RIM Writes Off Tablet Value, Hopeful for 2012
RIM is facing a fresh challenge that’s merely adding stress to the many woes the BlackBerry maker has dealt with in recent months. The company recently announced that it would be taking a pre-tax charge of $485 million in Q3 2012 because of an oversupply of unsold BlackBerry PlayBook tablets. RIM admitted that it does not expect to meet previous sales targets in the next quarter, and also announced that PlayBooks were selling below earlier forecasts, with only 200,000 devices shipped.
Moreover, RIM’s also writing off the price value of its PlayBook tablet, as the model originally priced at $500 now costs $200 (what a downgrade!). It is believed that RIM is doing this to repair its reputation and gain back the confidence of its customers.
“The Company now believes that an increase in promotional activity is required to drive sell-through to end customers,” RIM notes in today’s announcement, also making a not-so-direct reference to Amazon’s sub-$200 Fire tablet and the massively discounted TouchPads from HP in the “shifts in the competitive dynamics of the tablet market.”
RIM was really overwhelmed at the launch of its PlayBook tablet, as it was the most significant development for the company since the first BlackBerry device launched back in 1999. The company tried to fulfill customer demand for an iPad alternative, but when the PlayBook went on sale in April, the lack of email software failed to arouse much interest. This is the reason that RIM has now promised to offer updated software in February 2012, but it may be too little too late.
On the flip side, there is some positive news as well, as RIM reported that it will remain committed to the tablet market for the long run, and gives credit to the increasing demand for its tablets. It also gave a quick preview of upcoming Q3 results, for which it expects some positive figures. But again, RIM is not expecting much for Q4, partially due to the unexpected costs related to the massive service outage it faced earlier this year. All in all, though RIM is suffering from lots of challenges, but still has high hopes to perform well in the future.
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