BlackBerry isn't bringing its current BB10 operating system to the company's seven-inch PlayBook tablet.

This effectively obsoletes the two-year old device since developers are unlikely to create new apps for a product that's not in tune with the company's latest offerings, or its future.

Ironically, this announcement comes at a time when the popularity of seven-inch tablets is surging. Devices like the ASUS-made Google Nexus 7, Apple's iPad mini and various tablets from Lenovo, Acer, Samsung and others are competing in the market.

It will be strange to see BlackBerry drop out of a segment it had helped define, especially since it already has an educated and dedicated installed user base.

A fresh software upgrade would have made those users happy, as well as created a companion device for people thinking of buying new BlackBerry smartphones.

There are valid reasons for BlackBerry not upgrading the PlayBook. The hardware is two years old, and according to BlackBerry CEO Thorsten Heins, the BB10 experience on the PlayBook is less than optimal.

There's also a question of fragmentation since developers will need to contend with three screen sizes when creating apps: 4.2 inches for the Z10, 3.1 inches for the Q10 and Q5 and 7 inches for the PlayBook.

Seven-inch tablets have become so popular that they have even disrupted the eBook Reader market which are similar in size and shape but which are focused on reading apps.

Companies like Amazon, Kobo and Barnes and Noble have responded by creating their own 7 inch eReader hybrid tablets, which also run applications and play back movies, music and games. These companies are doing this to entice the part of their audience that is upgrading to more functional tablets.

The BlackBerry PlayBook may have had a rough history, but it was definitely ahead of its time. While most Android manufacturers tried to compete with the iPad with similarly large 9-10 inch tablets, RIM (Research In Motion) went small with a seven-inch device that was just as functional, yet eminently more portable.

The BlackBerry PlayBook introduced a powerful dual-core processor, 1GB of RAM, a front-facing camera for video conferencing, front-facing stereo speakers, mini-HDMI out video and a unique gesture area in the device's bezel.

While many of these features were cutting edge for the time, the PlayBook was handicapped from day one because it lacked native email as well as BBM (BlackBerry Messenger).

Missing two of the defining features of BlackBerry devices at the time, was a head scratcher. A later 2.0 update brought native email to the PlayBook, but this was at a time when the device had lost its momentum and was being sold at a heavily discounted rate.

While BlackBerry 10 is not coming to the PlayBook, CEO Thorsten Heins promises that the company will continue to support the device. That's all well and good, but without developer interest moving forward, the PlayBook is finished.

This is indicative of the larger problems that BlackBerry is facing. The company's shares lost value last Friday when they posted weaker-than-expected fiscal first-quarter earnings.

This comes after BlackBerry released both its Z10 and Q10 smartphones, as well as announced an upcoming Q5 smartphone designed for emerging markets.

So, clearly, improving a two-year old product will take a backseat to fixing the more pressing issues.