RIM's PlayBook manufacturer cutting production lines as sales slump
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.
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.
Comments
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.