RIM Devalues Playbook Inventory by $485 Million (NewsFactor)

Research In Motion said Friday that it will record a $485 million charge on the inventory valuation of the company's BlackBerry PlayBook tablets when it reports results for its third business quarter later this month. "A number of factors have led to the need for an inventory provision in the third quarter," said RIM co-CEO Mike Lazaridis.

However, RIM has no intention of emulating HP, which quickly sold off its remaining TouchPad tablet inventory and abandoned the market last August. The BlackBerry maker's goal is to dramatically increase the number of PlayBooks in the hands of more customers by cutting prices.

The PlayBook inventory write-down is merely the first page in RIM's new playbook for more effectively competing with lower-priced tablet models such as Amazon's $199 Kindle Fire and the new $249 Nook Tablet from Barnes & Noble. RIM is also aware that delays in the release of the new PlayBook OS 2.0 software featuring more advanced capabilities has hindered the BlackBerry tablet's immediate sales prospects at the old price.

Lazaridis said RIM remained committed to the PlayBook platform and believed the tablet market was still in its infancy.

"We believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise," Lazaridis said Friday.

Low-priced Promotions

Retailers such as Staples began selling the BlackBerry PlayBook for $200 on Black Friday. According to Lazaridis, low-priced sales promotions like Staples' Black Friday deal have already driven a "significant increase in demand across most channels."

By reducing the PlayBook's retail price, RIM hopes to drive the development of a vibrant application ecosystem in advance of the launch of its upgraded BlackBerry smartphones. However, the PlayBook's sales prospects -- even at sharply reduced prices -- are limited because of the relatively few applications and multimedia entertainment options available for the current PlayBook platform.

Even with the special promotions, RIM said Friday that it only sold 150,000 PlayBook units to retailers and distributors during the business quarter which ended on Nov. 26. On the other hand, RIM said its own internal numbers indicate that the actual sell-through to consumers was even higher as distributors presumably moved to clear their store shelves.

Still, it remains unclear whether RIM's new PlayBook strategy will put into play enough units to encourage software developers to create more apps for the company's PlayBook OS 2.0 platform, which is expected to launch in February.

Outage Aftershocks

RIM's BlackBerry platform held an 11 percent share of the global smartphone market at the end of September -- down from 15.4 percent in September 2010, according to Gartner. What's more, RIM's mobile market prospects worsened in early October, when the BlackBerry platform suffered a four-day global outage. The timing was potentially disastrous for RIM.

"The same week of the outage, the iPhone 4S hit the stores and users coming to the end of their contracts will now have a reason to think beyond BlackBerry," said Francisco Jeronimo, IDC's research manager for European mobile devices. "This outage harms BlackBerry's brand reputation."

According to Net Applications, a significant number of former BlackBerry users switched to Apple's iPhone 4S and new Android handset models during October. So even if RIM's PlayBook is offered at heavily discounted prices, RIM will find it difficult to regain lost customers who are now using handsets running iOS or Android.

Source: http://us.rd.yahoo.com/dailynews/rss/tech/*http%3A//news.yahoo.com/s/nf/20111203/bs_nf/81227

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