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Adam's background marries extensive hands on company building experience with a successful track record as a venture capitalist, investment banker and director of both private and publicly-held technology companies across North America. Adam's extensive knowledge of the Canadian technology and... More
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  • What to do with the PlayBook? 7 comments
    May 13, 2011 11:02 PM | about stocks: BBRY, AAPL, GOOG
    The BlackBerry PlayBook is now one month old and it's time to take a reality check on the pros and cons of this divisive device.

    Rarely has a device caused more friction and debate than the PlayBook tablet. For whatever reason, pundits and smartphoneheads are more passionate about their smartphone and tablet devices than they are say, dishwashers or laundry machines.  The launch of the PlayBook caused a stir of debate and controversy and reading through the reviews of the PlayBook hrough the analyst reports, the consensus appears to be that Research in Motion has lost its way, it launched a dud and the fallback of all fallback's would soon prevail - it would be acquired by Microsoft. Since the launch of the PlayBook, RIM's shares are down by almost 20%.  Is this the end of RIM?

    The truth is nothing so dramatic: RIM launched a great product that is slightly ahead if its time, and took some bad advice from the marketing department on how to position the tablet.

    The PlayBook, at least at launch, is a BlackBerry tablet in the real sense - to get the most out of the product you should be pairing it with a BlackBerry phone, and even better, a BlackBerry Enterprise Server (BES).  With this combination, your tablet becomes an extension of your phone, provides for a better experience, improves productivity while remaining secure under a lower total cost of ownership for your IT department.  This is how version 1.0 of the tablet was designed to be used, and only the most immense of brain farts could have moved RIM off of this message.  Sending a PlayBook to an iPhone user in the media and asking for a review was a disaster in the making and I've talked to more than one RIM engineer who saw this disaster coming as the company jostled for position in Apple's backyard.  The PlayBook 1.0 should have had a limited launch, focused on the core BlackBerry user and the BlackBerry friendly media and blogs, and RIM should have focused on the message that the current iteration of the tablet was intended for BlackBerry users and, due to limited supplies, a future version for the rest of the market would be released in short order.  Some would still complain of course, but given that they would complain regardless, it really is beside the point.

    Even with this stunted launch, the PlayBook does appear to be gaining some traction. I certainly see more PlayBooks in the hands of corporate and Wall Street users than I do any of the Android devices.  The size is perfect for a portable extension of the business phone.  The operating system is excellent and the multitasking wonderful.  It supports most web standards so surfing the web on it is a great experience.  It works like a BlackBerry should.  

    Over the next three months, RIM has a few challenges.  First, because they launched the product badly (using bad messaging), they will need to fix this, and it won't be easy.  They need to alter the messaging slightly to focus on the BlackBerry user without giving the impression that they are giving up on the rest of the market.  These are smart people, they will figure out a way to adjust the message.  Second, they need to get some core apps out there, a Kindle app, a twitter app, a proper RSS reader, things that really should have been there on day one.  Third, they need to understand that they are focused on a niche that rests on the corporate user.  They need to stick to their home field advantage for a while.  They need to continue to focus on the advantages that they have over Apple and Google in this market, advantages that I frankly don't believe that the competition will be able to overcome.

    Contrary to popular opinion, RIM is selling more BlackBerry's today then ever - both growth and rate of growth are stable.  RIM had this market all to itself for five years, new competitors will take market share, but the over-all market will expand and continue to grow.  We are still in the early stages of a new communication revolution, and RIM continues to have all of the tools necessary for it to be a big winner.

    The shares are at roughly $42 right now.  Let's check back in a few years and see where we're at.

    RIM has entered a business battle with the launch of the PlayBook, and then only later realized that they have entered into a holy war.  A battle of this type requires the immense loyalty of your adherents, they need to be unleashed as the most powerful tool for winning converts.  RIM decided to fight the battle by running into the lion's den and came out with more than a few scratches.  They will use this as a learning experience, and they will be better prepared as a result.








    Disclosure: I am long RIMM.
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Comments (7)
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  • Hey Adam,
    I enjoyed reading your article. I agree with your point about the Playbook being marketed incorrectly, I guess that explains the management shake up that resulted. Great point also about it being a bad idea to let fanatic Apple bloggers review the tablet. I hadn't thought of this.

     

    The Playbook's uniqueness on the one hand shut up pundits that said RIM was too conservative. On the other hand the big innovation brought a lot of unfair criticism, and negative publicity is a lot harder to get over. For example after Shaw Wu announced the Playbook would have battery problems, the stock tanked. Once the Playbook came out, and did not have these issues, the stock did not recover, nor did the people who reported the news correct themselves.

     

    I find very few people can explain to me why tether + WiFi is worse then WiFi alone (which is standard on all the other tablets), and yet somehow its been accepted as truth.

     

    In the end Marketing is it seems is more important than a sound product, so I hope you are right and I hope that RIM learns quickly from this.
    17 May 2011, 10:38 AM Reply Like
  • Author’s reply » RIM has realized that marketing a consumer product against Apple is a tough, tough, job. Intel, Microsoft, HP, Dell, Google, Sony, Samsung and various others have also realized this. Steve Jobs is a very tough competitor and one of the reasons for his success with Apple is that he defines the market and then uses his loyal followers as a means by which to force these competitors to fight the battle on the market as defined by Apple. This strategy has been tremendously succesful for Apple - but I think that the competitors are starting to wake up to this. Certainly RIM should be - there was no reason for them to fight this battle in the consumer market rather than in the corporate market. Recent announcements - like opening up the BES server to iOS and Android devices and Android support for the PlayBook indicate to me that they are taking the battle back from Apple and moving it back to their market. RIM's biggest fans are the IT departments - it's not sexy, but it is a significant strength.
    18 May 2011, 11:17 AM Reply Like
  • Its just interesting to me that Apple has been so great at 'defining the market' as you put it, that having an edge over an Apple product have means the bonus features are either 1) ignored or 2) ridiculed as unnecessary. This happened with keyboard + touch screen on the Torch/Palm Pre/Android models, with Flash, with quality call reception (everyone by the IP4 can make calls without dropping them), and now its occurring with tethering. Same for data compression and bbm. Both are obviously huge money savers, but simply not recognized by the masses.

     

    If the competition mimics Apple they are seen, correctly, as copying Apple. However, when they truly innovate, the market is seldom ready to recognize the merit.
    18 May 2011, 12:53 PM Reply Like
  • Author’s reply » As I said, this is more akin to a religious war and Apple has the largest number of zealots.
    18 May 2011, 04:14 PM Reply Like
  • Interesting analogy..
    18 May 2011, 05:06 PM Reply Like
  • How's it looking now for you?

     

    Where are all those PlayBooks you thought you saw on Wall Street?

     

    See, when you make stuff up, it comes back to haunt you.

     

    You misread Apple. This company doesn't win through the activities of zealots, on the contrary, it grows zealots through winning their trust, one wallet at a time, through delivering a great and fulfilling user experience.
    13 Jul 2012, 06:32 PM Reply Like
  • Author’s reply » Clearly the PB did not have the staying power that I had hoped for and the follow through was horrible. The initial launch did show some promise, unfortunately for RIM most of these people eventually moved on to the iPad. Note that the article points out the RIM was bungling the launch and mismarketing the product and focusing on the wrong customer groups. I agree with you on Apple, they "create" their zealots, RIM went in the opposite direction and turned off their customers.

     

    With respect to your comments, I say "all forecasts are lies disguised as estimates". Picking trends is a fools game, but yet we continue to do it because it's the only way to know anything about the future.
    14 Jul 2012, 08:24 AM Reply Like
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