BlackBerry maker Research In Motion (NAS: RIMM) promised in June that it would release 4G PlayBooks (LTE, WiMAX and HSPA+) sometime in the fall. Sprint Nextel (NYS: S) has already nixed the idea of a WiMAX PlayBook and RIM said it wouldn't build an HSPA+ version, and I think it's safe to assume the LTE version also won't happen, at least this year (and possibly not at all).
But why? First, RIM's QNX-powered PlayBook tablet hasn't really caught on in the market. In September, RIM reported shipping just 200,000 PlayBooks, a massive miss from the 500,000 that analysts had expected, and a big drop from the 500,000 RIM shipped in the previous quarter.
Further, RIM delayed the release of its PlayBook 2.0 software to February. If RIM is planning to release 4G PlayBooks at some point (and again I'm not sure the company will ever release the devices), RIM probably won't ship 4G PlayBooks until its PlayBook 2.0 software is ready.
(RIM has repeatedly declined to answer my questions about its 4G PlayBooks.)
RIM's struggle in tablets isn't really a surprise, though -- the company's PlayBook still doesn't support native email and contact functions, which makes it more of a BlackBerry smartphone accessory than anything else. (PlayBook 2.0 is supposed to add native email and contact functions.) And PlayBook owners who can access the BlackBerry Bridge app can connect their PlayBook to the Internet via their BlackBerry smartphone -- thereby negating the need for a PlayBook with built-in cellular connections.
But I think what's really working against a 4G PlayBook is the apathy that both users and wireless carriers have shown toward tablets with built-in cellular support. For example, ABI Research found that only 25 percent of Apple (NAS: AAPL) iPads shipped in the first quarter included support for 3G networks. If that same ratio carries over to RIM, the company would sell just 50,000 4G PlayBooks based on expected sales of 200,000 total PlayBooks in a quarter. That's not a lot of return on the investment in developing 4G technology.
Further, RIM probably can't count on much help from wireless carriers in selling a 4G PlayBook. Carriers have largely eschewed subsidizing the cost of cellular-capable tablets (which often cost $100 or more than their Wi-Fi-only counterparts). And according to ABI, wireless carriers represented just 13 percent of all media tablets shipped in the second quarter. The firm found brick-and-mortar stores were the most popular distribution point for media tablets, accounting for 43 percent of all vendor shipments in the second quarter. Indeed, a wireless carrier executive who asked to remain anonymous recently described tablets as "toxic."
Finally, users don't seem all that jazzed about 3G/4G-capable tablets. New figures from research firm Nielsen show that shoppers are much more concerned with factors like touchscreens and tablet brands than the presence of 3G connectivity. According to the results of a survey by the firm, around 42 percent of shoppers consider 3G or 4G capabilities "important" in a tablet purchase -- around 48 percent of respondents didn't have an opinion on the question, and 15 percent said 3G/4G connections were not important. Notably, the presence of 3G or 4G connectivity ranked behind a lengthy list of other tablet features that shoppers were more concerned with, including the device's screen resolution, the tablet's manufacturer, and the screen size of the gadget.
Thus, I fully expect RIM to focus its energies on its forthcoming BBX-powered smartphones instead of LTE PlayBooks. After all, Motorola Mobility's (NYS: MMI) struggles to get an LTE-capable Xoom into the market show that slapping a 4G chip into a tablet isn't as simple as it sounds.
According to research firm Canalys, RIM's third-quarter U.S. market share slipped from 24 percent in the third quarter of 2010 to just 9 percent in the third quarter this year. A push for 4G PlayBooks would represent an unnecessary distraction from what RIM should be focusing on: new (and good) BBX smartphones that would help reverse its markets share slide.
At the time thisarticle was published The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.