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What to do with the PlayBook?

|Includes:AAPL, BlackBerry Ltd. (BBRY), 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.

Stocks: BBRY, AAPL, GOOG