Waterloo, Canada - Research In Motion (RIM) will take a third-quarter pre-tax charge of around $485 million to write down the value of its PlayBook inventory as part of a bid to further step up PlayBook promotional activity, the company announced.
PlayBook sales have already spiked up based on promotions that have reduced the tablet's retail price to $199, but because the company still has "a high level" of PlayBook inventory, "an increase in promotional activity is required to drive sell-through to end customers," the company said.
RIM attributed the need to "recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software." As a result, RIM said it would "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 stepped-up promotional activity "will accelerate adoption of [RIM's] QNX-based platform by consumers and enterprises, as well as help to drive the development of a vibrant application ecosystem in advance of its next generation BlackBerry smartphones," RIM said.
Since the launch of new price promotions in consumer and enterprise channels in the U.S. and Canada late in the third quarter, RIM has enjoyed "a significant increase in demand for the PlayBook," the company said. RIM sold about 150,000 BlackBerry PlayBook tablets in the third quarter into distribution channels, and that sell-through to customers was higher than that, the company said.
Both consumer and enterprise customers who purchase a new BlackBerry PlayBook at the current promotional pricing, as well as existing PlayBook customers, will be able to upgrade to the enhanced PlayBook OS 2.0 software at no additional charge when it becomes available in February 2012, the company noted.
The $485 million pretax writedown of PlayBook inventory come to $360 million after taxes.