BlackBerry PlayBook vs. Android Tablets

NEW YORK (TheStreet) -- Among the numerous thousands of new products and announcements at CES (Consumer Electronics Show) Las Vegas 2011, there were only two that really mattered, in terms of moving the ball forward for the tablet category. These were the first display of Google's (GOOG) Android 3.0 Honeycomb software, showed for the Motorola (MOT) Xoom tablet, as well as the first hands-on with the BlackBerry PlayBook.

The Android 3.0 Honeycomb software will become available on more devices than I could possibly list, probably no later than some time in the third quarter of 2011. That said, Google's "hero device" is the Motorola Xoom, which is said to become available by March 2011, with additional versions (LTE, etc.) in the second quarter. So what was Motorola able to show at CES, on the Xoom?

At CES, people were not allowed to touch or play with the Motorola Xoom, and it did not carry even an early version of the 3.0 Honeycomb interface. The tablets shown by Motorola and Verizon Wireless simply ran a handful of videos showing what the interface is intended to look like, which is like showing a drawing of a fantasy car. As far as I could tell, these videos were similar to what Motorola had already posted on YouTube.

In other words, from a software perspective, these "demos" were pretty useless. Actually, as I watched the Verizon Wireless representative try to run the video demos in front of me in the Verizon booth, the Motorola Xoom crashed almost every minute. Clearly, the new Google tablet software isn't ready yet.

From a hardware perspective, though, we did find out one thing: The Motorola Xoom tablet requires you to carry an additional power cable, beyond the MicroUSB that powers almost every smartphone in the market today -- Motorola, BlackBerry, Samsung, HTC and others. This seems to be a major drawback of all Android tablets I have seen so far: A new power cable that's different from every smartphone's power cable.

In contrast, RIM ( RIMM) showed the PlayBook the way it's supposed to be shown: RIM allowed everyone to -- pardon the pun -- play with it. I loaded up the PlayBook with numerous simultaneous windows, with applications running Quake, high-definition video, and Adobe Flash-intensive web sites. The performance was amazing, with all apps multitasking in separate, visible windows -- just like you're used to on your Windows or Mac PC/laptop. And at no point did any of the multiple devices I tested crash.

The stability of BlackBerry's new ONX operating system is legendary, as it operates nuclear power plants and unmanned military vehicles alike, and this unprecedented stability appears to have translated into the PlayBook.

The PlayBook hardware is also filled with interesting advantages. I immediately noticed that it was the only tablet I have seen to date that uses MicroUSB for charging. This means you need to only carry one charger to feed both your PlayBook and your smartphone of any brand (as long as it's not Apple ( AAPL)). In addition, the front-facing camera has a very high resolution that could enable biometric user identification, increasing the security of the device, without requiring a separate fingerprint reader.

How does the PlayBook connect to the Internet and to other devices? Just as with the iPad's launch on April 3, 2010, the PlayBook launches with WiFi. As such, you use the device in a manner similar to most iPad owners. You can tether the device to a mobile WiFi hotspot such as the Novatel MiFi, a Motorola Droid or even the new iPhone 4 for Verizon ( VZ) Wireless.

Later in the year, sometime in the second or third quarter, expect versions of the PlayBook to become available on all major cellular networks such as HSPA, LTE and WiMax. Sprint already announced its WiMax version last week, available no later than the third quarter of 2011. Expect Verizon Wireless, T-Mobile USA, AT&T ( T) and other operators to announce upcoming availability of their versions in the second quarter.

In addition to WiFi and 3G/4G cellular versions, the PlayBook offers one additional method of connectivity that will set it apart from most other tablets: The PlayBook will connect over Bluetooth to an existing BlackBerry. This comes in handy for organizations with strict security needs that need to strictly protect information residing behind the corporate firewall. Employees may be prohibited from using WiFi as a result of the security concerns regarding WiFi.

The PlayBook uses a form of Bluetooth that RIM says has been approved by the NSA (National Security Agency). In addition, this allows you to share the data plan for which you are already paying on your existing BlackBerry, and it does so using very little power, saving battery life on both devices. These are all major selling points for the PlayBook compared with Android tablets.

RIM showed how the PlayBook runs Android programs that it claims were converted very easily and quickly. I was told that it could be as easy as one programmer spending only a few hours to do the conversion. If this is true, one would think almost every Android program will quickly become available for the PlayBook. The implications of this appear not to have been understood by the market, or else RIM stock would probably be trading well above $100 a share.

Who will buy the PlayBook? Clearly the enterprise/government market is almost a captive one for RIM given that it will have superior security on numerous fronts. Any CSO (chief security officer) of a company in possession of secrets must be scared stiff over what may come next in the WikiLeaks sagas of the future. Given the choice of deploying the same tablet platform that will be used by the CIA and the largest banks, compared with other platforms focusing on playing Angry Birds (that's a popular game, for those of us who have never played a computer game), what do you think most enterprises will choose? The PlayBook, of course.

In summary, the BlackBerry PlayBook was by far the major upside surprise at CES. It performs flawlessly with no crashes or freezes. It has a fantastic browser that will render many apps unnecessary: Who needs a Facebook app when you have a flawless browser, just like your laptop? And if you still need apps, Android apps are easily converted, so the PlayBook could launch in March with more than 200,000 apps available very quickly.

RIM showed that the PlayBook is the real deal. Expect handsets using the same powerful QNX operating system before the end of this year. In comparison, Motorola's Xoom demo of Android 3.0 Honeycomb doesn't really even qualify as a demo, given that all it showed was a video and people weren't allowed to touch it.

RIM stock is trading at a huge discount to peers. Once the PlayBook rolls out in different versions (3-inch, 4-inch, 7-inch, 10-inch, Sprint, Verizon, AT&T, T-Mobile and other versions), the earnings multiple should expand dramatically. Now that the most secure mobile platform is also the most powerful and most flexible, this stock deserves to trade at a premium to peers, not a discount.

Finally, I expect Apple continue to dominate the tablet market for consumers through the end of the year, thanks to the iPad 2, which should become available in the second quarter of 2011. Thanks to numerous hardware vendors, Android will likely take the #2 spot in the consumer market, and RIM should be the #3 consumer player with the PlayBook, while becoming the #1 player in the security-conscious government/enterprise markets.

The biggest question mark is HP ( HPQ), which is unveiling its new smartphone, tablet and TV products in San Francisco on Feb. 9. If HP's new products were to fail, HP may be faced with no other reasonable option other than to acquire RIM, if it wants to pursue its own platform rather than relying on Google, Microsoft or MeeGo (Nokia and Intel joint project).

If you comment on this article, please state whether you actually viewed the Motorola Xoom demo in person, as well as if you had your own fingers on the BlackBerry PlayBook for any meaningful period of time. Seeing and feeling the real, live, product makes a difference.

At the time of submitting this article, the author was long GOOG, RIMM, AAPL and NVTL.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Anton Wahlman was a sell-side equity research analyst covering the communications technology industries from 1996 to 2008: UBS 1996-2002, Needham & Company 2002-2006, and ThinkEquity 2006-2008.

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