RIM Tries Buy 2 Get 1 Free to Sell Playbooks in Desperate Move

November 2nd, 2011 by Trefis Team
11.98
Trefis
RIMM: Research In Motion logo
RIMM
Research In Motion

Last week Research in Motion (NASDAQ:RIMM) announced that its business customers will receive one free BlackBerry PlayBook tablet with every two purchase in a desperate move to stoke demand for its tablets. [1] This is not the first move that the company has tried to spark PlayBook sales. A few weeks back, RIM’s retail partners like Best Buy (NYSE:BBY), Wal-Mart (NYSE:WMT), Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP) effectively slashed PlayBook tablet prices from $499 to $299. However, we believe that given Amazon’s (NASDAQ:AMZN) $199 price tag for the Kindle Fire, RIM will need to further drop its prices if it wants to compete in the non-Apple (NASDAQ:AAPL) iPad category of the tablet market (see Retailers Cut Playbook Prices as Kindle Lights Fire for Cheaper Tablets).

Our $26 price estimate for RIM stock is about 35% below market price.

See our complete analysis for RIM stock here

Relevant Articles
  1. Earnings Beat In The Cards For Honeywell?
  2. Higher Keytruda Sales To Drive Merck’s Q1?
  3. Is Procter & Gamble Stock Appropriately Priced At $160?
  4. Should You Pick Intuitive Surgical Stock At $370?
  5. China In Focus As Apple Reports Q2 Results
  6. Here’s What To Expect From Corning’s Q1

RIM forced to offer promotions for PlayBook

Last week, the company announced that its BlackBerry PlayBook OS 2.0 update will be delayed until Feb 2012 as it is facing serious challenges getting native apps such as email, BlackBerry Messenger and more working on the BlackBerry PlayBook (see RIM’s Struggles Continue Amid Issues, Product Delays). Hence we believe that RIM had no other choice but to give more promotional offers, such as buy-two-get-one-free kind of offer. These actions indicates that rather than making any money of off Playbook, the company just wants to move off the unsold inventory in the hands of consumers.

RIM’s position in smartphone market also getting worse

The company’s position is not only getting worse in tablet market, but also in the smartphone market. Early this week, Canalys reported that RIM’s U.S. smartphone market share slipped from 24% in Q3 2010 to just 9% in Q3 2011, with HTC and Samsung gaining the most [2].

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. BlackBerry press release, October 28th, 2011 [↩]
  2. HTC takes the lead in the US smart phone market, Canalys, October 31st, 2011 [↩]