Research In Motion Ltd's.
,(
RIMM
) failure to integrate its BlackBerry Messenger service on PlayBook
tablets will continue to cost the company. RIMM is also looking to
cease production of its low-end 16GB PlayBook tablets, which we
view negatively given the fact that the main thing going for its
tablets at this point is the price.
In 2011, Research In Motion launched its much hyped PlayBook
tablets based on BlackBerry OS 1.0 applications. However, PlayBook
sales deteriorated over the year, mainly due to the limited number
of applications as compared to
Apple Inc.
's (
AAPL
) iPad and
Google Inc.
's (
GOOG
) Android-based tablets.
Since software development around a hardware platform is
instrumental to its broad adoption, Research In Motion increased
the number of applications from 2,000 to 15,000. However, this is
still a far cry from the development activity surrounding the iPad
or Android.
The new PlayBook tablet was expected to integrate the e-mail
feature, the security and speed of which had drawn users to its
phones. However, technical enhancements were minimal and calls for
the use of an application called BlackBerryBridgeto access mails
and contacts on PlayBook tablets.
In the beginning of fiscal 2012, Research In Motion launched the
BlackBerry PlayBook OS 2.0 application for its tablets to improve
email functioning. However, the problem still persists as the
company was unable to integrate its popular BlackBerry Messenger
service (BMM)on its PlayBook device. Moreover, the e-mail service
looks a bit complicated.
The tablet market continues to be dominated by Apple's iPad. In
the last quarter, Apple sold 11.8 million tablets compared to
500,000 BlackBerry Playbook tablets sold by Research In Motion.
Research firm Gartner expects the tablet market to grow by 98%
in 2012 from the 60 million units sold last year, with Apple
accounting for 61.4% of the total sales and Research In Motion
contributing a mere 2.2%.Therefore, the dropping of $199 tablets
from its portfolio, which helped drive a 78% increase in Playbook
sales in the last quarter looks like a very bad idea.
Particularly so, since the QNX-based PlayBook tablets are still way
behind Apple's iOS and Google's user-friendly Android operating
system.
Currently, Research In Motion has a short-term Zacks #4 Rank
(Sell) on the stock.
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