Will Tethering Kill RIM's PlayBook Line of Tablet PCs?

Research In Motion's BlackBerry PlayBook may look good on paper, but in its current form it has a major flaw that is likely to limit its appeal and success in the consumer market.

When the tablet device was announced last year it was seen as a serious competitor to the iPad by Apple' (NASDAQ: AAPL) and the many Android-based tablets that have begun to appear on the market. The name PlayBook - along with RIM's (NASDAQ: RIMM) promotional clips highlighting HD video recording, movie and music playback and app downloading - makes it clear that that the company is targeting its tablet at consumers as well as existing BlackBerry business customers.

But when it comes to appealing to consumers, there's a problem, and it's a big one. The problem is that RIM appears to see the PlayBook as a companion device to be used in conjunction with a BlackBerry smartphone, not as a standalone tablet PC. And because of this the PlayBook does not include its own standalone email, calendar, address book and task list. Instead users are expected to tether their PlayBook to their BlackBerry phone (and it has to be a BlackBerry, not an iPhone or any other handset) using BlackBerry Bridge, after which they can see the email and PIM data on the phone mirrored on the PlayBook.

This is a serious limitation, says Avi Greengart, a research director at Current Analysis. "By creating the PlayBook as a companion device rather than fully functional on its own, RIM is not only dramatically limiting sales to existing BlackBerry customers, it also means that RIM cannot use the PlayBook to bring people to the brand," Greengart says. "Doesn't RIM know that it needs the PlayBook to win over iOS and Android users if it is ever going to get these consumers back once RIM has a QNX-based smartphone?"

The question that needs to be asked is what RIM is playing at here? Why would it make the PlayBook a companion device rather than a standalone tablet? Why would it launch a product which can't do email and calendaring out of the box?

The reason has probably got a great deal to do with the fact that RIM is still at its core a maker of enterprise mobile IT devices and secure mobile operating systems, however much it would like to sell its goodies to consumers. "The PlayBook offers the best security model possible: no PIM or email data is stored on it whatsoever," says Greengart. "Those services require a connection to a BlackBerry phone via BlackBerry Bridge. Breaking the connection to the phone will remove all personal information (calendar, e-mail and contacts) that is being displayed on the PlayBook. As such, IT managers can deploy the PlayBook without any worries of data loss or synchronization problems to support."

It's worth remembering that having no email client out of the box doesn't mean that the PlayBook can't do email at all unless it tethered to a BlackBerry smartphone. The tablet has a pretty able web browser, which makes using cloud-based services such as Gmail and Google Calendars perfectly practical. And there's no obvious reason why third party developers shouldn't create email and PIM apps to meet many of the needs of consumers .

There's also the question of whether the out-of-the-box capabilities of the PlayBook will change in the future, when versions that use the cellular networks become available. The company has already announced the following models:

--a BlackBerry 4G PlayBook with Wi-Fi and WiMax which will connect to Sprint's 4G network and which is expected to be available in the summer;

-- a BlackBerry 4G PlayBook with Wi-Fi and LTE, due out in second half of this year, possibly on AT&T and Verizon;

--and a BlackBerry 4G PlayBook with Wi-Fi and HSPA+, also due in the second half of 2011.

It would be surprising if these devices still needed tethering to a BlackBerry handset in order to have full email and PIM functionality.

It's hard to see how the PlayBook can appeal far beyond existing BlackBerry enterprise customers without email and PIM functionality built-in, and many consumers will also be put off by the limited scope of BlackBerry AppWorld, RIM's answer to Apple's App Store and the Android Market . The App Store currently has over 400,000 mobile apps, and Android Market has around 240,000. By contrast only a handful of PlayBook apps have been developed, and App World only has about 20,000 BlackBerry cellphone mobile apps.

But RIM is still eager to attract consumers to the PlayBook device, and appears to be hoping that it can emulate the iPad in becoming a successful games platform. "The BlackBerry PlayBook is an ideal tablet for gaming with an incredibly intuitive touch interface, high end multimedia features and groundbreaking performance that allows apps to run smoothly and quickly," Tyler Lessard, a RIM vice president, said recently. The company announced earlier this month that the Playbook will be preloaded with two games from Electronic Arts: Need for Speed Undercover and Tetris.

There are also reports from three insiders that RIM is working on a system that will allow the Playbook to run Android apps. According to Bloomberg Businessweek, "RIM plans to integrate the technology with the PlayBook operating system, giving customers access to Android's more than 130,000 apps, said the people, who asked not to be identified because the effort isn't public. RIM, after looking outside the company, is developing the software internally and may have it ready in the second half, two people said."

This follows earlier reports that RIM had been considering adopting Google's Dalvik VM - the Java software Android uses to run many apps -but has rejected this option due to an ongoing patent dispute between Google and Oracle over the software, according to Bloomberg.

If RIM successfully builds a suitable virtual machine for the PlayBook and provides support for the Android Application Framework, then in theory the tablet could run many of the Android apps in the Android Market. And if future versions include email and PIM capabilities out of the box it would effectively "untether" the device from BlackBerry cell phones. The combination would make the PlayBook considerably more attractive to consumers than it is in its current form of "secure enterprise cell phone companion device."