The holidays aren’t bringing any joy for Research in Motion (RIM). Once the leader in smart mobile devices, the company seems to be dying a slow painful death in spite of its attempts to improve its position. Now, the company announced a US$ 485 million write-down, US$ 360 million after taxes, related to its struggling PlayBook tablet.
Another Sad RIM Tale
RIM entered the very hot tablet market in April with its PlayBook in an effort to reposition itself as a mobile technology leader. Originally priced at US$ 499, the device failed to give RIM the positive boost it desired, which was likely due to RIM’s decision to release the device without native email, calendaring or contact management support. RIM promised that the features would be introduced “soon,” but the functionality has yet to be released; it is currently planned for the first quarter of 2012.
The market made its opinion of the device known. Sales of PlayBook have continually declined from a high of 500,000 units in the first quarter of release, to 250,000 in the second quarter and 150,000 in the last three months. RIM’s efforts to improve sales by dropping PlayBook’s price to US$ 300 on Black Friday and Cyber Monday wasn’t enough to revive the beleaguered PlayBook.
RIM is conceding that things are not happy in the land of PlayBook. RIM announced that it is taking the multi-million dollar write-down due to a “lowered inventory valuation of BlackBerry PlayBook tablets.” RIM goes on to state,
The Company now believes that an increase in promotional activity is required to drive sell-through to end customers. This is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software.“
In layman’s terms, this means RIM executives will not be rolling naked in cash due to PlayBook sales anytime soon or, let’s be honest, ever. The humorous thing about the release is RIM’s suggestion that a market shift somehow caused their current plight. This is understandable. Corporate communications did not approve the press release that said, “Look, we messed up again. We thought we could sell a tablet without something as fundamental as email.”
What This Means
Despite RIM’s continued challenges with the PlayBook, they remain committed to the device. The company is hanging on to hope that the upcoming PlayBook OS 2.0 update will improve the sales picture. The performance of PlayBook is only one of many worries for the faltering giant. RIM is continuing to lose market share to Android, iPhone and Windows mobile devices as the new leaders add enterprise quality features.
RIM can still turn things around, but they must become more agile and significantly more realistic about their current position. Doing more of the same and hoping for the best will render the company completely obsolete.