The BlackBerry PlayBook, a tablet computer whose introduction marked the former Research In Motion’s ambitious and ultimately failed attempt to compete with devices such as the iPad and Samsung Galaxy Tab, died on Friday. It was two years old.
Perhaps writing this obituary seems a bit premature, but after listening to the smartphone maker’s quarterly earnings call it’s hard to come to any other conclusion. Though discussion of the PlayBook came almost as an afterthought amid news of a $84 million net loss and sluggish BB10 device sales, which sent shares plunging more than 28 per cent shortly after markets opened on Friday, the fate of BlackBerry’s tablet offering could be an important indicator of where the firm’s ultimate future is headed.
BlackBerry CEO Thorsten Heins said the company has been spending considerable time and effort to look at how BB10, its latest mobile operating system, could move to the PlayBook. “But I am not satisfied with the level of performance and the user experience,” he said, adding that BlackBerry will “continue to support existing devices and configurations.” With that, you might as well put an “obsolete” sticker on any of the BlackBerry PlayBooks on the market today.
In some ways this might make sense. Earlier in this space I have argued that creating new phone-tablet hybrids or “phablets” could unnecessarily drain the company’s resources when what it needs right now is to focus on core strengths. That argument, however, was based on the notion that one of its core strengths remains smartphones, and yet the company only shipped 6.8 million devices versus the 7.5 million most analysts expected. It also didn’t mean slamming the door on an existing product that is already in its second generation.
Heins reiterated that transitions take time, and that fiscal 2014 will be BlackBerry’s “year of investment,” aiming for sustainable growth in the following year. Those investments include creating new devices, monetizing its BBM messaging service and building up service revenue from its mobile device management software. This last area – creating secure environments that will allow almost any devices to be used securely within business settings – is large enough that one analyst on the call, Richard Kramer from Arete Research, asked the question that keeps coming up: “Could you see BlackBerry pivoting away from making devices and trying to become over the year just an enterprise software and services company?”
Naturally, Heins would not answer that directly, calling it a “long-term strategic question.” What he did say, however, was that in conversations with customers they expressed an ongoing desire for BlackBerry hardware. Even with the best of its software tools, Heins said corporate data will remain more secure on a BlackBerry device. “They want an end-to-end solution still, and we can’t break that paradigm.”
A tablet, however, remains a significant piece of that end-to-end solution for many firms. I speak regularly to IT professionals that work in banks, hospitals, major retail organizations and government who are all using tablets to bring traditional desktop experiences into a mobile context. If BlackBerry doesn’t continue to invest in that piece of the puzzle, it may become difficult to consider BB10 a complete platform. Yes, BlackBerry could eventually phase out of its namesake smartphones, but a focus on software alone would mean we’d see a much smaller company.
Heins has been justly lauded for cutting costs, ramping up marketing and making the kind of tough choices that will ensure BlackBerry’s survival. These latest results, however, indicate his toughest choices are just beginning. If the PlayBook is dead, investors can’t be faulted for wondering what else in the BlackBerry product portfolio is hanging on for dear life.