The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
Now Research In Motion (RIMM) is starting to see results from the heavy discounts it has offered on its PlayBook tablet.
RIM Attracting Developers With Free PlayBook Offer ...Not only is RIM attracting users by giving them huge discounts on PlayBook, but it's also wooing developers by giving them free PlayBooks. Recently RIM announced that it is extending a promotion that awards a free 16 GB BlackBerry PlayBook tablet to developers who port their existing mobile applications to the new BlackBerry PlayBook OS 2.0. Last week at the DevCon Europe event hosted by the company, RIM executives stated that contrary to popular belief, BlackBerry users have shown great interest in embracing smartphone apps. According to their blog, there is overwhelming interest in the offer, and the company has seen 1,500 apps submissions as of last Friday and 6,600 new developers have registered at the BlackBerry app store. The PlayBook promotion is just one part of RIM's ongoing effort to attract developers to its app store.
... But This Will Hurt RIM's MarginsWhether the company offers deep discounts through promotions to retail users or gives away free PlayBooks to attract developers, the strategy is bound to hurt its margins. We estimate that the PlayBook's gross margins will decline from about 17% in 2011 to 10% in 2012 and that the trend will continue in the future. PlayBook accounts for less than 1% of our price estimate for the RIM stock, which means that PlayBook's value to RIM is unlikely to improve if this strategy continues. Click here to find out how a company's products impact its stock price at Trefis. Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV