RIM has slashed the price of its PlayBook tablet. After anemic sales and a big write-down in 2011, RIM likely hopes the PlayBook will finally gain traction.
In Motion has slashed the prices for its PlayBook tablet, offering all three
models for $299 through the beginning of February.
those purchasing direct from RIM
, that represents a
discount of $400 for the 64GB version, $300 for the 32GB and $200 for the 16GB.
It comes in the wake of recent price cuts by retailers like Best Buy, which
sparked temporary runs on the 7-inch device.
RIM executives routinely tout the PlayBook's importance within the company's
broader strategy, the tablet has faced an uphill battle for adoption in a
marketplace dominated by Apple's iPad and crowded with a seemingly unending
tide of Google Android touch screens. In December, RIM announced that it would
take a $485 million charge against its PlayBook inventory, or $360 million
after applicable taxes.
a Dec. 2 statement, RIM cited "competitive dynamics of the tablet market" and
the delay of a significant PlayBook software upgrade as reasons behind the
write-down. "The Company now believes that an increase in promotional activity
is required to drive sell-through to end customers," the statement added. "RIM
will record a provision that reflects the current market environment and allows
it to expand upon the aggressive level of promotional activity."
demonstrated by Best Buy, a reduced price will induce customers to purchase the
PlayBook in greater numbers than usual. The retailer managed to sell out of its
stock after it dropped the tablet's price to $199 and $299, respectively, for
the 16GB and 32GB versions.
it's questionable whether a lowered price point can give RIM its needed margins
on the product-much less prevent each unit from selling at a loss. Earlier in
2011, a teardown by analysis firm IHS estimated the materials cost of the 16GB
PlayBook at around $271. If that number proves accurate, then RIM's current
$299 price point is truly margin-killing.
PlayBook's major software update, now scheduled for February, will include
integrated email in addition to a host of other, much-requested features.
RIM heads into 2012 seeking a comeback. Indeed, during the company's Dec. 15
earnings call, co-CEOs Jim Balsillie and Mike Lazaridis emphasized that an
internal turnaround is under way. A major part of that plan centers on an
upcoming series of smartphones running a QNX-based operating system named
BlackBerry 10. RIM executives have emphasized these devices' supposed ability
to compete toe-to-toe against BlackBerry's highest-end rivals, although they
have yet to share an exact release date beyond the latter half of 2012.
used a portion of the call to describe those BlackBerry 10 devices, detailing
features such as dual-core processors. "Industrial design we believe is
critical," he added.
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