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.