Beginning of the end for RIM's PlayBook

Deep discounts portend death knell for poor-selling BlackBerry tablet

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Different products, same story.

On July 1, Hewlett-Packard released its TouchPad tablet. Designed to compete with -- an priced the same as -- Apple's iPad, the TouchPad was greeted with lukewarm reviews and little consumer interest. Seven weeks and several price reductions later, HP announced it was killing off its webOS mobile software platform, and with it the TouchPad.

Now it appears Research in Motion's BlackBerry PlayBook is walking down the same path to tablet oblivion.

Like the TouchPad, the PlayBook was criticized upon its release in April for numerous shortcomings relative to the iPad. Like the TouchPad, the PlayBook sold poorly, with second-quarter numbers plummeting and production lines being cut back. Retailers soon began offering "limited time" discounts to spur TouchPad sales, and eventually made the discounts permanent until HP pulled the plug.

Now retailers are slashing PlayBook prices, with Staples cutting $200 off each model and Walmart offering the 16GB model at $250, or half-price.

This won't keep up because retailers can't afford to lose money on each tablet sale, and that's where we're headed, if we're not there already. After announcing the TouchPad was dead, consumers went crazy for the HP tablet after the price was slashed to $99. But the TouchPad cost $306 to manufacture. The math is quite clear here.

As is the PlayBook's fate. One way or another, the numbers aren't going to add up for RIM. The company just hasn't admitted defeat yet. But it will.

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