Lukewarm Reaction To Playbook Could Force Drastic Measures For RIM
Is Research in Motion (NSDQ: RIMM) turning into Palm (NSDQ: PALM), the next big prize in the mobile industry's consolidation? — Two of the most important companies in the prehistoric era of the mobile computer …
Context & Ripple Effects
The lukewarm arrival of the PlayBook lands ten days after a Reuters special report framed the device explicitly as a weapon for fighting Apple, making the soft reaction read as a failed opening move rather than an ordinary product stumble. It also extends a slide the corpus has tracked since late 2010, when RIM was confirmed to have slipped down carriers' priority lists as the BlackBerry struggled in a more sophisticated smartphone market.
The sharper question the piece raises — whether RIM is turning into Palm, the next big prize in mobile consolidation — is speculation at this point and should stay flagged as such. But it has a real substrate: back in September 2009 RIM itself signaled the potential of a price war with substantial fallout, and Deutsche Bank analysts had already calculated that Apple and RIM together captured roughly 35% of the industry's total operating profit, a concentration that leaves little margin room for a third-place player.
First-order effects
- Carriers already deprioritizing BlackBerry now have one more reason to steer shelf space and marketing dollars toward iOS and Android devices, squeezing RIM's distribution leverage at exactly the moment its flagship consumer pitch underdelivered.
- The PlayBook's weak debut leaves RIM without a credible tablet counterweight to Apple heading into its fiscal reporting cycle, raising pressure on management to show a turnaround path.
Second-order effects
- The 2009 price-war warning becomes live again: with carrier priority slipping and a tablet miss on the board, RIM's likeliest levers are aggressive pricing and bundling, which would compress margins across the handset tier below Apple.
- Consolidation talk, though unconfirmed, changes RIM's negotiating posture — every drastic measure it takes (licensing its OS, cutting prices, courting partners) is now priced by the market against the possibility of a sale, echoing how Palm's decline ended.
Third-order effects
- If the pattern holds, the smartphone industry structurally splits into platform owners capturing most operating profit and hardware-only vendors competing for what remains — pushing second-tier device makers toward acquisition, licensing deals, or exit rather than independent survival.
The trend: Smartphone competition is hardening into a two-platform profit concentration that turns once-dominant device makers like RIM into consolidation candidates when their own platform launches falter.