Case Study - Research in Motion Playbook

BlackBerry PlayBook Case Study A concise case study and analysis of Research in Motion’s BlackBerry PlayBook device, investigating product and marketing solutions to revive its faltering market share and grow RIM’s presence in the fiercely competitive tablet market during and after 2012.

BCIT MKGT1102 Set D, Team C: Upstream Marketing (Ann Marie Webb-Hughes) 20 October 2011

Earl Alikpala, Erin Vance, Daniel Tagulau, Viktor Vasylkiv, Kevin Willemse, Ramneek Chandi

CONTENTS Objective ...................................................................................................................................................................... 2 Problem Statement ...................................................................................................................................................... 2 Key Findings ................................................................................................................................................................. 2 SWOT Analysis ..............................................................................................................................................................3 Competitive Analysis .....................................................................................................................................................3 Target Market .............................................................................................................................................................. 4 Demographics .......................................................................................................................................................... 4 Geographics ............................................................................................................................................................. 4 Psychographics ........................................................................................................................................................ 4 Behavioural .............................................................................................................................................................. 4 Alternatives .................................................................................................................................................................. 4 Alternative 1: Product Development ........................................................................................................................ 4 Alternative 2: Product OS & Service Enhancements ..................................................................................................5 Alternative 3: Complementary Product Development .............................................................................................. 6 Solution......................................................................................................................................................................... 7 Implementation ........................................................................................................................................................... 8 Product..................................................................................................................................................................... 8 Price ......................................................................................................................................................................... 8 Place......................................................................................................................................................................... 9 Promotion ................................................................................................................................................................ 9 Conclusion.................................................................................................................................................................... 9 Bibliography ................................................................................................................................................................ 10 Course Concepts ......................................................................................................................................................... 11

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OBJECTIVE The objective of this report is to analyze the current positioning of Research in Motion (“RIM”) regarding its BlackBerry PlayBook tablet, and provide various product marketing strategies to improve its current position.

PROBLEM STATEMENT Despite concerted efforts, the RIM BlackBerry PlayBook tablet is far from reaching its predicted and potential sales figures and market penetration. What product marketing strategies can Research in Motion (“RIM”) implement within its BlackBerry PlayBook Strategic Business Unit, in order to increase its market share and sales figures/revenue during 2012 and beyond, after failing to reach its sales goal of 2.4 million PlayBook units by Q3 2011 (Berkow, 2011)?

KEY FINDINGS In April 2011, RIM released its first tablet, the BlackBerry PlayBook, with the aim of capturing a sizeable portion of the expanding tablet market. However, the release of the PlayBook was met with mixed reviews, due mainly to a lack of available applications, missing stand-alone email and contact capabilities, and no stand-out features (besides the BlackBerry Bridge security feature, which were not as lucrative as hoped). This overshadowed the tablet’s strong hardware platform (Reed, 2011), which stacked up well against competitors (Appendix 3: Tablet Comparisons Table).

Compared to Apple’s iPad 2 (the current tablet leader with a 68.3% market share (IDC, 2011)), RIM’s PlayBook was perceived as “rushed to market”, simply to compete (The Wall Street Journal - Personal Technology, 2011). In addition, the intended target market for the BlackBerry PlayBook was unclear, as it is marketed towards “the 70 million existing BlackBerry subscribers” (Dvorak, Vranica, & Ante, 2011), which consists of both corporate and consumer segments; these either utilise or ignore the BlackBerry Bridge security advantages RIM strongly touts in campaigns and saw as a USP, heavily diluting its efficacy. Because of these issues, the BlackBerry PlayBook failed to meet expectations, and only has a market share of 4.9%, third behind iOS and Android based tablets (The Wall Street Journal - Personal Technology, 2011). In fact, RIM’s poor quarterly performance during 2011 (Appendix 1: RIM Financial Statements) was attributed by many to the failure of the Playbook itself.

