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BlackBerry PlayBook Retail Strategy and Price – Will it be Competitive?

Screen shot 2011-02-16 at 9.37.30 PM Screen shot 2011-02-16 at 9.38.08 PM Screen shot 2011-02-16 at 9.38.29 PM

One of the things that will really make or break the BlackBerry PlayBook launch is pricing. It is not totally dependant on pricing but the big elephant in the room is the $499 price tag for the entry level iPad with an iPad 2 around the corner. This led me to speculate what kind of retail strategy RIM has for the BlackBerry PlayBook and trying to read into RIM’s market research surveys. My gut feeling currently based on what I have been hearing is that RIM will make the 16GB Wi-Fi version of the PlayBook somewhere between $449-499 starting point with the 4G models being discounted by carriers to somewhere between $199-299. Who knows if that will actually pan out.

RedNightHawk pointed out to me that Jason Hiner of TechRepublic has also been looking into why current iPad competitors cannot compete on price. Apple has a huge leg up on the competition by having their own 300 retail stores around the world. These stores get a majority of their device stock including the iPad. This allows Apple to keep more than 50% of the sale price of each iPad since the parts cost $229.35. From what Jason explains normal retail sales leave the retailer with a 50% markup on the wholesale cost. That means if RIM sold the PlayBook to carriers and retailers for $250 the retailers would sell it for $500. That means to hit a lower $449 price point they would have to be able to sell the PlayBook for $225.

I am curious to see how RIM plans on executing their strategy. They really need a win on the PlayBook and I would almost go so far to say they should artificially lower the price on the 16GB PlayBook since it HAS to be lower than the $499 iPad entry cost. RIM can compete with similar features to the iPad but to unseat the iPad it needs to either offer a whole new experience or be priced much lower with the same features or better.  Keir Thomas is asking the same question over at PC World wondering if tablets are just too expensive for their own good. Its an interesting argument and yet another reason why RIM can really shake things up by offering a professional tablet at sub $500.

What do you think?

37 total comments on this postSubmit your comment!
  1. What I have been looking for since day 1 that the Playbook was announced was for it to retail starting at $399 (16GB wifi only). That I thought will convince those on the fence to really seriously consider it. If RIM will start retailing at $499 and say “hey it’s less than $500!” I won’t blame anyone for saying RIM is just as bad as Apple at sticking it to the consumer.

  2. Great read. I’ve been really curious about this myself. I really hope they hit a homerun with the price. The Xoom isn’t going to offer flash until after launch, and RIM should really take advantage of this. Its only real (new) competitors are going to be the HTC tab and the Samsung tab (if it has flash). RIM is getting a really good opportunity hear to do something great. Lets hope they do it.

  3. I don’t know about you, but on that survey, I said I would go for it as long as it was not more than $300.

    $250 wouls be ideal price. Over $350 would be too much.

    I hop they take my 2cents into account. 🙂

    • I hear you, but I doubt they can sell it that low without going the way of SEGA. They need to make some money off of it.

    • If they price the playbook with the market, I think plenty of people are still going to buy it, $500 isn’t going to be a deal breaker for me.

      That said, I think if they can get the base model below $400…the buzz is just going to sky rocket and sales will be very strong.

      • Totally agree. I think it is a deal breaker for a large segment of the market if they can’t price it between $399-449

        • I think they’ll still see strong sales @ $500, my point was that they have an opportunity to really come out with a bang. $100 may not seem like much by being the cheapest tablet on the market you accomplish 2 things, 1) being the most affordable in a market captures sales and publicity and 2) I think some people are still not sure they need at tablet at $500 but once they see a $3xx (even if its $399) all of the sudden, people start justifying purchasing it.

          • Not to forget the people who were already willing to buy it at the $500 level, now it’s $399 instead….any hesitation was just eliminated by RIM.

            • Oh and one more point, if you’re trying to capture the non-blackberry market, people completely new to blackberry, then you got perhaps give a little more than if you were just targeting existing blackberry users only.

            • Sorry, but the average joe isn’t an apple or blackberry enthusiast. If they see a 9.7″ screen tablet beside a 7″ screen tablet and the price is the same, guess which one they will buy.

              A $500 price point is a FAIL big time for RIM. People won’t CARE what’s inside that’s so much better.

              Besides, its all about APPS. IPad has ’em, sorry but at this point I see good things but I don’t see RIM yet able to compete. ALL the hot mobile apps come to iPad/iPhone first, and MAYBE BlackBerry some time later.

              Sorry to sound so pessimistic.

              • The way I see it, if it is indeed priced at $500, they’ll will not make up any ground in the perception battle. The mainstream media is still going to consider RIM second seat to Apple. They had this tremendous opportunity and just settled for good enough.

            • I’m all for a cheaper PlayBook. But there is something to be said about premium pricing. People are willing to pay for quality. The cliche, ‘you get what you pay for,’ is very popular and oftentimes true. The 3rd question from the screenshot above proves that RIM is aware of this situation. They do not want people to consider the tablet to be so inexpensive that they would doubt its quality and not consider purchasing it. People like this would likely see the bigger, more expensive iPad and instantly think its better than the PlayBook. We all know this can’t be farther from the truth.

  4. Ugg, a 50% markup. I figured it was bad but not that bad.

  5. Where’s that wifi playbook, not a fan of contracts right now….

  6. Ridiculous. NOBODY is getting a 100% markup on electronics, ESPECIALLY not computers. And these tablets are computers. If RIM sold a PlayBook to Best Buy for $250, BB would be ecstatic to sell it for $300. That would give them like 16-17% gross margin on the sale, FAR more then they’re getting on a Dell or Toshiba or Sony laptop. AND they could run a 10% off sale and STILL be in the black.

