Should Research In Motion kill the PlayBook?
On Sept. 29, a rumor circulated that RIM was planning to discontinue production of the 7-inch tablet, which runs the company’s QNX-based operating system. RIM shot that down as fiction, with a spokesperson telling Boy Genius Report that the company “remains highly committed to the tablet market.”
But can RIM benefit from staying in the tablet market? Or would it prove better for the company, in the longer run, to end production of the PlayBook and devote those resources to other pursuits?
During the company’s Sept. 15 earnings call, RIM co-CEO Mike Lazaridis told media and analysts that PlayBook sales were “below where we’d like it to be,” but that the device would “ultimately be successful in a market that’s in its infancy.” At the time, RIM executives promised that a major software update would help fill in the PlayBook’s feature gaps, including its lack of native email; however, they neglected to mention when that would arrive.
This week, prominent retailer Best Buy slashed the PlayBook’s price by $200 for all models. It’s anyone’s guess whether that had anything to do with Amazon debuting the 7-inch Kindle Fire tablet, which will retail for $199.99 and offer easy access to the online retailer’s multimedia and cloud content.
Based on RIM’s frank admission of anemic sales, lack of a roadmap regarding the software update and those price cuts, things are looking a little grim for the PlayBook. RIM also faces broader troubles: for the second quarter of 2012, the company reported revenues of $4.2 billion, a 15 percent decline from the $4.9 billion it earned during the previous quarter. The company is prepping a line of QNX-based “superphones” it claims will reignite consumer and business interest.
If RIM terminated the PlayBook, it could save the company some cash in the short term. But longer-term, that could have some negative repercussions. For one thing, killing the PlayBook would double as a vote of no confidence in the QNX-based operating system, on which the company has pinned the bulk of its hopes for a turnaround. Also, killing the tablet would remove a significant element of RIM’s hardware ecosystem, hobbling its chances of competing on equal footing with Apple and the various Google Android manufacturers.
If you subscribe to that theory, RIM has precious little choice but to continue with the PlayBook for the foreseeable future.