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SWOT ANALYSIS The SWOT analysis is summarized in Figure 1, showing the internal and external factors that could affect the telecommunications company’s competitive success. In some instances, the SWOT analysis of RIM often manifests itself in that of the PlayBook product itself. RIM must find a way to maintain their business clientele while improving every aspect of their weaknesses, which may result in a somewhat radical deviation from their chosen path and market. Fortunately, since RIM has the R&D capacity and experience to create relevant and thriving products, they have an opportunity to fix the current downfall they are experiencing. If RIM is able to act fast enough and are more careful to listen to what a broader base of consumer wants, the threats to RIM can be mitigated.

Table 1 - Research in Motion SWOT Analysis STRENGTHS Recognizable brand attached to products Strong business based clientele Creates secure products

• • •

OPPORTUNITES Market for products is still rising (In a few years 50% of Netbook users will switch to a tablet) The safe design of products will become more appealing as technology continues to expand

• •

WEAKNESSES • • • •

Struggling to keep market share up Not up to date with certain features Extremely poor product launches and advertising Lack of sales for the BlackBerry PlayBook

THREATS • • •

Larger companies who are quicker to create desired products and have a huge, loyal client base Competition will force their products price to fall Technology evolution

COMPETITIVE ANALYSIS Within the chosen target market, the main PlayBook competitors are as follows: • • • • • • • •

Apple iPad 2 Samsung Galaxy HTC Flyer Motorola Xoom Acer Iconia ASUS EeeSlate/EeePC Kindle Fire (new product under review) Various OEM and branded devices

Notably, Apple leads with its 68% market share; however, the clear majority of the balance uses the Android OS, which is reflected in current elevated adoption trends. When benchmarked (Appendix 3: Tablet Comparison Table), it becomes apparent that while the PlayBook competes well, it does not have any truly unique desirable features. What also becomes clear is that certain key capabilities are being overlooked by players in the same space: • 1GHz CPUs, 1GB Ram, 1080p HDMI video, 6hr+ battery life and dual cameras are minimum demanded specifications; • The larger brand name tablets do not offer MicroSD card expansion, or 3G as standard.

Overall, the products compete very closely, which suggests that the success or failure of each depends largely on unique selling features, brand equity and marketing efforts.

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TARGET MARKET The target market of the PlayBook aligns closely with that of RIM’s BlackBerry smartphones - the two devices occupy similar segments and currently the PlayBook depends on a BlackBerry to deliver full functionality.

DEMOGRAPHICS According to RIM, BlackBerry customers are predominately male with an average age of 36.7 years (McInnes, 2010). As compared to users of Apple’s iOS and Android’s OS, BlackBerry users are mostly from Generation X (1965-1976) or earlier (Company, Nielson News, Online + Mobile, 2011). In addition, 53% of PlayBook users have a university or college degree and earn an average income of $86,000 yearly (McInnes, 2010).

GEOGRAPHICS In 2010, BlackBerry smartphones fared better in Canada, United States, United Kingdom, and Venezuela as they gained brand shares of 9.7%, 6.6%, 6.1%, and 18.9%, respectively (Euromonitor International - Statistics (Research in Motion), 2010). In addition, 48% of the target market is in city or urban areas (McInnes, 2010); in Canada, this equates to a segment of approximately 11.8 million (32 mil x 80% in urban areas x 48%) people.

PSYCHOGRAPHICS Traditionally, BlackBerry users are more reserved and tend to wait for new technology to be proven and researched before purchasing (Company, Communication Trends, 2009). However, once the technology is proven, and they have conducted their research, they are willing to pay a premium price for said products, so there is a fairly inelastic price nature attached to BlackBerry devices.

BEHAVIOURAL Compared to non-BlackBerry users, BlackBerry customers are more likely to use SMS and email on a mobile phone (McInnes, 2010), while less likely to play or look for games and non-essential applications on their mobile devices (Company, Media + Entertainment, Online + Mobile, 2011).

ALTERNATIVES ALTERNATIVE 1: PRODUCT DEVELOPMENT RIM can accelerate its penetration into the professional tablet user market by developing a vastly superior tablet with features not found in one single competitor product: the re-branded “PlayBook 2”. It will share many of the PlayBook’s physical features, but comprehensive hardware (and software) upgrades will speak to the needs of the already loyal corporate market who were disappointed in the original PlayBook and affluent new consumer markets.

