RIM May Be Sitting On Nearly A Million PlayBooks

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News Posted: Wed, Sep 21 2011 4:41 PM
RIM has been struggling to catch a break for months but the negative reports show no sign of slowing. According to UK rag The Guardian, the company has slashed production of its seven-inch tablet due to an enormous backlog of unshipped hardware. This follows the company's admission last week that it shipped just 200,000 PlayBooks in Q2, down from 500K in Q1. If true, it would mean that RIM has more PlayBook's in inventory than it's managed to sell to date.

Quantas, the company that actually manufacturers the PlayBook, has cut its staff from 2,000 to less than 1,000. Unidentified sources with the company claim that RIM is manufacturing less than 100,000 units per month at this point, down from initially projected sales of 4-5 million for 2011. RIM's balance sheet shows an enormous jump in inventory, from $618M in Q1 to $943M in May, and $1.37B at the end of the last quarter.

RIM's inventory levels, from 2002 to the present date. Image originally by The Guardian

Best Buy and Staples have both begun offering discounts on PlayBooks and are selling the 16GB version for $450 and the 64GB model for $550, down from original MSRPs of $500 and $700, respectively; RIM is purportedly mulling a significant price cut on all models. At present, the PlayBook's form factor make it less attractive than the iPad, why buy a seven inch tablet for $450, when a 9.7 inch model is available for $500?  A price cut would help to create a value proposition around the smaller device.

Price, however, may not be the PlayBook's biggest problem. RIM's decision to launch the device without native messaging tools was baffling given the company's typical business/government orientation. As nice as the PlayBook's hardware is, it's only half of the equation; a number of reviews that gave the device high marks overall knocked off points for poor launch software. Nearly four months after launch, RIM still hasn't offered native messaging apps. In the meantime, some of the company's partners are taking matters into their own hands, the Canadian cellular company Rogers has begun offering employees a 50 percent discount on the device.

RIM recently launched new devices and an updated version of its BlackBerry OS, so its Q3 sales should improve if these products  deliver. The company's new smartphones will be competing with Apple's iPhone 5 and updated iPhone 4, which could easily stall any momentum RIM builds around its newer smartphones this quarter.

According to RBC Dominion Securities, RIM's stock and future prospects will remain in the doldrums until the company deals with certain core issues. "We view recent Q2 results as symptomatic of RIM's failure to address these challenges, which are: 1) backwards-looking, uncompetitive products and software; 2) marketing and launch execution; 3) investor credibility/visibility; and 4) governance," said analysts Mike Abramsky and Paul Treiber.

Thus far, RIM has resisted calls to change its corporate structure or dramatically shift its business focus. The company has claimed it will earn $5.25 - $6 per share for fiscal year 2011--but hitting that target would require it to post historically record sales in Q3. Investors and analysts are both dubious that the company can deliver, particularly given the challenges it's facing.
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" One Million $99 Dollar Tablets on the Warehouse, One Million $99 Dollar Tablets,

Take one down, Root Android around, 999,999 $99 Dollar Tablets on The Warehouse."

"999,999 $99 Dollar Tablets on The Warehouse, 999,999 $99 Dollar Tablets,

Take one down, Root Android around, 999,998 $99 Dollar Tablets on the Warehouse."

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RTietjens replied on Wed, Sep 21 2011 5:34 PM

Optimu has it right. Bring the Playbook in at $99 and it will pour out of the warehouses so fast it will leave a vacuum behind. But at any price over $250, there are other competitors that are more attractive, often for less money, and with better app support.

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Joel H replied on Wed, Sep 21 2011 8:59 PM

Considering that the company's estimated Bill of Materials on the device is ~$271, the idea of selling it for under $250 is a pipe dream. At $300, the PlayBook's hardware would be a great value, but the tablet's hardware isn't really the problem--it's overpriced at $449, but not ludicrously so. The problem is the lack of a dedicated email and messaging client, which was sort of an unbelievable screwup on RIMs part.

