RIM's PlayBook manufacturer cutting production lines as sales slump

Posted:
in iPad edited January 2014
After sales of Research in Motion's PlayBook tablet slumped last quarter, Quanta Computer has laid off about 1,000 workers working on production lines set up specifically for the device, according to a new report.



Industry sources told DigiTimes that the manufacturer is cutting back production lines for the PlayBook at a factory in Taiwan, offering preferential compensation to the roughly 1,000 workers who have been let go. Quanta confirmed the layoffs, but declined to provide further details.



Sources noted that RIM had requested the lines be located in Taiwan in order to avoid the appearance of mainland Chinese knockoffs. "Quanta set up production lines at the factory in northern Taiwan specifically for PlayBook and began production in three shifts with a workforce of more than 2,000 staff," the report noted sources as saying.



Insiders suggested that Quanta had decided to cut its losses, despite the fact that RIM has yet to indicate plans to withdraw from the tablet market. They described RIM's tablet orders as "drastically shrinking."



An earlier report from the publication in April suggested that RIM was "internally optimistic" about the PlayBook and was looking to produce 800,000 units each month in the second half of the year. But, the Canadian smartphone maker revealed last week that it had shipped just 200,000 PlayBooks in the most recent quarter, down from 500,000 in the first quarter of fiscal 2012. Analysts had expected shipments of between 400,000 and 600,000 tablets.







In August, Sprint revealed that it had reached a mutual decision with RIM to cancel plans to release a 4G WiMax version of the PlayBook.



RIM itself is undertaking its own downsizing program. In July, the company announced plans to cut 2,000 jobs, bringing its total global workforce to roughly 17,000 people.



Wall Street has a cautious view of the company after its most recent weak quarter. Analyst Brian White of Ticonderoga Securities said last week that the PlayBook appears set to be the "next casualty of iPad's tablet dominance." He also predicted Apple's iPhone 5 will "steamroll" BlackBerry 7 offerings from the handset maker.



Shares of RIM are down more than 60 percent since the beginning of the year.
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Comments

  • Reply 1 of 40
    Dead Company Walking
  • Reply 2 of 40
    How many "hail mary" plays does RIM plan on running?
  • Reply 3 of 40
    Who would have thought in 2010 that both RIM and HP, in a period of just a couple of months would both have to abandon ship after hitting the rocks because of failings to deliver the necessary leadership, judgement and courage to navigate around. This speaks to the critical importance of effective leadership at the very top of every company and particularly in the tech industry where the currents are swift, turbulent and risky to navigate. These 2 unfortunate outcomes are stark reminders of why the fate of a company truly rests in the hands of it's CEO and why the brilliance of Steve Jobs will live on through the many lessons he has taught us long after we all move on.



    Most of all though, I'm saddened by the devastating consequences that poor judgement, hubris and self denial at the highest level bring to thousands of employees and their families in different parts of the world. Hopefully though, the companies still standing will deliver the very best products for not only consumers to enjoy but for their employees to keep their jobs that they and their families are so dependent on.
  • Reply 4 of 40
    Slumping PlayBook sales? You gotta be kidding. Who woulda guessed something like that?

    No problem for those workers. Just send them over to the iPad 2 assembly line. They can always use some extra workers over there. Might help stop the worker burnout from working around the clock and still never getting close to satisfying iPad 2 demand.
  • Reply 5 of 40
    Shocker! ...not
  • Reply 6 of 40
    Let's the fire sale begin, time to get a $100 Playbook.
  • Reply 7 of 40
    apple ][apple ][ Posts: 8,360member
    The only thing that these so-called "iPad killers" are good at is killing themselves. They're suicide tablets and only a fool would ever waste their money on getting one. Even the iPad 1, which as we all know was discontinued a while back, is still better than all of the inferior copycats coming out. Nothing comes even close to the massive ecosystem which Apple has built up, not to mention their superior tablets which are lightyears ahead of the copytition. By the time the iPad3 comes out, it'll be pretty much game over.



    The accessories market for the iPad alone is probably bigger than the entire non-iPad tablet market.



    Apple is truly killing it and I'm loving it! I pity the poor monkeys who try to challenge Apple and think that they can actually do better!



    Bring on the firesale!



    As for me, I wouldn't want a Playbook, even if I could get one for $50.
  • Reply 8 of 40
    This sort of experience will just give apple an even greater advantage with suppliers. Suppliers will view non-apple companies as riskier and charge them higher prices relative to what they charge apple.