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Product/Feature

Reasoning/Details

4G SIM card slot

Faster mobile capability is in demand yet few tablets offer it as standard. 4G will surpass competitors’ 3G models.

MicroSD card slot

User-scalable storage space is high on customers’ demand list. Not many other premium tablets offer this feature. Bundled card options can increase longevity and desirability.

Enhancement of existing features

The new tablet’s standard specifications will include: an updated CPU and GPU, wireless-N, improved screen and camera definition, 2GB memory, and other improvements that offer a valid cost/benefit ratio and matchless performance.

Product branding

The “PlayBook” branding for the new product must be revised.

Benefits: • The new PlayBook’s uncompromising and unmatched specifications will speak to the professional market’s key demands, who were underwhelmed by the first PlayBook.

• Given the premium market RIM appeals belong to, price elasticity should not pose too many problems (Company, Communication Trends, 2009).

• The new product will demonstrate RIM’s commitment to their tablet products by expanding product depth, dispelling negative perceptions and doubts, invoking buyer confidence and activity.

Challenges: • New product R&D is costly and time-consuming, notwithstanding leveraging off existing PlayBook platform.

• MicroSD card integration could cannibalize potential “hard-drive based” iterations of the product.

• Could launch into the current negative market or marginalise current/future “PlayBook 1” owners.

ALTERNATIVE 2: PRODUCT OS & SERVICE ENHANCEMENTS As a product-diversification alternative, the imminent launch of Android v4.0 (“Ice Cream Sandwich”) destined for around 4 million Android v4.0-capable devices of over 190 Million sold (Poeter, 2011), offers massive opportunity. The OS will also create demand for high-end tablets tailored, tested and capable of running it. Offering a “dual OS” (QNX and Android 4.0) option on RIM’s entire PlayBook range will satisfy the needs of consumer and professional markets as well as take advantage of the over 500,000 applications (worth over $380 million) (Tilton, 2011) available for Android.

(Appendix 4: Android Market Insights).

Product/Feature

Reasoning/Details

QNX/Android 4.0 OS Option on PlayBooks

PlayBooks will have preloaded files on initial start-up which will prompt the user to choose between QNX and Android v4.0. Corporate, data-sensitive users will opt for QNX and the newly opened consumer market can select the Android 4.0 platform.

OS Regression on PlayBook

The tablet will have features or software built in to allow for “switching” between the two. This will be an advanced user feature, but will retain critical data (Contacts, passwords, preferences, favourites, etc.).

Android on PlayBook 1 and PlayBook 2

“PlayBook 2” will natively support OS switching; PlayBook 1 software must be developed to support the Android v4.0/QNX OS switching.

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Benefits: • Leverages off the 190 Million Android device user base and market (Poeter, 2011), ahead of Android v4.0 release (rapid development could see the PlayBook as the first certified v4.0 device).

• Pure OS development, so cost and time frame could be reduced if well managed • Android platform can be fully RIM/PlayBook branded and customised, with preloaded BlackBerry-specific security, applications, and features.

• Provides buyers with a choice of QNX security and enhanced RIM device compatibility, or the flexibility and broad application options of Android.

• The development effort of this “Dual OS” or “Android/QNX-only” feature can be applied to PlayBook 1 and the proposed “PlayBook 2” to support and stimulate both sales streams.

Challenges: • Considerable development effort; must be thoroughly tested and customised in short time frame (six months) • Could dilute or marginalise RIM’s devout business/security focused user-base • Successfully managing two operating systems will demand long-term commitment and effort, with two ongoing RIM customer support, testing and development teams (Android 4.0 and QNX).

ALTERNATIVE 3: COMPLEMENTARY PRODUCT DEVELOPMENT RIM needs to come up with innovative complementary products to support its range as its competitors have – it competes only in the mobile phone and tablet market which limits its buyer interest landscape. Mobile Internet is in massive demand; if available, buyers have to pay inflated costs for 3G/4G enabled tablets. Personal WiFi devices have been sidelined and poorly marketed, allowing RIM to develop a 4G personal WiFi device which will not only complement the existing PlayBook market, but shepherd existing tablet owners towards the RIM brand.

