ANALYSIS | Can RIM's PlayBook survive the Fire?

Amazon’s new Fire tablet announcement leaves some wondering what will happen to RIM's PlayBook.

Apple is where it wants to be, with the company cornering the music and video market via iTunes. Now Amazon, with the Fire, has borrowed the Apple model to sell books, electronics, DVDs and video games.

It seems the old model of building a device, giving it decent apps and presenting it to the world with a big splash, hoping to sell millions, is over. Now, if Apple and Amazon are setting the bar, a new product has to be tied to sales, in the brave new world of making money not only on the device but on all that comes with it.

BlackBerry’s PlayBook tablet doesn’t have the cool factor that Apple has gathered, and it certainly doesn’t have the associated products to sell. Instead, RIM had the embarrassment of having its PlayBook app store rapped by critics and of having to drop the price on its tablets -- this after HP dropped the cost of its tablets as it quickly shed that side of its business. HP also didn’t have a strong app store and the needed ecosystem.

The Kindle Fire is not an earth-shattering tech device with breath-taking features. It’s basic, runs on Google's Android, with only a seven-inch screen, no camera or 3G, and at $199 comes in well under the lowest-priced iPad. Amazon clearly has a goal in mind: sell, sell, sell. And perhaps the unstated goal of taking on Apple, which apparently holds 80 per cent of the tablet market.

"In essence, the Kindle is a Trojan horse for Amazon's retail and media brands," said Morgan Keegan analyst Justin Patterson.

At $199, it appears the Fire is not designed to make Amazon a lot of money on hardware sales. Amazon promised perks such as free cloud storage for content such as e-books, as well as a free month of Amazon Prime, a membership-based program that provides access to the company's movie- and TV-streaming service and discount shipping for $79 a year.

It appears RIM needs to make some sort of move.

What now, RIM?

RIM put many of its eggs into convincing those people who already have a BlackBerry to get a PlayBook in order to take advantage of the ability of the two devices to hook up and work together.

Jefferies & Company analyst Peter Misek sees the relationship between the PlayBook and the BlackBerry as a beneficial one.

"We see the tablet as highly complementary to the smartphone. So for RIM they have to remain in the tablet game. They really need to provide that product for their customers," he told CBC News.

"Enterprise customers have very strong tablet buying intentions."

Misek said not having a PlayBook would have "a big, potential demand impact."

"For developers, they can develop for both smartphones and tablets, it is also very vital," he said.

CIBC World Markets recently said in an earnings update that RIM’s PlayBook needed a major reboot, noting that sales have stalled, something that is not a "complete surprise as enterprise and consumers have been unwilling to adopt this device without native email, an Android app player…"

Would a major reboot include more things for people to buy, the path Apple blazed and the one Amazon is now walking down?

For Amazon CEO Jeff Bezos, the way forward is clear. He doesn't name RIM in his comments, but the Canadian company will take notice.

"Some of the companies that have made tablets and put them on the market ... the reason they haven't been successful is because they made tablets. They didn't make services," Bezos said in an interview after the launch of the Fire.

"So what we've done is really integrate seamlessly all of our media offerings — video, movies, TV, apps, games, magazines, games and so on."

Steve Jobs could have said that.