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Topic: Hewlett-Packard

RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

Summary: How low can RIM go on PlayBook pricing? Not low enough to make anyone want to buy the tablet right now.

Larry Dignan

By for Between the Lines |

Research in Motion has started its price cuts on the PlayBook in earnest and how many units move will go a long way to highlighting the lasting damage from HP's TouchPad fire sale.

If you recall, HP discontinued the TouchPad and liquidated inventory with a 16GB version going for $99. The HP sale started a bit of a frenzy. The biggest lesson from the TouchPad sale is that price matters---a lot.

Enter RIM. The company on its last earnings call said it would cut prices and offer promotions to move PlayBooks. In its most recent quarter, RIM shipped 200,000 PlayBooks or about half of what was expected. The PlayBook is yet another RIM strike-out.

Now RIM is offering a 7-inch 16GB Wi-Fi PlayBook for $299 with a $100 coupon and $100 rebate. My initial reaction: $299 is still too high. Staples, Office Depot and Best Buy are offering the PlayBook price cuts.

Keep in mind that Amazon's Kindle tablet is coming---perhaps as soon as Wednesday. That device, which is likely to have a better ecosystem around it---could go for $250 tops.

Given those moving parts, I'd need the PlayBook to come in at $199 to get me interested. Even then it's a stretch.

As 2011 enters its final quarter, the damage from HP's TouchPad sale will become readily apparent. The army of tablets struggling to upend Apple's iPad are going have to get cheaper in a hurry. RIM is going to have to go lower if it wants to move units.

Here's the view from Staples:

Topics: Hewlett-Packard, Mobility, BlackBerry, Security, Tablets

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56 comments
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  • Can't we end this stupidity that the TouchPad was priced at $99?

    The TouchPad's sustainable price was not $99. It never was. It never will be.

    This is as ridiculous as going into a clearance warehouse and suggesting that stuff would sell a lot better if it was only priced at below cost.

    There are Android tablets for sale at around $160. They aren't selling well at all. Why? Because they probably have about $100 worth of components in them. In other words: they suck.

    The TouchPad sold well at $99 because it had $250+ worth of components in it.

    Paying $99 for a $250+ tablet is a great deal (if you can ignore the fact that you will never get any support for it).

    Paying $160 for a $100 tablet is not a great deal.

    It is ridiculous to blame the clearance sale of the TouchPad for the failure of the PlayBook. The PlayBook is failing because of the iPad.

    Period.
    toddybottom
    Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom, please don't try to make sense on this site. It's reserved for open source nuts who believe all software - and evidently hardware too, should be free.
      levieuxmagicien
      Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @levieuxmagicien

        But if you sell your $250 tablet for $99, then you can have enough sales to spark ads. The revenue from those ads can be used to subsidize both the hardware and software.

        Eventually, both SW and HW will be free thanks to this virtuous cycle. Everybody wins!
        dhmccoy
        Reply Vote

      • Well said

        @levieuxmagicien Gimme gimme gimme!
        happyharry_z
        Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        You are right!

        @levieuxmagicien
        rmacleod@...
        Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @levieuxmagicien Of course not. Because no one has ever sacrificed hw with the understanding that they would generate revenue through the sale of software or advertising. Or maybe Microsoft and Sony have been doing that with their consoles forever.
        yu119995
        Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom
      I also blame the design team at RIM for it. They made a bad choice of not making it as standalone tablet, for example if I have to work with email, calendar on the playbook, I have to thave BlackBerry. That eliminates the people outside of BlackBerry phones. Even if they make it independant from BlackBerry, it is already late and that screwed the outside market.
      Ram U
      Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom Not at all, the playbook is failing because it lacks email and calendar support.

      I don't know what genius thought it was a brilliant idea to require a Blackberry Smartphone to have any type of email on the tablet.
      slickjim
      Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @Peter Perry

        My understanding is that this is the result of RIM's servers not (yet) being able to tie more than one device to an account. Since they can't do two, and they figured a lot of the tablet buyers would already have blackberry phones, they chose to tie the tablet to the phone to work around this.

