RIM Blindsided by Kindle Fire Pricing
If you recently purchased one of Research In Motion’s BlackBerry PlayBooks at a significant discount, you may have Amazon to thank for it.
The move to slash $200 and then $300 from the device’s retail price was evidently made to battle the Fire’s loss-leading $199 price. “Our understanding is that RIM was blindsided by Amazon pricing its Kindle Fire aggressively at $199,” says Sterne Agee analyst Shaw Wu. “We estimate that the company is losing $50-$75 per PlayBook sold.”
And it may lose more in the future.
Remember, when RIM announced last week that worse-than-expected sales of its PlayBook tablet will cause it to fall short of financial targets for its third quarter, it said it must expand its “aggressive level of promotional activity” to drive PlayBook adoption. It also said it “now believes that an increase in promotional activity is required to drive sell-through to end customers.”