The signs never seem positive when a company discontinues an active product. So when we learned earlier this week, via N4BB, that RIM has discontinued the 16GB PlayBook, it was easy to frame it as another sign of decline from the former mobile giant. Yet in this instance that’s not the case at all.
Perhaps the 16GB model had a place in the market when it was released, but in the past year and change a few things have become apparent in the tablet market. The 16GB PlayBook no longer fits, and it makes sense for RIM to let it die naturally and focus on the higher capacity models. Why doesn’t the 16GB make sense?
The first is pricing. Obviously the 16GB PlayBook is at the bottom of the pricing heap. It’s only $200 on ShopBlackBerry.com, down from $500 at launch. As we highlighted a few weeks ago, other vendors are selling the PlayBook on the cheap as well. There can’t be much profit left in it. Why continue producing a device that you break even on, at best?
The second is usefulness. Tablets are essentially mini computers, yet a 16GB hard drive is less than 5 percent of the size you’ll see on most new computers (500GB minimum). Since tablets present ideal environments for multimedia, storage is of the essence. For many users, 16GB simply isn’t enough. I can speak to that personally. At times even 32GB can be light, depending on circumstances.
This all leads to a value proposition for the user. If RIM isn’t making money on the PlayBook, and users need more capacity, they’re doing no one favors by selling the 16GB model. It provides many, if not most, users with inadequate capacity, while earning the company no money. What’s more, there’s the potential for a negative connotation, since the user might find that the insufficient capacity turns him off. It’s lose-lose, and killing the 16GB model simply works.
Of course, you can render this hypothesis moot if RIM releases a new PlayBook with a 16GB option. Something tells me, though, that we’re pretty much done seeing 16GB tablets at the top of the market. I’m frankly surprised that Apple created a 16GB model for the new iPad.