Research In Motion's (RIM) has had a topsy-turvy year with network outages and loss of income in 2011. The news does not get any sunnier as the company just announced that PlayBook inventory still in stock would "record a pre-tax provision in the third quarter of fiscal 2012 of approximately $485 million, $360 million after tax".
In simple terms, the BlackBerry PlayBook has not been adopted on the scale that RIM assumed it would and now the unsold units, sitting idle in storage, will be taxed as part of RIM's inventory valuation. Our own hands-on with the device found some reasons as to why the PlayBook might not be very competitive in its product category. To mitigate damage, RIM has already slashed the price on the PlayBook in the US by up to US$300 and has seen sales pick up.
Plans to upgrade the device with PlayBook OS 2.0 are still on track, and RIM hope that better software will help make the tablet more competitive. Introducing a tablet device is in vogue at present and companies believe that the high demand for such products will result in profitable sales. However, as RIM found out, discerning consumers will disregard sub-par devices which could have serious ramifications for tablet manufacturers.