PlayBook Price Slashed as RIM Revenue Declines
Firesale Limited to Employees, For Now
It's not news that Waterloo, Ontario-based Research in Motion (RIM) is in very deep trouble right now. For months we've heard about declining revenue at the company, widely known for its watershed smartphone device, the BlackBerry. But it is news to learn that the company is drastically reducing the price of its PlayBook tablet for employees, leading to the possibility that other consumers could see similar price reductions in the coming months.
Recent hits to RIM's stock include a 19 per cent decline in its value during Nasdaq trading, a reduction tied to lower than expected revenue. Last week RIM was forced to announce that its profit for the second quarter had dipped to 80 cents per share, a full 10 per cent lower than the 88 cents predicted by analysts. RIM's stock value in the Nasdaq Stock Market dipped Friday $5.61 to $23.93.
By now, it feels like someone is kicking this company when it's already down. After all, RIM was forced to lay off about 2,500 of its employees this past summer in an attempt to trim the fat and keep up with fast-moving competitors like Apple.
So, what's the problem? For one, RIM just can't seem to replicate the success of its original BlackBerry. "RIM is on a path to becoming a niche player," noted Ted Schadler, Forrester Research analyst. "RIM has to essentially retrench its strategy. It has to focus on what about its products make them different or better than Apple or Google products."
Of course, the company has also failed in other markets. Its somewhat-anticipated PlayBook tablet got lots of advertising dollars and was hard to miss in the weeks leading up to its release, but nevertheless received mixed reviews once it finally hit retail shelves. Sales have been disappointing, to say the least.
PlayBook struggles have prompted RIM to reduce the price of the device for employees, with reductions being up to 50 per cent according to some reports. The deal started on September 14 and runs through early December.
Will the unveiling of an internal bargain lead to a widespread fire sale akin to HP's TouchPad bonanza? It's hard to tell, but some experts believe that could be the case. After all, cutting $150-$200 off each version of the PlayBook (16GB to 64GB) would most definitely get RIM's name out there once again. And if people actually like and use the device -- and RIM continues to support it -- then that could generate interest in the company.
And since the PlayBook functionality is so integrated with the BlackBerry, there's a good chance that sales of RIM's smartphone could also receive a boost.
Stay tuned to see if RIM makes this move -- an action that increasingly looks not just smart, but necessary.
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