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Unsold PlayBook inventory costs RIM $485 million

post #1 of 86
Thread Starter 
Research in Motion announced on Friday that its inability to sell PlayBook tablets to consumers has forced the company to take a $485 million charge.

The mostly non-cash inventory provision is yet another bad sign for the PlayBook, which has failed to gain any traction in the tablet market dominated by Apple. Retailers began a fire sale of the touchscreen device last month, slashing as much as $300 off the price of the PlayBook in an effort to move inventory.

The PlayBook sold just a half-million units in the first quarter of availability, but dropped to 250,000 the following quarter. In the third quarter, sales dipped to just 150,000.

However, RIM has reiterated that it is committed to the PlayBook, and the company remarked that deep discounts on the hardware, selling it for as little as $199, have spurred sales.

In addition to poor sales of the PlayBook, RIM warned investors on Friday that it is seeing "lower sell-through and demand" of its products, which will affect not only its third quarter, but also the company's fourth quarter. Accordingly, RIM has lowered its fiscal 2012 earnings per share outlook, as it no longer expects to meet its $5.25 to $6.00 EPS guidance.



Analyst Mike Abramsky with RBC Capital Markets said while RIM's smartphone shipments and gross margins are in line with expectations, the company's product mix has shifted toward devices with lower average selling prices. In addition, RIM is seeing sell-through of its hardware deteriorate, and it expects fourth-quarter shipments to be down sequentially.

In contrast, Apple is expected to be in the midst of its strongest quarter ever, riding high on the launch of the iPhone 4S. Apple executives said in October that they expect to set new records for both iPhone and iPad sales in the current holiday quarter.
post #2 of 86
Considering that, maybe the Touchpad firesale wasn't as bad a decision as we thought. I still think it could have done ok if sold at-cost and the money was made up with dev tools and app revenue though.
post #3 of 86
But...but...it runs flash! I thought people would be lining up to buy it after experiencing the flash-less horror that is the iPad!

Next.
post #4 of 86
Ahh, AI's first dose of Schadenfreude for the day. Classy.
post #5 of 86
Quote:
Originally Posted by MattBookAir View Post

Ahh, AI's first dose of Schadenfreude for the day. Classy.

Your disagreement doesn't bother me at all.

Your abject refusal to explain your point does.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

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post #6 of 86
The appropriate term, I believe, is "death spiral".
post #7 of 86
My local Staples still has a Playbook display, and it still includes the sign telling potential customers that they will need to download the OS for the Playbook before they can use it.
post #8 of 86
Quote:
Originally Posted by MacDevil View Post

But...but...it runs flash! I thought people would be lining up to buy it after experiencing the flash-less horror that is the iPad!

Next.

We don't see many explanations from the "Android kicks iOS' butt" crowd as to why Android tablets can't seem to get off the ground. They seem happy to stick to the smartphone market share argument for some reason. They also don't seem too enthused to compare total iOS vs Android device market share either. "An inconvenient truth" to quote a former VPOTUS?
post #9 of 86
They really are silly. Had they had just asked me before manufacturing all those paperweights I could have saved them a lot of money.

So to any other companies out there thinking of building junk. Stop! Do yourself a favour and ask me first.
post #10 of 86
Quote:
Originally Posted by tundraboy View Post

The appropriate term, I believe, is "death spiral".

I thought it was "beleaguered".
post #11 of 86
I would hope that Wall Street would punish them more - especially after a comment like, "deep discounts on the hardware, selling it for as little as $199, have spurred sales". No sh!t lower prices help products sell, but that doesn't make for a sustainable business model.

It's time for the board to unseat the dolts who claim to be co-ceo's. Two heads, both with outdated, delusional, ideas on how to run the company - are not better than one (ceo who knows what the hell they're doing).

Without a significant change in leadership and business model, RIM will continue to lose market share and brand equity until there is nothing left to save.

The only thing keeping them alive now is that Wall Street has remained BB-centric - which just goes to show that streeters are really far removed from reality. It's made even more pronounced with their inability to value Apple appropriately, but that's a different thread altogether.
post #12 of 86
Quote:
Originally Posted by NomadMac View Post

I thought it was "beleaguered".

no, it's 'doomed'.
post #13 of 86
Quote:
Originally Posted by monstrosity View Post

no, it's 'doomed'.

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

At least, the naysayers say so, so it's probably right.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #14 of 86
This must be making all those smaller manufacturers who were supposedly going to come in and flood the market with cheap tablets think twice. Everybody is getting burned.
post #15 of 86
Quite smooth.
post #16 of 86
Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

At least, the naysayers say so, so it's probably right.

and Samsung has second dibs
post #17 of 86
Ouch.

The only people I know that have BlackBerrys are executives that haven't figured out that it makes them look like a dinosaur and people who think thought they were 'hip' in a rapper way, a decade ago and haven't looked up long enough from their Curves to notice that Justin Bieber is the new Vanilla Ice.
post #18 of 86
Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

That's true.
post #19 of 86
Give it awayyyy Give it awayyy Give it awayyy Nowwww
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I've accomplished my childhood's dream: My job consists mainly of playing with toys all day long.
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post #20 of 86
Quote:
Originally Posted by tipoo View Post

Considering that, maybe the Touchpad firesale wasn't as bad a decision as we thought. I still think it could have done ok if sold at-cost and the money was made up with dev tools and app revenue though.

Uh, you have to sell the thing first, in order to get any app revenue. You do understand this, right?
post #21 of 86
Quote:
Originally Posted by ranReloaded View Post

Give it awayyyy Give it awayyy Give it awayyy Nowwww

Ah, if we're equating this to song lyrics, allow me to post the only two lines of this song that I know in a similar fashion:

"My hardware is a cage that keeps me from selling to the consumers "

No idea who sings it, what it's called, or where it's from; I just heard it on some recent trailer on Apple's site. Thought it fitting.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #22 of 86
Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

I always thought it was FedEx --
http://www.youtube.com/watch?v=NmZRDUO1wGQ
post #23 of 86
Quote:
Originally Posted by Mac.World View Post

Uh, you have to sell the thing first, in order to get any app revenue. You do understand this, right?

Yes, hence the sell it at cost thing. They went straight to 100 from the original price and it sold like crazy, if it was the first big tablet at 200 ish I'm sure it would have sold well too.
post #24 of 86
Quote:
Originally Posted by lkrupp View Post

We don't see many explanations from the "Android kicks iOS' butt" crowd as to why Android tablets can't seem to get off the ground. They seem happy to stick to the smartphone market share argument for some reason. They also don't seem too enthused to compare total iOS vs Android device market share either. "An inconvenient truth" to quote a former VPOTUS?

I'm a Android user but not a fandroid and do not get into childish arguments of iOS vs Android but I will say this Android tablets are at best a joke. They were rushed out too quick because of the iPad. I will get a Galaxy Nexus but I will also get an iPad as my tablet.
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #25 of 86
Quote:
Originally Posted by tipoo View Post

Yes, hence the sell it at cost thing. They went straight to 100 from the original price and it sold like crazy, if it was the first big tablet at 200 ish I'm sure it would have sold well too.

They would have to sell a shitload of apps and dev tools to make it worthwhile to sell at cost and expect to have a viable business on the back end.

What you are proposing isn't ridiculous. It is exactly them model Amazon is trying with the Kindle Fire. Sell the device at cost and make it up on the backend with content. But selling content is one of their core businesses, so it makes sense for Amazon. Breaking even (or a little less) on hardware is ok for them, since they make their money on content anyway and the hardware is then just a control avenue to encourage that revenue stream, through sales of app and movies and music and ebooks and subscriptions and cloud services. RIM (and HP with the Touchpad) had/have no such infrastructure or agreements to make that a viable business model for them. Very few companies have the scale, infrastructure, agreements and experience to even try. Apple would be the most obvious, but they do well enough not having to sell their devices at a loss. Amazon is going to try, we'll see how it works for them. Maybe Google and MS and possibly Sony have the pieces in place to even think of trying this. Can't think of any other companies that could even try with any hope of viability. Certainly not HP or RIM.

"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
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"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
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post #26 of 86
Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

Correct. Apple is doomed.
post #27 of 86
Quote:
Originally Posted by dasanman69 View Post

I will get a Galaxy Nexus but I will also get an iPad as my tablet.

That seems somewhat inefficient from the standpoint of managing/using/enjoying your content, but whatever.....
post #28 of 86
Quote:
Originally Posted by MacDevil View Post

But...but...it runs flash! I thought people would be lining up to buy it after experiencing the flash-less horror that is the iPad!

Next.

What....My iPad does not run Flash.....Back to the Apple Store!!!
post #29 of 86
What's amazing is that anyone is surprised, including RIM. They released a tablet that had to be tethered to a blackberry, didn't support their messaging/e-mail service natively, had an inferior screen and user experience, and was priced like an iPad. Oh, but it ran flash. Got it.
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I can only please one person per day.  Today is not your day.  Tomorrow doesn't look good either.  
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post #30 of 86
Quote:
Originally Posted by AppleInsider View Post

However, RIM has reiterated that it is committed to the PlayBook, and the company remarked that deep discounts on the hardware, selling it for as little as $199, have spurred sales.

They were selling it as low as $99 to staff this week, with a limit of 5-10 per employee depending on which model. This in turn spurred a sudden demand of people looking for RIM employees across Canada to buy them. I expect they probably moved another 50-100k this week through the staff promo, but that was at significant loss.

Between HP and RIM, the expected price consumers will pay for non-iPad tablets is being pushed to insanely low prices. Now that the bar has been set twice, as to what price will actually result in sales, the other manufactures have all got to be thinking it's time to get out of dodge.

"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
Reply

"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
Reply
post #31 of 86
Quote:
Originally Posted by tundraboy View Post

The appropriate term, I believe, is "death spiral".

