With QNX phone, RIM must avoid PlayBook mistakes

Research In Motion will have to learn from the mistakes of the PlayBook tablet if it wants to see any success with its next generation of BlackBerry smartphones.

With disappointing sales and plunging profits, how could the company not feel the urgency to rush out a phone using slick its new QNX software? But that would be a bad idea. As the PlayBook has shown, rushing out a product only leads to more criticism and a poor reception.

"They got to get it right with QNX," said Mike Walkley, an analyst for Canaccord Genuity. "They're better off not rushing to get it out. It's better to get it right."

The stakes are extremely high for getting a strong product out there during the first pass. Research In Motion is betting that QNX is its path to the future. If BlackBerrys running on QNX elicits the same ho-hum reaction that the PlayBook did, the company will have essentially hit a wall. Apple and Google, meanwhile, would continue to take large bites out of its market share.

RIM appears to be taking its time with QNX, much to the frustration of those who want the company to move on from its aging platform. Co-CEO Mike Lazaridis cited the long process of launching the new BlackBerry Bold, the first phone to use the BlackBerry 7 operating system, as one of the reasons why it has been received so well.

"The success of the recent BlackBerry launches is an example of our focus on product readiness," he said during an investor conference call today. "If we had rushed the product, we would not have benefitted from the positive reception."

He added he was thrilled with the launch of the new line of BlackBerry 7 phones.

That's a far cry from the mixed critical reaction the PlayBook received. It launched without native access to e-mail, calendar and contacts--which have been fixtures in every other BlackBerry device. Beyond a slick Internet browsing experience and the ability to handle video well, it lacked the breadth of applications to do much else. Critics called it half-baked and not ready for the market.

The commercial reaction was appropriately negative. After shipping 500,000 PlayBook tablets in the fiscal first quarter, the company came back and shipped 200,000 devices in the second quarter, suggesting a large supply of unsold inventory from the first round of shipments.

Lazaridis admitted as much on a conference call with investors when he said RIM would work with its retail partners to help clear out its inventory. He added that the company would offer incentives and rebates--corporate jargon for price cuts--to spur sales.

While the discounts won't likely be at the same magnitude as the $99 TouchPad, they will likely help. Lazaridis said RIM will show off a new version of the software that will provide e-mail, calendar, and contacts on the device itself, as well introduce the Android app player and a video store with access to 10,000 videos available for rent or purchase.

This kind of patchwork operation may be okay with the tablet, which Lazaridis said was still a business in its infancy, but it won't fly with phones.

BlackBerrys, for all their faults, are considered bulletproof when it comes to its core enterprise functions. Legions of fan love the devices for their solid keyboards and easy access to their corporate system. Where the PlayBook lacked that basic function initially, the first QNX phone needs to have all that and hit one out of the park immediately with its other features.

That success is the only way to get the developer momentum behind QNX. It's still a new platform that developers are curious about, but a little leery given their past experiences with RIM. The PlayBook didn't do much to drum up any interest. Lazaridis said the company plans to establish a "vibrant ecosystem that is available prior to commercial launch" by releasing access to the software and test phones at a conference in October.

But if the QNX phone doesn't get off to a quick start, that vibrant ecosystem may just be talk, leaving RIM in a lot of trouble.