After months of delays, the software upgrade to Research in Motion’s (NASDAQ:RIMM) Playbook tablet finally arrived on Tuesday. With a native email client, built-in calender and contacts applications, we believe the Blackberry Playbook OS 2.0 addresses many of its predecessor’s limitations, but the lack of BBM functionality will be a deterrent for many of its fans.  With cheaper and much more popular 7-inch tablets such as Amazon’s (NASDAQ:AMZN) Kindle Fire and Barnes & Noble’s Nook tablet gaining market share in the low-end tablet market and Apple’s (NASDAQ:AAPL) iPad dominating the high-end space, RIM will have to do much more to stay relevant in the tablet arena.
Back to basics please
To start off, the company should try to focus on its core strengths that had helped it become a popular brand in the first place-its core audience of enterprise users and BBM fans. Enterprise customers constitute a huge proportion of its overall customer base that use its Blackberry phones to connect to its enterprise server and send secure encrypted messages. The Blackberry Messaging service (BBM) accounts for close to 30% of our $16.50 price estimate for RIM stock and brings in a lot of value to the company’s business.
However, just like its predecessor, the new upgrade lacks BBM functionality as well as integration with the company’s enterprise server software. This, we believe, is a huge gaping hole in the company’s Playbook software that needs to be addressed as soon as possible. Given the amount of time the company has taken to launch this upgrade-Playbook was launched in April with the next upgrade scheduled for October, we expected this version to finally provide all the above mentioned functionality that should have actually been present in the original version.
A lack of these features had caused Playbook sales to remain slow throughout last year (only 850,000 sales for the full year compared to iPad’s 15.4 million in a single quarter), that even heavy discounts and promotional offers couldn’t reverse.
The only positive capability that we see in this upgrade is the ability to support some apps originally written for Android. This makes it easier for developers to write apps for the QNX platform, which the company is also banking on to revive its smartphone fortunes. The company is trying to generate a good developer momentum ahead of the launch of its QNX-based smartphones, which the prospect of increased Playbook sales following the launch of the upgrade might kick-start. (see RIM Extends PlayBook Promotion to Attract Developers) Also, the fact that the company did not further delay the launch of the upgrade can be seen as a reassurance that it is trying to deliver on its resurgence road-map following the management shuffle at the top.Notes:
- BlackBerry PlayBook OS 2.0 arrives, built-in e-mail and all, CNET, February 21st, 2012 [↩]