        There are customers for whom this works just fine; almost anyone in a corporate setting that already uses blackberries is not likely to care very much. But for a general-purpose tablet selling to consumers who are more likely to have a non-blackberry than otherwise it's awful.

        I disagree that the Playbook is failing because of this, though. I'm sure that is make or break to some people but lack of apps in general is at least as big a problem. If the app environment were rich enough you could just get someone else's e-mail app. But the icing on the cake is that the price is still too high relative to an iPad, which does a lot more no matter how you slice it. If you are really price sensitive a refurb iPad looks pretty darn good.

        It's unfortunate that RIM cannot sell them more cheaply, but what can they do? HP's "dump it" approach is a market exit strategy, not a solution. You don't make up for a loss on every unit by selling in more volume. And the idea that they can make the difference up on ads, as has been suggested here, is laughable; are they going to sell home screen ads?

        They'd need a lot more revenue than they could ever hope for to make the device that cheap. Look at Amazon; buy the ad-based units and you save circa $50 ... and they have a way better model to sell to advertisers (the only thing you're using that Kindle for is reading stuff into which those ads can be inserted).

        General-purpose devices really need to make a profit or it's not worth being in the business. And, right now, no one can undercut Apple much on price because Apple has a supply chain and volumes that are the envy of the industry.

        You may not realize it but the high degree of commonality in parts between the iPod touch, iPhone, iPad, and Apple TV means that Apple's parts volumes are huge -- in most cases (batteries, CPUs, flash memory, displays) more than an order of magnitude greater than anyone else. It's not even the same ballpark.

        It sucks to be in competition with them. People point at the Android phones and say, "look, it competes just fine," but that was a severely distorted market. Apple was hindered by an inability to sell on more than one carrier in all of the major markets, and rarely even the biggest carrier, for *four years*. That's a heck of a lot of time for the competition that had cross-carrier relationships to build and market new products. On top of that you can hide a lot of pricing evils in the cell contract kickbacks.

        Even so, the Android phone guys aren't making much money -- it's like the PC market, working like mad for razor-thin margins.

        But once you step away from the cell market everything changes. Apple has shown it can completely dominate. It did it with mp3 players and the iPod touch long before the iPad; the iPad is just more of the same.

        I happen to believe that Apple will lose their current advantage in the long term but I really don't have any evidence I can point to as to why. They never did in mp3 players and everyone, including me, expected them to. It could very well be that Apple becomes the next IBM, thoroughly dominating for a generation. I hope that open source helps keep that from happening but realistically there is only so much cost benefit that the vendors can get out of a "free" operating system. If that's not enough to make up for relatively poor hardware volumes and supply chains, and it isn't even close today, then you lose anyway.
        jimfrost
        Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @Peter Perry @Rama.net Both of you are incorrect with the capabilities of a playbook. Just like a pc, laptop,or netbook or your computer at work for that matter, there is no built-in client or "app for that" when it comes to email and calander. And you don't need a blackberry smartphone to use one. Google docs, calander and major email clients we all still access via isp is still accessable via playbook's html5 and flash enabled browser.The benefit from having a blackberry smartphone is security for the business sector for instance if a thoughtless corporate dude gets drunk at a bar and leaves his playbook, all of the companies sensitive info is not on the playbook its on his smartphone that can be remotely locked and wiped. The other is Blackberry Bridge, which allows BB smartphone users to use the data plan they already pay for through phone carrieres to access the rich webbrowser the PB has as well as all data required apps like GPS. Making the wifi only device 3G capable via bluetooth (BT 2.0 now 3.0 ready). In short having a BB phone only adds to the cool factor, the PB doesn't depend on it.
        Drentz
        Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @Drentz Sorry, but you are wrong. First, why would I want to go backward and use web mail when the standard and far more convenient way to get mail is using a mail app? Second, not sure what systems you have been purchasing but every system I have (Windows and Mac) all came with mail applications. As far as regard to having a BB phone just adds to the cool factor, that's actually pretty funny :-)
        non-biased
        Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom - the point was that HP showed people who aren't buying an iPad are price sensitive in the tablet market. That's it. And if you think companies don't ever sell hardware at a loss, I guess you've never owned a Playstation or Xbox, which were sold at losses for years (both the PS2 and PS3 as well as the original Xbox and Xbox360). Both Microsoft and Sony did this to gain control of market share. I suspect Amazon will be doing the same thing with their tablet - sell at somewhat of a loss, gain market share and have other ways to drive revenue (such as ads, direct software sales, etc).