    Not a chance if RIM offers PlayBook to retailers for $250 they will sell it for $500. There’s too much competition.

    • Wait, are tablets of the computer family or are they computer eliminators? Let’s ask babis for his opinion? 🙂

    • Bestbuy has the iPad 16gb wifi version for $499. If I was average consumer and I saw the iPad and Playbook (and can’t ignore other tablets out there either) next to each other, same price…You know 75% of the time people are going to go the iPad.

      I agree with you know, not complete fail but definitely a major disappointment if it’s the same price. Even if it was $450, you know consumers are going to stand there and consider the fact that “for $50 I can walk home with an iPad instead…”

    • The other thing that I don’t understand…I get the impression that the mobile technology market is very high loyalty driven. Something like 80% of people who waited overnight to buy the i4 were existing iphone users…you have people who swear by Android, swear by Blackberry…

      So, why not get people on your platform and then find ways to make money off of them later? Like I said in some other thread, you make a $200 low budget version (say 8gb), maybe you break even on the sale of the hardware but just think of number of new customers you now have. Those customers, sure some are going to buy accessories, apps no doubt, maybe they even recommend blackberry to family or friends, oh and, now you already have their attention when QNX comes out…

  7. Good point. RIM should keep these two facts in mind: 1. IPad is an established name in the tablet industry and 2. The IPad has much more apps. I belive that If their going to give a $499 price tag to the 16 GB Playbook, they should add some accessories to it to make it worth while to the average consumer.

  8. If they could hit the $399 price point I think you’ll see alot of PlayBooks sold to non-BlackBerry wielding users.

  9. Yup, that first digit after the $ sign has mighty influence.

  10. IPad has set the bar. They were first they are good and every other tablet is compared to it. If you beat IPad on price and not quality you will not make it. If you beat it on quality and substantially price, then you wonder why is it cheaper? The key is to beat it on quality and compete on price, which RIM has said it will do…”be competitive” You have to get the apps that are meaningful and do things the IPad doesn’t. Then you may have a horse race.

    • Yes, good points. Competing on price though does not mean costing the same amount. $500 iPad or $500 Playbook, iPad wins probably 8/10 of those customers….

  11. I think RIM has an opportunity to capture a sizeable part of the huge market that is being sought by every computer and phone manufacturer out there. Larger than what Apple has gotten so far. RIM needs to hit a home run. There is a huge group that has not bought a tablet yet. Make it do everything that an Apple IPad can do and things that it can’t (or won’t). Apple is a classy but arrogant outfit. And for reason. Don’t let them keep the reason. People will buy quality. RIM did well with the Torch, but imagine what they would have done if they had of brought the Torch 2 to market right off the bat. The momentum that would have given them to market the Playbook would have been awesome.

    • Exactly. People buy quality.

      Personally, I would love to see RIM totally low-ball the competition with an insane introductory price on the PlayBook! That would work perfectly for consumers like ourselves who have done research and already own a BB.

      Most consumers are less informed. If its all about price, they might go for a cheaper PlayBook. Its not all about price though. The key here would be solid advertising and informing the public about how amazing the PlayBook is. Show them Need for Speed and Tetris in action and maybe mention they come pre-installed. (Note: this would be all it would take to convince me. :)) Show them the 3D rendering capabilities, multitouch, multitasking, 1080p video recording…I could go on.

      If people are properly informed and the PlayBook is priced lower than the iPad, but not too much lower, there is huge potential here for the PlayBook to be a huge player in the tablet market right from the start.

      There are a lot of things that will need to happen between now and April to make that happen though.

  12. I hope people dont get taken back by a reasonable price.

    I see most people griping about the price, because they might be frugal. But remember when they ask what they want it will be justified.

    If its over 299 or 399, go pick up a tablet at that price point and see how it perfroms.

    RIM has also put a LOT of money in to engineering for this device, they have been working on the concept of the PB for over 2 years.

    If they price it too cheap they will be shooting themselves in the foot.

    Im all for a $499 price tag if it can be justified.

  13. Yes, if they price it FAR too low they will shot themselves in the foot. However, I agree with earlier comments that selling it at or near cost may be a great thing for them to do. If they do that, they need to do a great job of marketing it making sure to stress that owning a Blackberry phone is NOT a requirement. There are still a lot of people that think it is useless without one. If they can get non-Blackberry users to buy a Playbook it may help boost phone sales. Once you have a Playbook, you may be much more likely to buy a Blackberry phone.

  14. I think the Playbook should sell around $250. Buy a Blackberry phone and you get a discount (say $150 with a contract of some sort)
    It will come in pricey like the Bold 9000 when it first came out, but then it’s successor (Playbook 2) will be cheaper.
    That’s what I call evolution. 😀

  15. Oh forgot to mention, probably RIM is sticking to their $499, hence the added games and features…
    That’s just my theory.

  16. WOW…. this is interesting…. i got a lot of info from the actual thread… but it was all the comments and discussions that interested me… now we have a forum guys!!

  17. When I was asked I said it would be great @ $399. Now after all the news coverage, video postings, write-ups RIM deserves to price point it $499. Sure a Xoom my be 10″in or a iPad may have 1 million useless apps but in the end the tight integration with it’s mobiles may come out stronger. The consumer-side will embrace its form factor and portability which RIM has nailed bang on. I also think the professional industry (medical, military, investigators, and lawyers etc) will eat it up allowing accessibility to much more without the weight of papers and folders. {DHB}

    • I totally agree DHB. I think portability is huge. The difference between 7″ and 10″ is the difference between carrying a tablet in a briefcase or jacket pocket. It totally appeals to me as I am a ‘less is more’ person. Makes the PlayBook seem all that much more powerful when it is smaller than the competition.

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