Product/Feature

Reasoning/Details

RIM/BlackBerry branded portable 4G WiFi device

A high capacity battery-powered personal WiFi device to which authorised devices (PlayBooks, netbooks or any other WiFi device) can connect. Very portable, 5 hour battery life, 4G, strong RIM/BlackBerry branding/association.

Benefits • • • •

Low cost to bring to market – leverage off current 4G module development.

Open marketplace – personal WiFi devices have not been targeted or produced by competitors despite buyers demanding 3G/4G tablets; this is a more flexible device addressing these needs.

Ability to provide mobile internet coverage for PlayBook, as well as any device (Sony, Apple etc.) will question existing brand loyalty and create RIM buyers, creating brand awareness and questioning existing loyalties.

Complementary Product Development

Challenges • Development, manufacturing and marketing costs • Non-proprietary technology means competitors can copy it • Not truly effective (“game-changer”) without alternative 1 and/or 2 being adopted

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SOLUTION Our proposed solution is new product development i.e., the creation of “PlayBook 2”. This new device will be a uniquely powerful, flexible, feature-rich product, meeting the high demands of corporate and affluent consumers alike. Its raw power and switchable OS will create a unique, best-of-breed product, appreciated by all RIM buyers.

With the embedded broad feature set in PlayBook 2, RIM should expect a substantial increase in market share. The first PlayBook captured RIM a 4.9% share of the tablet market, but the revised PlayBook we estimate to increase this to 10.5% between its proposed release date (end 2Q2012) and end 1Q2013. This 5.6% increase represents a big jump for RIM, considering the current downfall, but a 9% market share should be attainable at minimum given the continuing upward tablet buyer swing and RIMs unwavering loyalty base.

RIM’s goal is to create a tablet that “speaks” to its core customer as well as uncompromising consumers. With more features and better services, PlayBook 2 will deliver the “complete” feel to it which the PlayBook 1 lacked. Rebranding the device from the “PlayBook” term will also position the product more suitably in the target market. By 1Q2012, RIM should have launched some promotional campaigns about the PlayBook 2 by 4Q2011, in order to cordon off yetundecided year-end buyers, and adhere to an end 2Q2012 release date. This date must be set to the day and, as far as possible, never change; this creates hype and demonstrates how RIM commits to meeting customer demands and delivers on its promises.

RIM can also pursue the product OS and service enhancement alternative (with alternative 1, or separately). The development of a selectable QNX/Android OS for PlayBook 1 will create much needed flexibility for buyers and owners, and access to the millions of applications that RIM cannot support on the QNX platform. Aside from the numerous applications, users can choose between the QNX and Android 4.0 operating systems, and experience their own comfortable platform. This stretches and penetrates both the consumer and corporate markets by offering tailored flexibility, and breathes new life into the existing PlayBook device.

Development of the dual operating system could show an estimated increase of 4% market share from its current 4.9% by 1Q2013, but this will be more susceptible to competitor hardware developments. By 2013 these competitors will be releasing completely redesigned models with updated hardware specifications and 4G capabilities, along with Android functionality, as the hype curve for these begins to plateau.

RIM must therefore act very quickly in adopting and embarking on either of these solutions, and ensure it incorporates an extremely well crafted, sensitive through-the-line marketing campaign (far better and redefined from current) to ensure success.

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IMPLEMENTATION For any new product development and launch, one has to consider the various steps to be taken to ensure success.

These new product processes have been addressed as follows.

New-Product Strategy Development

Idea Generation Screening and Evaluation

Business Analysis

Development Market Testing Commercialization

Evaluate the flaws of PlayBook 1 to brainstorm and create a more completed version of the tablet which will succeed in the current market by meeting new and known demands.

Expanding market into consumer base instead of just business base. Creating a technically superior, uncompromising product.

