RIM alters PlayBook pricing strategy as U.S. marketing blitz begins

Financial Post Staff Jan 3, 2012 – 2:53 PM ET

By Zara McAlister and Matt Hartley

In an effort to breathe new life into sales of its BlackBerry PlayBook, Research In Motion Ltd. is slapping new price tags on its beleaguered touchscreen tablet.On its United States Website, the Waterloo, Ont.-based company is now offering all three models of the BlackBerry PlayBook — 16 gigabyte (GB), 32 GB and 64 GB — for US$299, until Feb. 4, 2012.

However, in Canada, RIM is offering the 16 GB PlayBook for $199, the 32 GB model for $249 and the 64 GB model for $399. While the U.S. price change represents a drop for the 32 GB and 64 GB models — which were initially sold for US$599 and US$699 respectively — the US$299 price tag on the 16 GB model is actually slightly more expensive than what some retailers were charging for the seven-inch tablet during the holiday shopping season.
In the run up to Christmas, the 16 GB model was available through certain retailers for US$199. The new US$299 price tag for the three PlayBook models applies not just on

RIM’s own retail site, but also through the company’s retailer partners.
During its December conference call, RIM co-chief executive Jim Balsillie said the company planned to go on an aggressive marketing blitz South of the border, one that would have an impact on the company’s bottom line, in an effort to regain mind share in a market where RIM’s smartphones are falling out of favour with users.“We are not satisfied with the performance of the business in the United States,” Mr. Balsillie said at the time.
RIM officials did not immediately respond to requests for comment on Tuesday.

The move comes amid reports that RIM handed out thousands of free PlayBook tablets to employees at the company’s Waterloo, Ont. headquarters prior to the holidays.
The timing of the PlayBook promotion may also offer some insight into when the company plans to launch the delayed PlayBook 2.0 software update, which is slated for a February release.

This decision hasn’t been limited to North America. PlayBook prices on all models were recently halved in India, a country with a large population and a growing appetite for Web-connected mobile devices. RIM’s competitors have employed similar strategies in the past. Last summer, Hewlett-Packard Co. slashed the price of its disappointing TouchPad tablet to US$99, a move which resulted in increased demand and line ups outside electronics stores.

At the time of its launch in April, some analysts expected RIM could sell as many as six million PlayBooks in the device’s first year on the market. However, RIM has sold fewer than a million units, and now has a stockpile of inventory. RIM has sold just 850,000 PlayBooks over three quarters, or about 1% of the global tablet market, as it struggles to compete with Apple Inc.’s iPad and a slew of devices running Google Inc.’s Android software.

In December, RIM announced it would be taking a US$485-million pre-tax writedown on its third quarter earnings caused by a surplus inventory of unsold BlackBerry PlayBook tablets