(Reuters) -- Research In Motion on Tuesday gave its PlayBook tablet computer the ability to handle e-mail as easily as a BlackBerry does, with new software that eliminates a shortcoming that has throttled sales since the PlayBook launched last April.
Before the software update, which came months after RIM initially promised, a user had to tether the tablet to a BlackBerry to get e-mail, robbing the PlayBook of the function that made RIM's smartphones an essential business tool.
It's what the first Playbook software should have been from a company which stakes its brand on messaging strength, with tightly integrated calendar, e-mail and contacts, said Frost and Sullivan analyst Craig Cartier.
The tablet, which RIM has had to discount heavily to boost flagging sales, is the first RIM device to run on the company's new QNX-based operating system.
As such it provides the blueprint for the first QNX-based BlackBerry, due by the end of the year. For that reason, the future of the company may hinge on the tablet's success, analysts say.
The Waterloo, Ont.-based company needs to have more applications available before the new phones, powered by QNX software called BlackBerry 10, hit the market. It hopes the PlayBook upgrade will encourage developers to get started.
That's crucial if the company that virtually invented the smartphone hopes to make up ground lost in recent years to Apple Inc's iPhone and iPad, and a host of devices powered by Goggle's Android, analysts say.
RIM appears to have re-positioned PlayBook from a standalone profit center at launch (at $499) to an investment to build and seed developer interest in its next-generation platform ahead of the launch of BlackBerry 10 later this year, RBC Capital Markets analyst Mike Abramsky said in a note to clients.
FIRST TEST FOR HEINS
In the months since PlayBook's botched launch, demands by investors for change grew louder and RIM's share price eroded. The pressure culminated with the departure of RIM's co-chief executives Mike Lazaridis and Jim Balsillie last month. Thorsten Heins, a former Siemens AG executive who joined RIM back in late 2007, has taken the reins.
How the PlayBook upgrade goes down with investors and analysts could set the tone for Heins' first year at the helm.
After the release, tech websites mostly reacted with a dismissive shrug. TechCrunch said that what RIM has done is effectively bring the PlayBook up to speed with Android tablets. Gizmodo said it was RIM's attempt to salvage the PlayBook by giving it basic tablet functionality.
Perhaps just as importantly, the upgrade is designed to make more apps available for running on QNX devices. It gives the tablet the ability to run apps written for Android, a tacit acknowledgement that the current dearth of RIM-specific apps has limited the PlayBook's appeal. The prospect of increased sales could kick-start the app development, analysts say.
RIM sold just 850,000 tablets to the end of November. By comparison Apple, which has far more available apps, sold 15.4 million iPad tablets in its latest quarter.
The update will also feature a new BlackBerry video store, initially only available in the United States, and enhanced web browsing capabilities.
But two important features are missing. The upgrade excludes the popular BlackBerry Messaging (BBM) application and it is unable to integrate with existing versions of RIM's enterprise server software. That gives it limited appeal to RIM's core audiences of business users and BBM fans, Abramsky said.
Shares of RIM, which have tumbled close to 80 percent over the last year, rose on Tuesday morning before slipping to trade 0.6 percent lower at $14.98 on the Nasdaq by mid-afternoon.
(Editing by Frank McGurty)