Internal Approach: Making the PlayBook 2 technically sound External Approach: Competing with other tablets to see its capabilities and how well it can fit into the market Competitive analysis concludes that in order to increase our market share we must update our product both technically as well as offer platform flexibility to enter a larger market Prototype ready by 4Q2011 for promotional campaigns. Product Launch 2Q2012 must be confirmed. Development must be extremely well managed and tested.

Failure in PlayBook 1 implies that we need to revamp our original idea and create the PlayBook 2. Parallel campaign is critical to alleviate negative perceptions.

Marketing new PlayBook as easy to use for everyone; diverse, but not sidelining existing markets. Emphasize power and flexibility.

PRODUCT The new PlayBook product must enter into immediate R&D efforts, so as to be produced rapidly in order to meet the imminent hype curves. A release date of end 2Q2012 should be aimed for. The product must be extensively tested to ensure minimal comebacks or launch issues. It will be technically superior to any other product and meet every demand of consumer and corporate buyers alike.

The “PlayBook” branding must be seriously reconsidered to meet the image and associations of its intended market.

Cost to research, test and manufacture should be constantly weighed up against marketing goals and intentions, as well as market trends. The “PlayBook” moniker must also be revamped to project a more professional image for the new product, but retained for existing product so as to identify rather than orphan it, and existing owners alike.

PRICE The cost to manufacture the new PlayBook is estimated to be between $300 and $350 given the current manufacturing costs of the PlayBook (Annexure 5: PlayBook B.O.M. Teardown). The product should be aggressively retail priced at between $600 to $700, depending on final costs as well as competitor models at launch.

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PLACE The tablet market is bullish globally, eating into PC and netbook sales worldwide, and not just in areas where RIM/BlackBerry has existing strong market presence (Appendix 2: Morgan Stanley Tablet Report). BlackBerry currently has a strong smartphone market share in Canada, United States, United Kingdom, and Venezuela. In order to take advantage of the sound BlackBerry brand, the new PlayBook will be released sooner in the same locations. This allows RIM to capture innovators and early adopters loyal to the brand. Shortly after, it will be released in China as 41% of Chinese consumers have an extreme demand for a tablet within the next year (Huberty, et al., 2011).

PROMOTION A far reaching and intense marketing campaign must accompany the launch of the new PlayBook, and/or any of the chosen alternatives. RIM has previously failed to effectively cordon off and communicate with any particular market regarding its PlayBook and must avoid this at all costs. This is especially true since it will now enter the consumer market (Android) while still growing and satisfying its existing business (QNX) market. Already playing in the muddy waters of PlayBook 1, RIM must banish all preconceived negative perceptions regarding the capabilities or features of the new PlayBook, as well as RIM’s commitment toward these product lines.

CONCLUSION Although RIM have suffered due to lacklustre sales of their PlayBook, amongst various other market and company events and shifts, there is still great opportunity to revive itself successfully in the tablet market. By playing off its key strengths and adopting a bold product development approach, coupled with an intense marketing campaign all as described in this document, RIM could become the tablet of choice in the high-end consumer and corporate markets, and second only to Apple overall, by the end of 2012.

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BIBLIOGRAPHY Euromonitor International - Statistics (Research in Motion). (2010). Retrieved October 18, 2011, from Euromonitor International: http://0www.portal.euromonitor.com.innopac.lib.bcit.ca/Portal/Pages/Search/SearchResultsList.aspx The Wall Street Journal - Personal Technology. (2011, April 14). Retrieved October 18, 2011, from The Wall Street Journal: http://online.wsj.com/article/SB10001424052748703730104576260953631631640.html Berkow, J. (2011, June 22). FP Tech Desk | Financial Post . Retrieved October 18, 2011, from Financial Post | Canadian Business News, Investing and Commentary: http://business.financialpost.com/2011/06/22/bootup-rim-cutsplaybook-sales-estimates-by-two-thirds-report/ Company, T. N. (2009). Communication Trends. Retrieved October 18, 2011, from Nielson Wire: http://blog.nielsen.com/nielsenwire/wp-content/uploads/2009/12/09-Nielsen-Convergence-Audit.pdf Company, T. N. (2011, July 6). Media + Entertainment, Online + Mobile. Retrieved October 18, 2011, from Nielson Wire: http://blog.nielsen.com/nielsenwire/online_mobile/games-most-popular-mobile-app-category/ Company, T. N. (2011, March 3). Nielson News, Online + Mobile. Retrieved October 18, 2011, from Nielson Wire: http://blog.nielsen.com/nielsenwire/online_mobile/who-is-winning-the-u-s-smartphone-battle/ Dvorak, P., Vranica, S., & Ante, S. (2011, September 30). BlackBerry Maker's Issue: Gadgets for Work or Play? Wall Street Journal, p. A.1.

