November 10, 2010 / 7:27 PM / in 7 years

RIM aims to challenge iPad with PlayBook pricing

SEOUL (Reuters) - BlackBerry maker Research In Motion, a late entrant in the booming tablet market, will take on Apple’s iPad with competitive pricing of its rival Playbook device.

The Canadian firm’s tablet, set to launch in the first quarter of next year, will start contributing to its sales “right at the gate,” said RIM Co-Chief Executive Jim Balsillie.

RIM, which later said it will sell the PlayBook for less than $500, is confident the 7-inch tablet would help sustain “fast sales growth,” Balsillie said.

RIM’s Nasdaq-listed shares jumped more than 6 percent on Wednesday to as high as $58.72, their highest since June.

“You have seen the smartphone market just explode...we are in the right sweet spot... This idea that there are two players and a small pie and they are divvying that between them -- you are missing the point,” Balsillie told Reuters in an interview on the sidelines of the G20 CEO Summit in Seoul.

Balsillie was referring to a perceived two-way battle for mobile dominance between Apple and Google’s Android operating system.

RIM’s Nasdaq-listed shares jumped more than 6 percent on Wednesday to as high as $58.72, their highest level since June.

RIM has eagerly touted its tablet’s ability to support Adobe’s widely used Flash multimedia software, something Apple’s iPad does not.

Last month, Apple CEO Steve Jobs said a batch of seven-inch-screen tablets, including the PlayBook, that will compete with Apple’s 10-inch iPad would be “dead on arrival” when they hit the market. RIM insists the seven-inch tablets would be a big portion of the market.

The iPad’s Wi-Fi-only version, sells at $499 and runs up to $699 for a 64-GB model. A 3G iPad starts at $629.

RIM will be lagging rivals such as Samsung Electronics, which aims to sell at least 1 million units of Galaxy Tab this quarter alone. Apple’s iPad controls 95 percent of the market.

“It’s (tablet) a long strategic market and we are still growing 20 percent plus... We are still growing fast and we haven’t factored into tablets and we have great products,” Balsillie said.

International sales of the Playbook start in the second quarter.

THREAT TO BLACKBERRY

RIM has long been the dominant player in the corporate smartphone market, but its dominance of the corporate sector, where its secure email once reigned supreme, is weakening as companies increasingly allow use of iPhone and a slew of devices running on the Android system.

Blackberry’s stranglehold on corporate communications is being eroded by rival devices, with Bank of America and Citigroup joining a growing throng of financial institutions eyeing alternatives to the Blackberry.

The company has also being dogged by demands from countries including India and the United Arab Emirates for easier access to the encrypted data sent over its network.

Balsillie shrugged off market concerns and said sales of its smartphones are set to grow by two-thirds in two years.

“We’re close to 60 million BlackBerry subscribers now and if we continue to perform moderately, we’ll be 100 million (subscribers) in couple of years...two years.”

He said enterprise demand for BlackBerry remained strong and its Asian business was not affected by the security issues, dismissing investor concerns it keeps losing market share to rivals such as Apple.

Apple overtook it as the world’s No.2 smartphone maker last quarter, trailing only Nokia, by selling 14.1 million units. RIM sold 12.4 million phones in its July-September quarter and saw its market share slipping more than 4 percentage points from a year ago, according to industry tracker IDC.

Balsillie reiterated that Apple was surrounded by a “distortion field,” saying RIM’s staggered quarters made the comparison difficult. RIM’s last fiscal quarter ended August 28 while Apple’s ended September 25.

RIM is increasingly dependent on lower-margin emerging markets in Latin America and Asia for sales growth but India and other countries are also causing headaches with demands for access to encrypted data.

“We have seen tremendous growth in India, Taiwan, Philippines, Indonesia, China...It is paradoxical, the security issue,” adding it is not affecting the company’s business.

Additional reporting by Alastair Sharp in Toronto; Editing by Anshuman Daga and Frank McGurty

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