RIM’s poor play: QNX on PlayBook before smartphones

BlackBerry 10 QNX

Amid lackluster BlackBerry PlayBook sales, 1,000 production line workers have been let go at Quanta in Taiwan where the tablets are made. Quanta confirmed the layoff figures to DigiTimes, although the company didn’t comment on specific clients or activities of the former employees. The figure of 1,000 workers is estimated to be half of the total production resources used to manufacture Research In Motion’s tablet computer.

On its most recent quarterly investor call just last week, RIM reported shipping a scant 200,000 PlayBook tablets. In the prior quarter, the first one that included PlayBook shipments, the company shipped 500,000 units. Bear in mind that shipped doesn’t mean sold and the company hasn’t yet said how many tablets have actually been sold. Regardless, there’s a few problems here.

In a fast growing tablet market, PlayBook shipments should be growing, not shrinking. DigiTimes sources indicate that RIM expected to build and ship between 4 and 5 million PlayBooks in 2011, but it’s clear that the actual figure will be a small percentage of that number. And QNX, RIM’s future operating system for phones, is the featured platform for the tablet; if it fails to impress or doesn’t sell devices, the company is at risk for losing momentum before it ever gets QNX on BlackBerry handsets.

When RIM cut 2,000 jobs back in July, I noted that the company was taking too long to transition from its legacy BlackBerry OS to the more modern QNX platform. At the time, I said:

The entire situation reemphasizes that RIM has been too slow to change in a market that’s moving fast. The BlackBerry Storm, an attempt at an all-touchscreen device, was met with fanfare in 2008, but it never materialized as a solid competitor to Apple’s iPhone. Last year’s BlackBerry Torch was more evolution than revolution.

And the company’s plan to run future phones on a QNX-powered platform makes sense, but RIM bought QNX in April of 2010 and there are still no handsets announced for the new operating system. Instead, new Bold handsets are the latest offerings announced; they appear delayed and will run a new version of BlackBerry OS, not QNX. They’re also not expected to be upgradable to QNX either.

QNX runs great on the PlayBook and I actually enjoy using it. What the PlayBook can do, it does very well; the bigger problem is what it can’t do. Although there’s a software update expected next month to address some of these problems, the device still has no standalone, native email application and doesn’t yet run the promised Android apps that will help offset a relative lack of third-party software.

In hindsight, RIM should have focused its QNX efforts on handsets before trying to compete in the tablet market.  Early this year, RIM suggested that QNX is best suited for dual-core chips, but given that the QNX-powered Colt handset is expected to use a single-core chip, that justification to push tablets first now seems weak at best.

As it stands today, it appears that the company tried to jump in to tablets first in order to leverage the market’s fast growth. But as Google Android Honeycomb tablets have illustrated, you can’t simply show up for the race and expect to win. It takes a full-featured solution, a broad ecosystem, and smart marketing to gain sales. And as much as the tablet market is growing, it is still dwarfed by smartphone sales.

RIM would have gained more bang for the buck if QNX was first put on its smartphones. Instead, it appears that the first run of the PlayBook is a relatively lost cause for the company and it will have to hope that software updates are enough to have consumers take a second look at RIM’s first tablet.

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