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RIM Burned For $485 Million By Unsold PlayBooks

Research In Motion to write down massive $485 million charge after devaluing its large inventory of unsold PlayBook tablets. It also warned on BlackBerry sales and revenue.

RIM BlackBerry PlayBook Teardown
(click image for larger view)
Slideshow: RIM BlackBerry PlayBook Teardownr
RIM's foray into the tablet market has cost it dearly. At last count, RIM had sold fewer than 900,000 of its PlayBook tablets since its April launch. The company has given them away by the tens of thousands, and in recent months has been forced to mark them down significantly at retail outlets in order to convince buyers to take one home.

Today, RIM admits that the PlayBook is going to hurt more than its pride. The company warned that it is going to mark down the value of its huge stockpile of unsold PlayBooks to the tune of $485 million this quarter.

Of the 150,000 PlayBooks sold in its most recent quarter, RIM hasn't said how many were sold at full price. The PlayBook launched at the $499 price point (for 16 GB) and maintained that price until September. Right now, the PlayBook can be purchased for as little as $199, and the company is giving away a free PlayBook for every two purchased by its enterprise customers.

By way of comparison, Apple sold 11.12 million iPads in its fiscal fourth quarter.

"RIM is committed to the BlackBerry PlayBook," the company said in a statement. It said it will continue to market the PlayBook aggressively.

[ RIM's foray into mobile device management looks to be another case of too little, too late. Read RIM BlackBerry Fusion: A Swing And A Miss? ]

In addition to the PlayBook charge, RIM has also revised its guidance downward. It now says that sales of its BlackBerry smartphones have declined faster than expected. Though its new BlackBerry 7-based handsets sold well at launch, demand for RIM's older devices has fallen off a cliff. RIM says that it moved 14.1 million BlackBerrys in its most recent quarter, and that lines up with its guidance, but the company's revenue won't meet predictions. RIM had previously said that revenue would be in the $5.3 to $5.6 billion range, but now says it will fall slightly under that number.

RIM's stock has lost about half its value this year as competitors such as Apple, HTC, Samsung, and Motorola have gobbled up its share of the U.S. smartphone market.

According to the latest numbers from Nielsen, Android has the largest percentage of U.S. smartphones, growing from 39% to 42.8% from the second quarter to the third quarter. HTC's Android phones alone own 15% of the U.S. smartphone market, Samsung has 10.7%, Motorola owns 10.4%, and "other" (probably including LG, Dell, Huawei, Pantech, Casio, and others) rounds out the Android presence with 7.2% of the U.S. smartphone market.

Apple's share grew a fraction from 28% to 28.3% quarter-over-quarter.

Research In Motion, meanwhile dropped from 20% to 17.8% quarter-over-quarter. Palm and HP's WebOS holds a pitiful 2.2% of the U.S. smartphone market, while Nokia's Symbian brings up the rear with 1.7%.

Our InformationWeek 2012 Business Intelligence, Analytics, and Information Management Survey shows the old practice of following the money, using lagging financial indicators to guide a company's decisions, giving way to the forward-looking approach of following the data. Download the report now. (Free registration required.)

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