Trying to compete against Apple’s iPad can be costly – especially if you are RIM and your PlayBook tablet went from design to discount bin in record time. Today the Waterloo, Ontario company announced it will take a $485 million charge for a growing number of PlayBooks it just can’t sell.
After months of watching PlayBook sales slip first to a half-million in the first three months, then fall to 250,000 the next quarter and to 150,000 in the third three-month period, RIM stumbled upon its best marketing tactic: cut the price to $199. Not surprisingly, sales perked up. Just as HP discovered its disastrous TouchPad became very popular by practically giving them away, RIM’s device is flying off the shelves — mostly by retailers wanting more space to hawk the iPad.
Things aren’t looking up for RIM, elsewhere. The company said consumers aren’t buying its other products, forcing it to lower its earnings expectations for fiscal 2012. Analysts already hear the death rattle coming from RIM’s financial statements. RBC Capital Markets’ Mike Abramsky said while the company is still selling smartphones, the devices increasingly garner lower average prices. This is the opposite of Apple, which routinely breaks records selling iPads and iPhones that cost more than competitors, indicating quality could trump cost. Indeed, Abramsky calls the PlayBook write-down “a bit of a sideshow.” The real bad news for RIM is they are cutting expectations at a time when the company should be selling its brains out.
Again, contrast RIM’s bad holiday news with Apple. After a slight dip in iPad sales for the third quarter, the Cupertino, Calif. company expects this quarter to bring new record demand for the tablet and the iPhone.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
10 responses to “RIM To Eat $485M In Unsold PlayBook Tablets”
Most of us knew they would have to sell PlayBooks at a loss. It didn’t take a genius to figure that one out. I’m sure even RIM employees could see that much. The Kindle Fire basically killed whatever chances the PlayBook had after RIM probably funded much of the R&D on the Kindle tablet. Jeff Bezos gets an A for outsmarting two RIM CEOs.
Hey, I’d even consider buying a PlayBook for $99. Actually, I wouldn’t consider it at all. I think they should all be shipped to some third-world country where people living in near poverty might have some appreciation for them.
I actually own an iMac, a macmini, two ipads and two iphone 4S…and now I own a blackberry playbook (16GB @ $199) and I actually have to honestly admit that it is an excellent tablet, it’s only failing is that it needs more apps. It is a solid device with an excellent UI that I might admit is better than iOS.
If you can find one for $199 is makes an excellent media consumption device. The hardware and web browsing experience is very solid, and videos on the screen look great. They made a huge mistake with the original price point and poor marketing and were very slow (and still) in updating.
Wow, I hope that’s the case in Malaysia because here, everything is sky rocketing and still people are willing to buy. Come, invest in Malaysia for the peace of mind:)
Hey, as the sign on the Playbook display at Office Depot says, “Amateur hour is over.” Yes. And so is the Playbook.