The company that revolutionized the phone industry by providing email service and other business-friendly apps...forgot to put email on its own tablets.

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omegadraco replied on Wed, Sep 21 2011 10:05 PM

Maybe RIM will figure out some sort of way to alter the software on the devices to offer that native e-mail and messaging support.

When I think of Blackberry I think of businesses and if they make it right then they can target the business audience a bit more with this tablet.

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AKwyn replied on Wed, Sep 21 2011 11:35 PM

Hey Wheatley, this is Tim Cook. We at Apple would like to thank you for talking bad about the competition and for supporting the iPad all of the way. While other people may say $99 tablets are wrong, we'd like to thank you for being right, as this will allow us to launch the iPad 5 the best possible way, since we don't have any other tablets to worry about.

As part of your dedication to Apple, we'd like to send you a model of the iPad 5; while it may not be the full version, we're sure that you'll buy the iPad 5 when it goes on sale for $1.200 USD, and that's for the 16GB version.

Anyway, keep talking trash and keep buying those iPads!


Seriously, anybody who believes in $99 tablets? What are you thinking, you want Apple to have a monopoly? Also the PlayBook isn't a bad tablet or anything, it's a good tablet; and if it was priced at a more acceptable price range than more people would be inclined to buy it and well, RIM would have a iPad competitor on it's hands.

Also whatever omegadraco said.


"The future starts with you; now start posting more!"

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akumu replied on Thu, Sep 22 2011 3:28 PM

Id have to agree that the playbook is overpriced right now. Not to mention it really doesnt have the 'cool' factory that the ipad or other apple products have.

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Manduh replied on Thu, Sep 22 2011 7:40 PM

Rogers Wireless NEEDS to give huge discounts on devices, it's the only way they get customers. Their prices (data usage, etc) are borderline theft, that's why they have the nick name "Robber's Wireless". Unfortunately those device discounts come with 3 yr contracts.

Not to mention their customer service, actually their customer service POLICIES, are the worst around... I know because I have worked for them. First line agents' hands are tied for a lot of issues and a majority of the time the higher ups didn't care enough to take over the call to help out.

So what are customers stuck with? Outrageous prices, several billing errors, a discounted device that will no doubt fail or become a "dinosaur" before the 3yr contract is up and not one "Robbers'" rep who can or will do anything to help.

Hopefully other companies will lower the price as well so they aren't forced to go with Rogers if they want a lower price on the Playbook!

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What are you thinking, you want Apple to have a monopoly?

"Its not that I want Apple to have a Monopoly, its that when a company decides to invest hundreds of millions of dollars to try to compete against a rival company product, it should take its time to be more prepared and do its homework before they pull the trigger and fail in a way that would jeopardize thousands of jobs. Lets continue"


Joel H:

The problem is the lack of a dedicated email and messaging client, which was sort of an unbelievable screwup on RIMs part.

The company that revolutionized the phone industry by providing email service and other business-friendly apps...forgot to put email on its own tablets.

"There's something really fishy about that. And the only thing that comes to my mind about it, with influence from what Realneil said in another post about hP's CEo, is the same thing. Before I say it, I dont know who is, nor anything about RIM's CEO, but the thought that a mistake like this can be made just make me think the same way, that the Guy doesn't care, And if he would get fired, he still would be walk out with millions in his bank account without putting in anymore work time."

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JDiaz replied on Fri, Sep 23 2011 12:20 AM

RIM will be releasing a big update in October that will address those issues, and even add support to run some Android apps.

What originally happened was that RIM was trying to bolster the sales of their Blackberry phones and decided to market the Playbook as a Blackberry accessory. Thus it didn't need its own email client, etc as you would get that from the Blackberry and they would function seamlessly with each other.

Problem of course is people wanted it by itself and not tied to a specific phone. While the Blackberry phone has been losing market share and that complicated things for RIM who wanted to set up a market ecosystem but now they have no choice but to finally market the Playbook as a independent product.

While increased competition and regaining consumer confidence will likely make them reduce the pricing as steep as they can make it.

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