Research in Motion continued its difficult year Friday by announcing a $485 million hit related to lackluster sales of its PlayBook tablet.
The pre-tax provision, RIM said, is necessary because the company is sitting on a huge PlayBook inventory that it can only clear out by drastically slashing prices—in some cases from $500 to $199.
Why aren't people buying? RIM admitted that the PlayBook suffered due to "recent shifts in the competitive dynamics of the tablet market and a delay in the release of the PlayBook OS 2.0 software."
In October, RIM said it would delay the launch of BlackBerry PlayBook OS 2.0 until February 2012.
The iPad is, of course, the dominant tablet on the market at this point, though Amazon and Barnes & Noble stepped into the low-cost tablet market recently with their $199 Kindle Fire and $249 Nook Tablet. RIM is going after the enterprise market, but some key missteps at launch, such a the lack of a native email client, did not help the PlayBook fly off the shelves.
Despite its troubles, the PlayBook is not going anywhere, RIM said.
"RIM is committed to the BlackBerry PlayBook and believes the tablet market is still in its infancy," RIM co-CEO Mike Lazaridis said in a statement. "Although a number of factors have led to the need for an inventory provision in the third quarter, we believe the PlayBook, which will be further enhanced with the upcoming PlayBook OS 2.0 software, is a compelling tablet for consumers that also offers unique security and manageability features for the enterprise."
Though RIM won't be making much money from PlayBook sales, the company said the price cuts will help get the tablet into more hands and "accelerate adoption of its QNX-based platform by consumers and enterprises." Those who buy the tablet now will get a free upgrade to PlayBook OS 2.0 next year.
In October, RIM unveiled BBX at the DevCon conference. The OS features HTML 5 support, robust security, and a commitment to open standards. It combines the company's RIM BlackBerry 7 OS and the QNX OS from the PlayBook. Going forward, BBX will be the OS of choice on RIM's smartphones, mobile devices, and embedded systems.
RIM shipped 150,000 PlayBooks in the third quarter. In comparison, Apple said during an October conference call that the company has now sold 40 million iPads since the device hit the market last year.
On the smartphone front, meanwhile, RIM shipped 14.1 million BlackBerrys in the third quarter.
For more, see PCMag's full review of the BlackBerry PlayBook and the slideshow below.