RIM PlayBook Sales Forecast Sliced 23% - InformationWeek

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5/26/2011
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RIM PlayBook Sales Forecast Sliced 23%

The BlackBerry PlayBook tablet is not selling as well as originally thought, causing another analyst to reduce sales expectations for Research in Motion for both the quarter and fiscal year.

RIM BlackBerry PlayBook Teardown
(click image for larger view)
Slideshow: RIM BlackBerry PlayBook Teardownr
RIM has yet to share any official sales data regarding its PlayBook tablet, which went on sale April 19. Estimates pegged first week sales at about 100,000, first month sales at about 250,000, and put RIM on track to sell about a half million PlayBooks by the end of its current quarter.

Not quite, says Wedbush Securities analyst Scott Sutherland.

In a note to investors on Wednesday, Sutherland said that based on his channel checks, RIM will sell only 450,000 PlayBooks by the end of the quarter. That's not far off the 500,000 number, but it's enough to cause Sutherland to reduce his target price for RIM's stock from $55 to $49. Sutherland also cut his revenue estimates from $5.2 billion to $5.1 billion.

Further, Sutherland first believed RIM would sell 3 million PlayBook's by the end of its current fiscal year. Now he doesn't. He's cut his forecast for yearly sales by 23% from 3 million to 2.3 million.

What's got Sutherland so concerned? He says the small screen is playing a role, and the overall "lack of appeal will limit consumer adoption," he wrote. The PlayBook has a seven-inch display, while competitors such as the iPad, Motorola Xoom, and Samsung Galaxy Tab 10.1 have screens reaching to 10 inches.

Another problem is the BlackBerry Bridge application. The Bridge app is necessary if PlayBook users want to access basic features such as email, contacts, and calendar. Even with Bridge installed, PlayBook users also will need to have a BlackBerry and tether it via Bluetooth to transport their email from the handset to the tablet.

While Sprint, T-Mobile, and Verizon Wireless are supporting the Bridge application, AT&T is not. That means BlackBerry users on the AT&T network can't use Bridge and don't have any access to email, calendar, or contacts on their PlayBook at all. That's a significant roadblock, and one that AT&T doesn't seem to be in a hurry to remove.

Beyond the PlayBook, Sutherland also notes the lackluster lineup of BlackBerrys available at the moment in his decision to reduce RIM's outlook. RIM has offered little more than incremental updates to its hardware lineup the last year or so, leaving its devices a little "long in the tooth" when compared to the high-end Android devices flooding the market.

"That said, as the buying decision continues to shift to the consumer, we still do not see the revolutionary upgrade that will alter the competitive gains seen by smartphones coming from Apple and Android vendors," Sutherland concluded.

RIM, however, contends that the PlayBook is selling just fine.

Enterprise Connect is taking our deep mobility expertise and bringing it to your desktop with a one-day virtual event, The Future Of The Mobile Enterprise, to be held Wednesday, June 8. Ever-increasing mobility is perhaps the most important trend affecting enterprise communications today. Learn how to support and secure smartphones, deal with the effect of tablets on IT planning, and more. Register now.

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