Retailers Cut Playbook Prices as Kindle Lights Fire for Cheaper Tablets

September 28th, 2011 by Trefis Team
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Research in Motion’s (NASDAQ:RIMM) retail partners like Best Buy (NYSE:BBY), Wal-Mart (NYSE:WMT), Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP) have started to slash PlayBook tablet prices in order to boost sales. [1] Retailers are attracting consumers through $100 coupon and $100 rebate, effectively slashing the price of the 16 GB Wi-fi PlayBook version from $499 to $299. However, given Amazon’s (NASDAQ:AMZN) $199 price tag for the Kindle Fire, this price tag still looks high.

Stiff Competition Among Non-iPad Tablets

A few weeks back, HP discontinued the TouchPad and liquidated inventory with a 16GB version going for $99. The HP sale started a bit of a frenzy among customers. Amazon, launched its tablet earlier today to with a price of around $199. This goes to show that RIM will need to further drop its prices if it wants to compete with HP and Amazon.

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Following Amazon’s announcement of Kindle Fire, we wrote a note earlier today suggesting that Microsoft might have trouble cracking the tablet market next year with its Windows 8 platform. See Amazon’s Kindle Fire Could Make Microsoft’s Tablet Entry Even More Difficult

RIM PlayBook Shipments Have Been a Disappointment

During the last quarter, RIM could only ship around 200,000 tablets, which was a major disappointment (see RIM Blows it with Investors Again, Lowering Estimates). During the earnings conference call, RIM’s co-CEO Michael Lazaridis acknowledged this shortfall and hinted towards price cuts in order to boost sales. [2]

He commented:

We have promotional plans in place for the fall intended to drive both enterprise and consumer adoption of PlayBook, including special incentive programs for enterprise, a loyalty program for existing BlackBerry customers and rebates in consumer channels. [2]

See our complete analysis for RIM stock here

Notes:
  1. Retailers begin slashing prices on BlackBerry PlayBook tablet, BGR, September 26th, 2011 [↩]
  2. RIM FY Q2 2012 earnings conference call transcript, SeekingAlpha, September 15th, 2011 [↩] [↩]