Best Buy slashes up to $150 off of BlackBerry PlayBook
BlackBerry Playbook gets big Best Buy price drop — Best Buy hinted at possible sluggish sales of the BlackBerry PlayBook by starting a new sale on RIM's tablet. The deal takes $50 off of the 16GB and 32GB tablets and a much steeper $150 off …
Context & Ripple Effects
The PlayBook arrived in April 2011 at $499 for 16GB, exactly the sub-$500 positioning RIM had telegraphed back in November 2010 when it said it would undercut the iPad on price. That strategy is now fraying: a May report found the tablet missing sales targets by over 90% at one major retailer with returns running well above the XOOM's, and RIM spent August managing fallout from the US and Canada launch aftermath — hacked blogs, London riot cooperation demands, and a BlackBerry 7 lineup that does nothing for the tablet.
Best Buy's cut — $50 off the 16GB and 32GB models, a much steeper $150 off the top tier — comes barely four months after launch. The retailer hasn't confirmed why, so the sluggish-sales reading is inference rather than fact, but a channel discount this deep this early is itself the signal.
First-order effects
- Buyers can get the 64GB PlayBook for $150 less than its April price, collapsing the tiered pricing RIM built around storage capacity just months after the $499 Office Depot pricing was set.
- Best Buy absorbs the margin hit to move inventory, while RIM watches its flagship tablet's street price fall without an official price cut — a distinction that protects announced pricing but erodes realized revenue.
Second-order effects
- Rival tablet makers chasing the same 'iPad alternative' slot face the same inventory math, pressuring them toward matching discounts rather than holding premium prices against Apple.
- Retailers learn the PlayBook needs promotion to sell, which shifts bargaining power toward the channel and makes future RIM launches harder to stock at full margin.
Third-order effects
- If deep early discounts become the norm for non-iPad tablets, the effective price floor for the category drops below the $500 line RIM chose in 2010, forcing vendors to either subsidize hardware or accept thinner margins.
- RIM's tablet economics get tied to its QNX roadmap — the BlackBerry Colt smartphone due in Q1 2012 — since shared software costs only pay off if PlayBook volumes justify the platform investment.
The trend: Android-and-beyond tablet makers are discovering that sub-$500 launch pricing doesn't hold, with retail discounting becoming the de facto mechanism for finding the category's real demand curve.