RIM Goes for a Price Fight to Regain Lost Ground in Smartphones

Last Updated Nov 10, 2010 9:01 PM EST

Day by day, the actions of Research in Motion (RIMM) look like the three stages of competitive desperation. First RIM was complacent about its position. Next, it was late in responding to the advances of competitors. Finally, RIM retreats into a low price strategy. But this may be a case in which the technique actually works, at least in the short term.

Where it won't work is in dropping the price on the BlackBerry Torch to $100. As reviewers back in August found, the phone had an improved interface -- possibly enough to slow customer defection -- but not enough to regain any ground with the broader public. AT&T (T) just cut the price of the Torch in half as it readies to sell newer handsets running Windows Phone 7.

Neither AT&T nor RIM will have any more luck with this tactic than Verizon (VZ) had when it dropped the price of the Microsoft (MSFT) Kin. Where constraining price might work, though, is with its new PlayBook tablet for under $500. Unlike other tablet vendors that went for premium pricing compared to the Apple (AAPL) iPad, it seems that RIM will likely either match the iPad's low-end price or slightly undercut it.

RIM will wisely first release a Wi-Fi only version of the PlayBook, which lowers manufacturing cost and price to the consumer. Yet the intelligence of that move won't offset the fact that RIM will still not ship units until sometime next year, even if it sells the product through Target (TGT) and Best Buy (BBY), as RIM co-CEO Jim Balsillie has suggested.

Related: Image: Flickr user kevindooley, CC 2.0.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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