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Stratagem
 
RESEARCH-IN-MOTION: BLACKBERRY PLAYBOOK’S POTENTIAL
A Play Book a day, Keeps The Apple Away
Many Claim that BlackBerry Smartphone’s success is Attributable to The Unrelenting Support of Zealots in its Customer base. They are right. Question is: Will The same Energy help Boost its PlayBook tablet Profile? Will PlayBook be Nicknamed “The Apple Basher”?
Issue Date - 17/02/2011
 
The story of Research-in-Motion (RIM) is really a tale of two guys playing charade – two of whom actually share very little in common, except that they are both 48 year-old billionaires, who have been running the show at RIM as its co-CEOs for the past 17 years. One (Jim Balsillie) is a Canadian born in Ontario, the other (Mike Lazaridis) a Greek born in Istanbul. Balsillie, a Harvard MBA, has an athletic build, and travels without a hair-comb (he does not need to), while Lazaridis, a drop-out from the University of Waterloo, is stout but proud of his luscious shock of white hair. The difference shows at work – while the extroverted Canadian, who looks after strategy-making at RIM, takes part in long brainstorming sessions even with amateur salespeople, the reserved technological geek-Greek in charge of R&D, loves to bask in the sun of bureaucracy. The contrast surfaces at play too – Balsillie loves cycling on Tour de France tracks and playing hockey (he has also been active in his efforts to buy a NHL franchise), while Lazaridis, is not one interested in 10 mile-long treks (he regrets the fact that by the time he got around to driving a Porsche, his posterior made it an uncomfortable experience). And beat this for difference – even their offices in RIM’s headquarters on 295 Phillip Street in Waterloo, are located in different buildings. But even with such dissimilarities, they seem to be playing the oddball of connectivity very well. Today, RIM is no longer talked about as the lesser-known maker of bar-codes. It is known as the $15 billion-a-year earning maker of BlackBerry handsets, valued at $31.23 billion on NASDAQ (as on February 1, 2011), controlling 14.8% of the smartphone market. And it is now trying to squeeze its weight in between the PC and the mobile. The duo fondly call it the Playbook tablet, we call it the Apple-basher.

Singly, Balsillie and Lazaridis may not yet have either earned the reputation or inculcated the attitude of their biggest rival – iPad’s black-mock-turtleneck-donning genius. But given the force that these opposite poles have gathered over the years, they appear to have grown the incisors to bite into the half-eaten Apple. RIM and Apple are the closest competitors amongst the top smartphone sellers today (boosted by the launch of the 4G version, 134.8 million iPhones were sold in Q3, 2010, versus 119.1 million BlackBerrys). But tablets are a different business.

Unlike most existing and upcoming Android tablets (except Cisco’s Cius), the yet-to-be released PlayBook (its Wi-Fi version is expected in March, with 3G and 4G models by end-2011), is primarily meant for the enterprise space. So it is not expected to bite at the heels of the iPad soon, not at least for a year post-launch. But happen it will – PlayBook will appeal to masses, willingly or unwillingly. Apple is fun. It has leveraged that image to sell the iPad. RIM is business. And Balsillie & Lazaridis know where the money lies. Giving a quick prediction, James Moorman, Equity Analyst at S&P tells B&E, “The PlayBook offers true multitasking and high performance multimedia, while also providing advanced security features, out-of-the-box enterprise support and a breakthrough development platform. RIM will make a positive inroad to the enterprise market with this device.” Not surprising therefore that the product’s sales count is expected to surpass the 10 million mark by March 2012 (possible, considering that Apple sold 14.79 million iPads since April 2010).

 
Technical data supports PlayBook’s case strongly. The fact that it comes with a 7-inch screen weighing 0.41 kg and is therefore a smaller, lighter machine as compared to the iPad (9.7-inch, 0.68 kg) makes it an easier package to carry around. There are more sweet spots – higher RAM (1 GB; iPad sports a 256 MB), 3 & 5MP cameras (front & back; iPad has none), Adobe Flash support (missing in the iPad), greater pixel density (170 versus iPad’s 133) and a more advanced processor makes it a steal. Its dual-core ARM Cortex A9 processor, built upon the QNX’s Neutrino micro-kernel architecture, is a generation ahead of the iPad’s single core A4 processor. Says S&P Analyst Peter Misek to B&E, “RIM’s new OS (QNX) provides a great browsing experience, is scalable so it can address low-end and high-end, is easy to port Android apps to, and is more secure, and requires less bandwidth.” Adds Massachusetts-based Charles King, President of Mindspring to B&E, “RIM’s choice of QNX is interesting because of its maturity and features, which are far more advanced than either Apple iPad OS’ or Android’s. RIM may even enable the PlayBook to run Android, possibly via the Dalvik VM or a direct agreement with Google, to make PlayBook appeal to simpler, general consumers.”

An old card in the deck – the promise of higher security is what will force all-and-one to rethink their iPad shipments. The QNX architecture used in the PlayBook, is found in many embedded systems – from networking hardware to power-grid gears, medical devices, military hardware and automobiles. Cisco’s routers, run QNX and even GE runs it on power-grid turbines. The PlayBook promises levels of security found in the US military’s computer systems (the Common Criteria EAL 4+ security). Tough to imagine then that tablet users should opt for any tablet less secure.

Many also question PlayBook’s choice of using Sprint Nextel, the #3 mobile operator in US. Why not the #1 Verizon? [iPad is exclusively sold by the #2 AT&T.] This one comes straight out of Balsillie’s cookbook – Sprint owns a 51% majority of Clearwire, which operates the largest wireless broadband network in US. Any better a choice to guarantee success for a Wi-Fi-only gadget?

But there are hurdles. RIM has not earned a reputation for battery life, and tablet users seriously appreciate the 7 & 10 hours of backup that the iPad and the Samsung Galaxy deliver respectively. Secondly, iPad 2, which will be launched in November, sporting a dual-core Cortex A9 processor with four times the current pixel density (making it the tablet with the highest resolution). It can make PlayBook’s case weaker. Competition is another threat. Though IDC has forecasted that 44.6 million tablets will be sold in 2011 – 250% more than in 2010, there are many Android tablets making their way into the market. Market stagnation is a concern too. While speaking to B&E, San Francisco-based Kent Schofield, Analyst at Goldman Sachs says, “The key risk to the PlayBook, which marks the beginning of an attractive product cycle, is that of quick stagnation of the product in US.” Meaning: PlayBook should bet on other markets outside US, and as early as possible. iPad sells only in 10 countries, Playbook can sell in 10 more!

Good news is that with PlayBook, RIM has shown why it is serious about evolution. Given that RIM believes in marketing its products globally & considering that even a 32GB PlayBook would carry a tag of $499 (equal to iPad’s Wi-Fi version), the PlayBook is a good offering at a good price. And once the 3G & 4G versions are out, this harmless tablet might just be nicknamed “the Apple-basher”. At least, we know of a Canadian and a Greek, who are praying it happens.

Steven Philip Warner           

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