the year and RIM will likely send the PlayBook into the same graveyard as the HP TouchPad.
A few short sentences, but Blair makes a pretty big claim in pointing to the death of the PlayBook. On the shipments, I agree - RIM sales haven't materialized to the extent RIM was hoping. Back on June 14th leading up to RIM's last earnings announcement, I wrote an article called I've got a feeling... that BlackBerry PlayBook sales are not having a good time where I predicted based on my evidence that the number of actual PlayBook owners out there in the world was under 200,000. On that earnings call RIM said they had shipped 500,000 units (that's what they sent to stores - not what was sold). Since then, RIM has launched the PlayBook in a lot more markets - so I'm sure they've shipped quite a few more PlayBooks this quarter, but again from my standpoint I don't think RIM has seen a lot of uptake in PlayBook ownership these past three months. Looking at all the metrics I can tap into from the operation of a site like CrackBerry (where we get a pretty good understanding of the demand and the success of individual BlackBerry products) I really don't think there are a lot more PlayBook owners now than there were three months ago.
On the last call RIM's Co-CEO Jim Balsillie said he didn't know the number of actual PlayBook owners (he just had the shipment numbers), but obviously that is data RIM knows very well. With BBID registration required upon PlayBook startup and OTA updates, RIM knows exactly how many PlayBook owners there are and how many are actively updating the OS. Suffice to say, if this question gets asked tonight on the earnings call, I hope the answer given isn't "we don't know." I'd rather hear we know, but aren't going to tell you. Again, I don't think there are all that many PlayBook owners out there - so wouldn't be shocked to hear that be the case even if RIM did divulge that information.
So **assuming** BlackBerry PlayBook sales haven't been that stellar to date and that there aren't all that many active BlackBerry PlayBook users out there in the world, what does that mean for the future of the BlackBerry PlayBook? Is Blair right in saying that it'll go the way of the TouchPad to the tablet graveyard?
Personally, I don't think the PlayBook will head to the tablet graveyard anytime soon. But at the same time, that doesn't mean its future is rosy and bright and that we'll see generation after generation of new PlayBook hit the market as we see happen on the phone side. RIM, like webOS, like Android, is having relative trouble in the tablet space compared to Apple and their success with the iPad. For RIM, selling tablets has a been a challenge compared to selling phones (and making money at it a bigger challenge - I don't think they have been successful in that department at all on the PlayBook). Part of this can be blamed on the PlayBook being a little incomplete at launch and its initial reviews being lackluster (even our PlayBook Review was a bit harsh), but I think maybe the bigger reasoning here is that what we have today isn't a tablet market, but an iPad market.
Back when I visited Waterloo, I actually had the opportunity to talk to a bunch of the members of the PlayBook team in one of their biweekly townhall meetings (probably ~50 people). It was an awesome experience, and I relayed to the team some of my outsider/blogger perspective and feedback on the PlayBook to date. And one of the things I talked about was just this -- that I don't think there even is a fully developed tablet market yet. Normal average people are not waking up on a Saturday morning and saying to themselves "I want to buy a tablet today.. better hit the net and research which one is the best." The majority are waking up and saying I'm going to buy an iPad today. You get this which should I buy? behavior with developed product categories like desktop computers, laptops, digital cameras and cell phones, but with the new era of tablets it's still very much a single-product game... an iPad game. Apple got the first mover advantage in breathing new life into tablets, and it's making it very hard for everybody else. Of course the enthusiasts and early adopter/techy type people are looking at tablets beyond the iPad, but for the average consumer that need for a generic tablet (whatever the manufacturer) still isn't there. The world existed for a long time without everybody needing or wanting a tablet, so it's really been Apple's product getting people's attention more than category creating a massive need (though at a $99 price point a lot of people don't care who makes it - as evidenced by the TouchPad firesale).
So if you're RIM, where do you go from here? You have to remember - sending a device to the graveyard admits defeat. And RIM doesn't like to do that. Plus it's still early in the "new" tablet game - so there's hope. Part of me thinks in retrospect RIM wished they put their first tablet on hold and just poured all that time and effort into getting QNX phones to market. But what's done is done, so thinking like I know RIM likes to think (not admitting defeat, and not giving up), here's how I'm predicting we will see things play out:
- Tablet OS 2 Update: As I already blogged this would happen and we've seen some follow up leaks occur, RIM will release a Tablet OS 2.0 update for the PlayBook. It'll be the same PlayBook hardware (which is awesome) and this will address all of the feature gaps that were there at launch and also introduce a bunch of new features. Native email, Android app support and a bunch of other stuff will be there (hopefully we'll see stuff like DLNA support for wirless video streaming and the ability to type on your PlayBook with your Bold 9900's amazing keyboard!).
- PlayBook w/ radio (Winchester) released: From what I can gather, RIM is still planning on releasing versions of the existing 7" PlayBook with a radio in it for carriers to sell. With Tablet 2.0 software and a data plan, this updated PlayBook becomes a pretty compelling package in the marketplace. What's with the Winchester name? Apparently that's the codename for this one. RIM goes through phases with their codenames and apparently they got on a gun kick... remember the Magnum? And now the Colt (QNX touchscreen phone) and the Winchester (PlayBook w/ radio). A carrier re-launch of the PlayBook will get extra life out of RIM's current PlayBook efforts to date.
- Licensing the BlackBerry Tablet OS to other tablet manufacturers/car companies: And here's where I think the PlayBook's future gets a little crazy. For a while we started hearing rumors about RIM working on a 10" BlackBerry PlayBook. Then we heard the rumors that the 10" PlayBook got scrapped. We also haven't been hearing rumors of updated hardware for a 7" PlayBook (honestly, the hardware as it is now is awesome). So what's this all mean? To me it means that RIM doesn't see a clear path to making profit in the tablet space. Even on BlackBerry Smartphones they're having a tough time keeping their hardware costs down, and I'm guessing with lower than expected volumes it's even tougher on tablets. So where does that put the BlackBerry Tablet OS in the future? I'm thinking down the road we may see RIM actually license the PlayBook out to other manufacturers to build tablets running the tablet OS. I know it seems crazy, and I don't see them going this route with their phones any time soon, but in the tablet space I don't think it's that far of a stretch. The reason? Cars.
QNX has a long history in automotive, and I could see RIM/QNX happily letting automotive companies work to put the BlackBerry Tablet OS into their onboard computer/infotainment systems (back at BlackBerry World I just got winks whenever I asked this question when getting demos of the latest incar QNX/BlackBerry offerings). So if you're going to let automotive companies put the Tablet OS into cars, wouldn't the next step be to let computer/electronics hardware manufacturers put it on their own tablets? Example: I picked up a cheap Acer Aspire Windows 7 laptop last week for one of our new developers to use.... is an Acer tablet with the BlackBerry Tablet OS that far a stretch? Maybe it is. Maybe it isn't. A move like this would turn RIM in tablets into more of a software OEM than a hardware manufacturer, but it would allow them to keep more of their focus on phones, which a move like this would allow them to do (and they wouldn't have to worry as much about losses in the tablet space as their risk would be shared/less). It seems odd given that tablets these days are a lot like phones -- only bigger -- but I'm used to seeing odd things from RIM. A strategy like this would allow for RIM to keep growing their BlackBerry footprint in the mobile space, but in a way that doesn't put the manufacturing burden and costs on them. And in the distant future, if they want to re-visit building tablet hardware again with follow up versions of the PlayBook or something else, that will always be an option.
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