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Can Research In Motion Withstand the Apple Onslaught?

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BlackBerry maker Research In Motion (Nasdaq: RIMM  ) has priced its sleek new PlayBook in the same general range as the now-ubiquitous Apple (Nasdaq: AAPL  ) iPad. Though opening-day sales of the Playbook surpassed some initial estimates, analysts still wonder about the future of this impressive yet potentially forsaken device -- a mobile-computing David, up against Apple's Goliath.

Better than expected
The Playbook puts up a good fight technologically, but few legitimately expect the device or the company to topple Apple in the tablet game. Given the rising popularity of competing Apple and Android offerings in the smartphone market as well, is this a reason to worry if you have your money on RIM?

I don't think so. RIM has a lot of competition, but it can level the playing field in the long run. Here's how.

What the competition looks like
RIM faces cutthroat competition in the Tablet PC market. In a recent study by comScore, Apple iOS's market share ranked ahead of that of Google (Nasdaq: GOOG  ) Android by 59%, counting its presence on both smartphones and tablets. The outcome is bad news for those players of the tablet PC market, like RIM, who want a share of the Apple pie in this highly lucrative market.

In my mind, the disadvantage for the PlayBook device itself is its small size. On its itsy-bitsy 7-inch screen, all its first-rate apps, security, HDMI capability, and desktop-like Internet accessibility appear belittled. Worse yet, in the race for good-looking gadgets, RIM must compete with more than just Apple.

A few of the notable names fighting for market space in this industry include the Motorola Mobility (NYSE: MMI  ) Xoom, the Dell (Nasdaq: DELL  ) Streak 7, the Hewlett-Packard (NYSE: HPQ  ) TouchPad, the Samsung Galaxy Tab, and the HTC Flyer. With such stiff competition, it won't be easy for RIM or any other player to vie for public acceptance.

The way forward for RIM
In order to keep the revenue coming in, the best alternative I can imagine for RIM is not to go head-to-head with Apple in the same consumer market segment. The PlayBook, although packed with some excellent multitasking capabilities, falls short of the iPad's elusive "cool" factor. Rather than trying to market the PlayBook to tech-savvy hipsters, RIM should focus instead on the business world, which already loves its BlackBerry.

Getting corporate users to buy the PlayBook could be comparatively easy, given the features that allow users to integrate it with BlackBerry smartphones. The PlayBook was planned for corporate users, and I think that's where RIM should concentrate  

The highly polished QNX operating system could be another trump card for RIM in its effort to out-Apple the market, giving RIM a number of impressive selling points for which to command a relatively premium price.

You can win
A host of new players will enter the Tablet game in 2011, and the market will heat up for sure. If RIM can successfully curb Apple's competition by appealing to business users, it's definitely on its way to significant profits -- unless, of course, all of those consumers buying iPads start taking them to work as well.

Arunava De does not own shares of any of the companies mentioned. Google is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers choice. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On May 02, 2011, at 5:01 PM, flexengineer wrote:

    I think it is also important to raise awareness regarding Apple's scams and abuses related to mobile application and digital entertainment markets, their strategy to destroy the web by pushing HTML5 (which they do not truly support and implement themselves) in order to kick users out of the web into Apple's walled garden taxed at 30% is outrageous! Apple's ban of Flash is not acceptable, turning consumers and developers into collateral damages in a corporate war is not acceptable.

    I invite you to read my email sent to Steve Jobs this week in response to his "Thought on Flash" posted on Apple's website last year:

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