RIM launches PlayBook but fans don't play along

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Apple Inc
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By Alastair Sharp and Sinead Carew
TORONTO/NEW YORK | Tue Apr 19, 2011 7:30pm EDT
(Reuters) - Research In Motion's PlayBook tablet computer launched in thousands of stores on Tuesday and mostly stayed there, a grim reminder of Apple's lasting allure for tech-hungry consumers.

By mid-afternoon, two carriers and two electronic stores in one of downtown Toronto's main shopping malls -- where long lines greeted last month's iPad 2 launch -- had stock available. Each started the day with no more than 5 PlayBooks.

"It's going to be a tough sell to the consumer," BGC Partner analyst Colin Gillis said of the tablet, a sleek but flawed gadget that doesn't yet offer the secure email that is the trademark of RIM's ubiquitous BlackBerry.

RIM, which has priced the PlayBook to match the iPad, has struggled to win consumer fans since Apple's iPhone and a slew of devices running Google's Android entered the smartphone fray.

But reviewers panned the PlayBook for the absence of inbuilt email and organizer functions -- the gadget needs a BlackBerry to access those -- and said it appeared to have been rushed to market before it was ready.

The stakes could not be higher for RIM, whose security-focused BlackBerry once reigned supreme in financial, corporate and government circles. Its shares closed almost 3 percent lower at $53.22 on the Nasdaq.

RIM must now persuade its corporate base to ignore the poor consumer turnout and scathing reviews and see the merit in a powerful new operating system and complex arrangement that retains RIM's famed BlackBerry security.

"When RIM launches a tablet they have the luxury of knowing there is at least some guaranteed demand from the enterprise," said Morgan Keegan analyst Tavis McCourt. Limited supply and lack of major advertising hinted RIM was easing into the launch, he added.

Adding to a feeling that the launch was not thought through, AT&T, the second largest U.S. carrier, said it was still testing the secure Bridge software that lets BlackBerry users get email and other services on the larger PlayBook screen without incurring additional fees.

"We just got the app for testing. Before we make it available to our customers we want to make sure we deliver the type of experience our customers would expect," AT&T spokesman Mark Siegel said. "We have to test this app."

SLOW BURN LIKELY

The PlayBook launch, more than a year after Apple created the tablet market, was in stark contrast to the frenzy when Apple launched its iPad 2 a month ago and consumers lined up overnight to buy the gadget.

Apple sold almost 15 million iPads in 2010; RIM is expected to move 3 million PlayBooks in a similar window in 2011, according to 18 analysts polled by Reuters.

Analysts say RIM should stay in the hunt with the PlayBook despite the slow start, as it overhauls its creaky platform with the QNX operating system it acquired last year. The Canadian company expects large businesses to buy PlayBooks in "the tens of thousands."

Gartner, a research outfit focused on technology, estimates one in 10 tablets sold in 2015, or some 30 million, will be powered by QNX, which will likely find its way onto RIM's smartphones in the next 12 months.
That would place it third behind Apple at almost half the market and Android at just under 40 percent, leaving little room for Hewlett-Packard's soon-to-launch WebOS tablet and completely ignoring a possible Windows tablet platform.

Retailers say solid pre-orders suggest there will be pent-up demand for a capable alternative to the iPad.

"Based on those numbers coming in, we expect it to be successful," said Steve Coffin, operations manager at a Future Shop big box store near Toronto's financial district, dismissing the absence of lines of eager shoppers when doors opened and highlighting strong pre-orders.

Cellular-connected versions of the PlayBook are due out later in the year.

"It's not going to be in the same league as the iPad," said Al Hilwa, a Seattle-based analyst at IDC. "The question is will it sell more than the Xoom but less than the Galaxy," he added, referring to Android-based tablets from Motorola Mobility and Samsung.

(Additional reporting by Liana Baker in New York, editing by Janet Guttsman)