Skip to main content

The Globe and Mail

For RIM's PlayBook, the picture brightens

When the upscale Ritz-Carlton Hotel opens in Toronto next month, guests will be able to view the drinks menu at the hotel restaurant on an iPad. In the fanciest suites, the hotel's well-heeled customers will find digital editions of their home country's top newspapers waiting for them, also on Apple's increasingly ubiquitous tablet computer.

The Ritz intend to use tablets in other ways, too - allowing customers to check in while they relax in the bar, for example, so they don't have to wait in line at the reception desk.

There's only one problem. Ritz officials have decided the iPad isn't secure enough for matters that deal with sensitive information such as customer credit cards.

Story continues below advertisement

That's why the hotel will likely employ another tablet: Research In Motion Ltd.'s soon-to-launch PlayBook.

The Ritz-Carlton and a growing list of other big corporate players are at the forefront of what is quickly becoming the most difficult guessing game in the world of technology: figuring out how - and how many - businesses are going to embrace tablets.

For RIM, the answer to that question is critical to the success of its most important product launch in years.

The majority of the world's 55 million BlackBerry users are corporate or government customers; many of them prefer RIM to Apple Inc.'s line of products because it uses superior encryption technology for keeping data private.

If RIM can capitalize on that advantage and sell PlayBooks to a sizable proportion of BlackBerry users, it will have tapped into a new gold mine of revenue.

If it can't, it will remain far behind Apple in the race for market share in the hottest new category in computing.

No one yet knows how it will turn out, but some analysts are growing more optimistic about RIM's chances. RBC Dominion Securities Inc. analyst Mike Abramsky said Tuesday the company could sell as many as six million PlayBook tablets in the first year of the product's availability, in large part driven by enterprise enthusiasm for the seven-inch tablet.

Story continues below advertisement

"Tablets probably represent a larger opportunity than most investors appreciate because they reach a lot more people through simplicity and mobility," Mr. Abramsky said in an interview.

"Apple certainly has a huge lead and has established the bar, but the large size of the market opportunity leaves room for other entrants."

At six million, Mr. Abramsky's guess is significantly higher than those of other analysts. Hapoalim Securities analyst Kevin Hunt has said he expects 4.5 million units sold in RIM's 2012 fiscal year, which starts in March - around the same time the PlayBook is due out. FBN Securities expects two million PlayBooks sold in 2011, based on a projection of one out of every 40 BlackBerry users picking up the device.

Tablet sales estimates have come under some scrutiny recently because few observers have gotten the numbers right. With 7.33 million iPads sold in the last quarter, and 15 million for all of 2010, Apple easily beat virtually every estimate on Wall Street. (The iPad was first released in April of last year).

Part of the difficulty in predicting tablet sales is the extreme swing in competition between last year and this one. In 2010, the iPad dominated virtually all tablet sales. This year, more than a dozen big-name entries are expected to launch, including units from Hewlett-Packard Co., Motorola, RIM and many others.

In addition, iPad sales have largely been to consumers. Apple has recently highlighted the number of Fortune 100 companies deploying or testing the device, but those numbers offer little clarity on how many enterprises are buying them for large numbers of employees.

Story continues below advertisement

In Canada, throughout 2010, enterprise sales for tablets have been in the "low, low, low single-digits" of the overall number of users, when compared with general consumers, said Krista Napier, emerging technologies analyst at IDC Canada. But in 2011, the enterprise market for tablets will begin to grow, with IDC forecasts reaching into the low double-digits, or roughly between 10 and 20 per cent of the overall user base of tablets.

"What's challenging about this market is that there's a lot of hype and speculation," Ms. Napier said. "The market might reach that hype, or even exceed it, but the point is that there's been a lot of devices that have been announced … but we don't know when they're going to be launched."

In the enterprise market, certain industries are likely to pick up tablets quickly. Ms. Napier pointed to retail stores and restaurants - the latter are increasingly starting to use iPads and similar devices as menus.

But where the PlayBook may find a lucrative niche is in the higher-security functions, such as accounting and secure enterprise e-mail, where some companies may want a more security-oriented tablet.

Wade Oosterman, president of BCE Inc.'s Bell Mobility unit, said security has been the primary focus for his corporate clients contacting the company about integrating tablets.

Some companies, and particularly security-focused ones such as law firms, are being held back from adopting tablets simply because of the risk, should one get misplaced or stolen. That's why functions like remote-wipe - the ability to erase a mobile device's hard-drive from a PC - are being introduced, even though most consumers would have no need for them, Mr. Oosterman said.

"One of the great things about RIM, historically, has been the security of the e-mail service that they have delivered," Mr. Oosterman said in an interview. "And so to the extent that their Playbook delivers similar security, I think that will be important to enterprise clients."

Mr. Abramsky's PlayBook sales estimate is based on a survey of 1133 consumers at this year's Consumer Electronics Show in early January. About 6 per cent of respondents said they were "likely" to buy a PlayBook - about half the level of interest a previous RBC survey showed for Apple's iPad tablet.

Respondents cited a number of factors that increased the PlayBook's appeal, including its size, its processing power and the high security specifications of RIM devices.

Assuming an average sale price of $450 and 30-per-cent gross margins, Mr. Abramsky estimates four million PlayBooks sold in 2011 would add $1.8-billion in revenue and 30 cents in earnings per share for RIM.

The positive news for RIM is that a significant number of potential customers have expressed interest even as few have actually had a chance to use the device and figure out what its unique capabilities are.

"As those unique capabilities become more visible, that will help investors understand potential for product," Mr. Abramsky said.

"Apple is the leader in the market right now. Certainly RIM is likely to have a seat at the table because it's so early in the market - there's basically just one vendor right now."

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to