    In the last week or so, people have been comparing windows 8 to iOS/macos -- an interesting comparison to be sure. But in terms of shipping products that's only half the story. The other half is the hardware. And this RIM story is a great reminder of the advantages apple has in terms of building high quality hardware at a reasonable cost.
  • Reply 9 of 40
    I've owned an iPad 2 since launch day in the UK. Yes, I lined up for 5 hours - more fool me. I really enjoy it, it's cool. I'm not blind though, so I do look at other tablets when I'm in stores. I've seen the Playbook about 3 times now in PC World (UK Store, not Magazine by same name) and *every* time the demo it runs has completely screwed up the display. It has ended up with the display thinking it is in portrait mode but being in landscape and there seems to be nothing you can do but reboot to fix it. This is a really good reason not to buy a Playbook. I've also looked at the Android tablets, some of them are pretty sweet. If I wasn't so happy with my iPad 2, I'd buy one. The 7" form factor is a lot more conveniant for my usage pattern, but the iPad just works too well to use that as an excuse.
  • Reply 10 of 40
    tipootipoo Posts: 997member
    Ok, if they fire sale these I'm not missing it this time!



    Lol...But really, I think they should sell these at cost if they aren't selling, then make up their other spending on developer tools, services, etc. That's what HP should have done, the fire sale proved people were interested but wanted a lower price.
  • Reply 11 of 40
    Quote:
    Originally Posted by tipoo View Post


    Ok, if they fire sale these I'm not missing it this time!



    Lol...But really, I think they should sell these at cost if they aren't selling, then make up their other spending on developer tools, services, etc. That's what HP should have done, the fire sale proved people were interested but wanted a lower price.



    Are you kidding. A company needs to be profitable. This means making money on all their assets. Not giving them away. If you do a little home work, the first step to losing it, is to drop your prices, and thus your profit. When profit goes, so down goes the company.

    FWIW.



    you business pundits make me laught
  • Reply 12 of 40
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by emulator View Post


    Let's the fire sale begin, time to get a $100 Playbook.



    It has apparently already started:

    http://www.pcmag.com/article2/0,2817...069TX1K0001121



    Employees only, but I really doubt that very many employees are going to buy one for 50% off, so it will probably be extended.



    At least RIM realizes that the market price is somewhere around $250, not $99. HP messed up by dropping the price that far.
  • Reply 13 of 40
    tipootipoo Posts: 997member
    Quote:
    Originally Posted by madhatter61 View Post


    Are you kidding. A company needs to be profitable. This means making money on all their assets. Not giving them away. If you do a little home work, the first step to losing it, is to drop your prices, and thus your profit. When profit goes, so down goes the company.

    FWIW.



    you business pundits make me laught





    Which is all fine and dandy unless no one is buying said products. Selling them at cost or at a small loss is not unheard of, the PS3 and 360 were both sold at a loss at the beginning and the cost was made up by developer tools, licences, etc. If the Playbook was actually selling well, sure, sell for a profit, but it isn't, so the latter strategy might work better. HP's strategy of giving up and dropping the Touchpad was dumb, obviously people were interested, they didn't even try a smaller price drop first.



    You make me "laught" too.
  • Reply 14 of 40
    nealgnealg Posts: 132member
    Biggest problem for RIMM, from the reports I have read, is that they put out an unfinished product at premium prices. It could have worked if there wasn't any other tablet around but the iPad has been around now for 1.5 years and people aren't going to pay a premium for something that appears unfinished.



    The other thing that I don't understand is the production runs that these companies have ordered for the launch of their products. Why come out with a substantial production run when you have such an unfinished product? Maybe they are getting a discount on parts/production for making a larger run but these guys seem to be building these things faster than the original iPad run. There has been some complaints about the way that Apple has managed inventory on many of their new product introductions but I think it ultimately makes more sense to be lean on the front end of a product introduction and build up the production as/if needed rather than being caught with a ton of inventory if your product doesn't sell.
  • Reply 15 of 40
    Putting production in Taiwan was many of its mistakes. Companies have been moving production line to Mainland China for 10 years.
  • Reply 16 of 40
    I could be wrong on this but I thought you needed a blackberry phone to use the playbook. If so what would be the use to a non-blackberry user?
  • Reply 17 of 40
    Quote:
    Originally Posted by kozchris View Post


    I could be wrong on this but I thought you needed a blackberry phone to use the playbook. If so what would be the use to a non-blackberry user?



    I believe that's only if you want to read your BlackBerry-based mail with the PlayBook. Security concerns prevent you from using both devices with the same mailbox.
  • Reply 18 of 40
    tipootipoo Posts: 997member
    Quote:
    Originally Posted by kozchris View Post


    I could be wrong on this but I thought you needed a blackberry phone to use the playbook. If so what would be the use to a non-blackberry user?



    That is wrong. You can use it completely without a BB, with one you get the benefits of synchronization and whatnot.
  • Reply 19 of 40
    RIM's PlayBook manufacturer cutting production lines as sales slump and a fire sale is happening in 3, 2, 1....
  • Reply 20 of 40
    MacProMacPro Posts: 17,835member
    The assumption on RIM's part was because they could make a phone with a tiny plastic keyboard and a late 20th century OS that was successful, they could enter and compete with Apple in the iOS arena from a standing start. Very ironic when you consider the warning Apple was given by RIM about staying out of markets they didn't understand. I wonder if they will burn through all their assets before total collapse or somehow manage to salvage something out the rubble.
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