      The failure of the Playbook was partially due to price but also due to the fact that it was essentially a limited device to anyone not owning a Blackberry, despite RIMs attempt to target everyone. In other words, the company themselves didn't even know who their target audience was and spent all this time developing an expensive paper weight.
      biobat
      Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @biobat

        Game consoles make money licensing $60 a pop games. Tablets have no such stream. The Apple App Store is the most successful mobile App store in the world and it breaks even, so what can RIM offer to offset such massive losses?

        Amazon, I think, is thinking people will buy more if they are holding a tablet. I don't "buy" that.
        dhmccoy
        Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom You're also missing the point. When stores panicked and offered HP TouchPads at $99 they were all bought up by Amazon traders who are now selling them at their true [current] market value of $275.95 for the 32GB model for instance.

      The reality is that no tablets that are trying to compete with the iPad are selling in any real numbers. Here in the UK the stock of all models in Best Buy stores is the same stock they had originally, diminishing at a rate of one or two per day, whereas iPads are being restocked at a steady rate of 50 plus per week.

      The only model that's even coming close to looking interesting is the Samsung Galaxy - which staff are putting down to the same reason Apple are suing Samsung - it looks like the iPad!

      And you're also missing the real reason why the Playbook isn't selling: the business model was utterly flawed from day one. The requirement to own a Blackberry in order to benefit from the device's full functionality, far from increasing sales of Blackberries as the two fools running RIM arrogantly supposed, has of course only limited Playbook sales.
      Graham Ellison
      Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom
      Sure, the $99 tablet is not a reasonable expectation given the firesale of the HP TouchPad...*BUT* what HP has shown is that at the $99 pricepoint, the tablet becomes an impulse buy regardless of the usability! At $99 *ANYONE* will buy a tablet that has at least some level of usability. This is the magic price...the closer a major manufacturer can get to this price, the better the assurances they will have of being able to sell the device in great volume! By virtue of the $99 TouchPad, HP has entered as the 3rd most populous tablet at 5% of the tablet market...Imagine if HP had more inventory to sell! It would be easy to see that the HP TouchPad would be able to command 20%, 30% or even 50% of the tablet market! Them's some serious numbers if you think about it!
      tech_ed@...
      Reply Vote

      • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

        @tech_ed@... Was there really anybody out there that was so clueless that they need HP to have a fire sale to realize that a quality tablet at $99 would sell well? You have got to be almost brain dead to not have been able to come to that conclusion without HP. Sub $100 is a hot spot for a lot of electronics to become impulse buys. <br><br>Sure if HP had more inventory they could have gotten a larger market sharere with the fire sale, that's also very obvious. The problem with even thinking that way is that it does them nothing what so ever. Sure they get market share but they lose their a$$ and can't afford to continue. So now they have lost a ton of money and can't continue in the market, what now. All they can do at that point is sit back and watch that market share (which is really meaningless) slowly dwindle to zero because they aren't in the market anymore.
        non-biased
        Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      The playbook is over prices. The $100.00 drop will not rescue it. HP's cut has not helped but the Playb@toddybottom
      rmacleod@...
      Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @toddybottom OMG, you and I are in agreement for once :-)
      non-biased
      Reply Vote

  • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

    Me I will pass I am not about to do a mail ins when Amazon is about to give my kids the same thing but with a better price and with Amazon customer service.
    And if we dont like it, amazon will take it back with a smile. ( even if its through their teeth)
    evilcart
    Reply Vote

    • RE: RIM's PlayBook price cuts: Still not enough thanks to HP's TouchPad

      @evilcart Amazon customer service? Please! I couldn't even get them to fix my 99-cent mp3 download that I never got. Amazon has idiots in customer service. That 99-cent rip-off cost them hundreds of dollars in sales that went elsewhere.

      Oh yeah, my BlackBerry works just fine.
      josmyth
      Reply Vote
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