Quote:
Originally Posted by NomadMac View Post

I thought it was "beleaguered".

Dropped like an elephant turd!
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post #32 of 86
Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

At least, the naysayers say so, so it's probably right.

My comment regarding "beleaguered" was a sly reference to the '90s when you couldn't read an article without that adjective describing Apple; they went together like peanut butter and jelly.

In fact, old guys like me refer to the 1990s as "the beleaguered years".
post #33 of 86
Quote:
Originally Posted by NomadMac View Post

In fact, old guys like me refer to the 1990s as "the beleaguered years".

Yep, I remember that. Good times.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #34 of 86
Oh man. Canada has had a rough go of it in the tech industry. When I was taking electrical engineering in university back in the early 90's, a dream job would have been to work for Nortel. Then in early 2000, RIM became the next tech darling for the great white north. But it looks like big brother south of the border has given little brother north of the border a big can of whoop-ass. No wonder Canadians always have this inferior complex when compared to their neighbour.
post #35 of 86
Quote:
Originally Posted by KDMeister View Post

Oh man. Canada has had a rough go of it in the tech industry. When I was taking electrical engineering in university back in the early 90's, a dream job would have been to work for Nortel. Then in early 2000, RIM became the next tech darling for the great white north. But it looks like big brother south of the border has given little brother north of the border a big can of whoop-ass. No wonder Canadians always have this inferior complex when compared to their neighbour.

Yeah, but you aren't going broke trying to pay for your healthcare.
post #36 of 86
Quote:
Originally Posted by NomadMac View Post

Yeah, but you aren't going broke trying to pay for your healthcare.

Actually... yes we are.

RIM doesn't have a monopoly on incompetence up here...
na na na na na...
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na na na na na...
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post #37 of 86
Amateur hour is now truly over.
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Do you realize that fluoridation is the most monstrously conceived and dangerous Communist plot we have ever had to face? - Jack D. Ripper
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post #38 of 86
Quote:
Originally Posted by AppleInsider View Post

The mostly non-cash inventory provision

While that is technically correct (the inventory provision is non-cash), it's worth pointing out that there was plenty of cash wasted - the cash to buy components and pay for assembly.

Quote:
Originally Posted by tipoo View Post

Considering that, maybe the Touchpad firesale wasn't as bad a decision as we thought. I still think it could have done ok if sold at-cost and the money was made up with dev tools and app revenue though.

I still think the Touchpad sale was a bad move. Not the discount to clear them out, the the size of the discount. Tons of people (including me) made a bunch of money by buying $99 and $149 Touchpads and selling them on eBay for $200-300. If HP had dropped them to $199 and $249 (or even $149 and $199), they would still have sold all of them but had tens of millions of dollars smaller loss.

Quote:
Originally Posted by Tallest Skil View Post

No, no, Apple is doomed. They have exclusive rights to being 'doomed'.

At least, the naysayers say so, so it's probably right.

I think you have it backwards. Apple is 'beleaguered'. It was nearly impossible to read an article about Apple in the 90's and early part of this century that didn't use that term.

Quote:
Originally Posted by Tulkas View Post

They were selling it as low as $99 to staff this week, with a limit of 5-10 per employee depending on which model. This in turn spurred a sudden demand of people looking for RIM employees across Canada to buy them. I expect they probably moved another 50-100k this week through the staff promo, but that was at significant loss.

Between HP and RIM, the expected price consumers will pay for non-iPad tablets is being pushed to insanely low prices. Now that the bar has been set twice, as to what price will actually result in sales, the other manufactures have all got to be thinking it's time to get out of dodge.

RIM hasn't panicked as bad as HP. First, the PlayBook is inherently less attractive due to its more limited feature set and need to be paired with a RIM phone for full functionality. Second, they didn't cut the prices as much as HP did - a special deal for employees isn't the same as offering $99 across the board to the whole world.
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post #39 of 86
Quote:
Originally Posted by KDMeister View Post

back in the early 90's, a dream job would have been to work for Nortel. Then in early 2000, RIM became the next tech darling



Now it is Apple's turn.
post #40 of 86
Quote:
Originally Posted by jragosta View Post

RIM hasn't panicked as bad as HP. First, the PlayBook is inherently less attractive due to its more limited feature set and need to be paired with a RIM phone for full functionality. Second, they didn't cut the prices as much as HP did - a special deal for employees isn't the same as offering $99 across the board to the whole world.

Correct, RIM has shown more restraint in their pricing, but they are still selling it at or below cost when selling it at $200 to the public. That sets the bar far below profitability for tablets in general, excluding the iPad. As I said, between HP and RIM selling at or below cost (and Amazon now too) the price consumer are willing to pay is dropping for all tablets that aren't iPad. That has to make the other manufacturers wonder whether it is worth playing anymore.

"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
Reply

"My 8th grade math teacher once said: "You can't help it if you're dumb, you are born that way. But stupid is self inflicted."" -Hiro. 

...sometimes it's both
Reply
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