Is RIM Throwing in the Towel on the PlayBook?

RIM is reportedly taking a $485 million charge to write off the value of its BlackBerry PlayBook tablet inventory. With the device slashed to a fraction of its original price and still not moving, RIM may soon follow in HP’s footsteps and kill the PlayBook entirely.

I don’t really know how all that fancy business accounting magic works, but using simple math based on the full $500 retail price of the base 16GB PlayBook, it seems like RIM is sitting on–and writing off 970,000 or so units. That’s a lot of unsold tablets.

RIM hoped to parlay its reputation as a leader in corporate mobile devices to differentiate its tablet from the dominant Apple iPad. While there is a diverse array of iPad rivals including the Motorola Xoom, and Samsung Galaxy Tab, RIM tried to establish the PlayBook uniquely as a tablet for business use. Nobody was buying it…literally.

The PlayBook has its fans, but its launch was panned with tepid reviews–incredulous that the device seemed half-baked despite grandiose claims from RIM’s executive leadership. RIM has scrambled since then to assure users that the tablet will one day live up to its hype, and promises a major upgrade coming in early 2012. But, who wants to buy a tablet that may or may not work as promised months from now when there are plenty of options available that actually work right now?

RIM slashed the price of the PlayBook from $500 to $200 as a Black Friday holiday shopping special. It is still available at that price at Best Buy, and on the RIM website, but the RIM site claims the offer expires tomorrow, December 3.

Competing with the Apple iPad on the one side, and the Amazon Kindle Fire on the other, the BlackBerry PlayBook is a tough sell even at $200. For $500 most consumers and business users would be much wiser to purchase the Apple iPad 2, and at $200 the Amazon Kindle Fire seems to make a very compelling case as a consumer Android tablet. If the price of the PlayBook goes back up to $500 it is probably a death sentence for the tablet.

Even if RIM waves the white flag, though, Apple will still face some competition in business circles. Cisco also has a tablet targeted for business use–the Cius. The Cius sells for a whopping $725, and only through Cisco corporate sales channels. It is unclear how well it is doing, but there are reports that Cisco plans to double down with a larger model of the Cius in 2012.