Huberty, K., Lipacis, M., Holt, A., Gelblum, E., Devitt, S., Swinburne, B., et al. (2011, February 14). Morgan Stanley Perspective. Retrieved October 18, 2011, from Morgan Stanley: http://www.morganstanley.com/views/perspectives/tablets_demand.pdf IDC. (2011, September 14). Media Tablet and eReader Markets Beat Second Quarter Targets, Forecast Increased for 2011, According to IDC [Press Release]. Framingham, Massachusetts, United States of America.

McInnes, K. (2010, August 2). Leaked BlackBerry 6 Developer Briefing Shows Upcoming APIs. Retrieved October 18, 2011, from BlackBerry Cool: http://www.blackberrycool.com/2010/08/02/leaked-blackberry-6-developerbriefing-shows-upcoming-apis/ Poeter, D. (2011, October 16). News and Opinions | PCMag.com. Retrieved October 18, 2011, from PCMag.com: http://www.pcmag.com/article2/0,2817,2394752,00.asp#fbid=w8EaqidXSNF Reed, B. (2011, April 18). Four things RIM's PlayBook got wrong. Network World, p. 11.

Tilton, A. (2011, October 17). Blog & News. Retrieved October 18, 2011, from AndroitPIT: http://www.androidpit.com/en/android/blog/398881/Android-Market-Explosion-500-000-Apps-And-Counting

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COURSE CONCEPTS The team utilised the following applicable learned concepts when developing this case study. The concept, its application, benefits and perceived definition is briefly presented below.

CONCEPT

HOW IT WAS USED

Product Life Cycle

Although PlayBook is still in early stages, we examined the normal curves to see how BlackBerry must change their strategy when a product hits maturity or falters en route.

Situation Analysis

We used this concept to show where BlackBerry is right now and the potential directions it has to go.

Value Consciousness

This is fully what we used to determine the price of the new PlayBook we created.

Since we had to find the people that are willing to pay for quality, it also helped to determine our target market.

Brand Loyalty

Since the majority buying a PlayBook are brand loyal and also have a BlackBerry Smartphone, this helped us to think of features to add that would be helpful to RIM's current customers.

Market Potential

This was useful in helping us find what amount of market share was realistic for RIM to set as a goal. It also broadened perspectives by bringing to light market areas that were not being exploited, and why.

Six Sigma

We tried to use this concept throughout our entire planning of our new "PlayBook 2".

We based all of our data on fact and not on our own opinions, as well as using customer input to create a tablet that was as close to perfect as we could get.

Idea Generation

This was our focus while brainstorming the alternatives. By creating a variety of concepts we were able to go through and combine different ideas to make an ideal product.

Marketing Mix

This was a great way for us to organize what our plan to get our new product going.

Filling out the four P's helped to make our plan very clear.

Unique Selling Point

This made us look further into what would set us apart from other tablets. A lack of a USP is also one of the major issues the BlackBerry PlayBook 1 has had.

Product Depth/Breadth

RIM has a very small breadth of product compared to competitors, and the depth needs to be improved to become a true competitor. Knowing these concepts and the challenges involved helped us support our alternatives and solutions.

Market Segmentation/Target Market

These concepts helped guided us through the steps of finding who we wanted to target our products to as well as what techniques would capture the attention of our existing and proposed target markets.

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APPENDICES

Appendix 1: RIM Financial Statements Appendix 2: Morgan Stanley Tablet Report Appendix 3: Tablet Comparison Table Appendix 4: Android Market Insights Appendix 5: Playbook B.O.M. Teardown

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