RIM writes down its PlayBook inventory

Research in Motion has revealed that the inventory it hold of its PlayBook tablet device is worth considerably less than it previously estimated. The company will incur a $360 million charge as a result of the write-down.

"RIM has a high level of BlackBerry PlayBook inventory," the company said in a statement. "The Company now believes that an increase in promotional activity is required to drive sell-through to end customers."

"This is due to several factors, including recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software," it said.  

"As a result, RIM will record a provision that reflects the current market environment and allows it to expand upon the aggressive level of promotional activity recently employed by the company in order to drive PlayBook adoption around the world."

The company said it sold approximately 150,000 PlayBooks to distributors in the three months ending 26 November.

"“RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy," said co-CEO Mike Lazarides. "Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise."

Nick Dillon, mobile analyst at Ovum, says it is not clear exactly why RIM has undertaken this write down. "It could be that they are to buy back stock, but they haven’t gone into much detail".

But there is little doubt, he adds, that the PlayBook has not gone as well as RIM had hoped. "I don’t think it’s any secret that the product hasn’t sold as well as they wanted," he says. "The shortcomings of the software, and the fact that the first version couldn’t be used without a BlackBerry, did limit it."

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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