In the latest chapter of RIM’s slow-motion withdrawal from the tablet market, a key supplier of the PlayBook cuts its production line in half amid a “drastically shrinking” market for anything not Apple. Last week, the Canadian smartphone maker announced selling only a fraction of the units Wall Street expected.
Quanta, which had created a production line with more than 2,000 workers operating in three shifts just for the PlayBook, has cut 1,000 of the employees as demand for the RIM tablet continues to fall. According to industry publication DigiTimes, RIM requested the Taiwan-based production line to prevent Chinese versions of the PlayBook appearing. The concern now seems unwarranted, given the lack of interest by consumers.
That lack of interest could be seen in a shocking statistic released last week: each time RIM sells one PlayBook, Apple sells 19 iPads. RIM “overplayed the PlayBook,” Needham & Co. analyst Charlie Wolf told investors.
So far, RIM remains “internally optimistic” about the PlayBook’s chances to compete with the iPad. The Waterloo, Ontario company had hopes of producing 800,000 tablets each month during the second half of 2011. However, last week, RIM reported shipping just 200,000 PlayBooks during the previous quarter, less than half of the 500,000 tablets shipped during the first quarter of this year. Even skeptical analysts expected between 400,000 and 600,000 tablets would ship.
Unlike HP, which quickly ditched the TouchPad, RIM appears to be going to Band-Aid approach, promoting, pushing and now hoping for people to buy the tablet while the floor falls out of consumer demand. Could smartphones save the company? Maybe. One Wall Street expert thinks the chances are slim, however. Ticonderoga Securities’ analyst Brian White expects the iPhone 5 will “steamroll” the upcoming BlackBerry 7 devices. As for the PlayBook, it is just the “next casualty of iPad’s tablet dominance,” he said.
All of which makes RIM’s inner confidence of snatching victory from the jaws of defeat even less likely. On Wall Street, investors have already placed their bets on RIM — the company’s stock value has fallen 60 percent since the start of 2011.
