The Kindle Fire Is Scaring the Heck Out of Competitors

RIM cut prices on their PlayBook, but they may be getting out of the tablet business entirely

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Retailers didn't waste any time in responding to the new, jaw-droppingly cheap Kindle line-up. About 12 hours after Amazon CEO Jeff Bezos pulled back the curtain on the new family of tablets and readers, Best Buy slashed the prices of Research in Motion's BlackBerry PlayBook by $200 across the board. The 16GB model is now selling for $299--the 32GB and 64GB are $399 and $499 respectively--but it's still $100 more expensive than the Kindle Fire which, as CNET points out, offers very similar specifications. Meanwhile, one analyst cited last week's news of widespread layoffs at a PlayBook factory and connected the dots. "We believe RIM has stopped production of its PlayBook and is actively considering exiting the tablet market," wrote John Vihn in a note, adding "that RIM has canceled development of additional tablet projects."

RIM quickly denied the idea. "Rumors suggesting that the BlackBerry PlayBook is being discontinued are pure fiction," RIM spokeswoman Marisa Conway told Reuters. However, that doesn't change the company's history of struggling. RIM shipped 500,000 of the devices in the first quarter of this year, but that number dropped to 200,000 in second quarter. The price cut has drawn comparisons to the final days of another now deceased tablet project. "When HP sounded the death toll for the HP Touchpad and slashed the prices to $99 and $149, the once-ignored tablet became an overnight sensation," Brennon Slattery at PC World notes. "But even at a whopping $200 off, the BlackBerry PlayBook is still too expensive, especially when you consider that the price reduction is the exact cost of the Kindle Fire."

Time and sales reports will tell whether Slattery is right, but RIM's hopes to keep up with competition look like they're dimming. The past couple of months have brought nothing but bad news for the BlackBerry manufacturer, and the company's stock has been sinking steadily as a result.

This article is from the archive of our partner The Wire.