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RIM Officially Nukes 16GB PlayBook Tablet

Reuters reports that Research In Motion has officially discontinued the 16 GB version of its poorly selling PlayBook tablet. The company will phase out the PlayBook once current stock at retailers is finally depleted. RIM said it will continue to manufacture the 32 GB and 64 GB models.

News of the 16 GB model's discontinuation is a little surprising given that its pricetag was/is $199. The next largest version isn't all that more expensive -- costing $249 USD -- whereas the 64 GB model costs $299. If anything, the 16 GB version's demise is an indication that even a low pricetag could't help boost consumer interest and overall sales.

But let's face it: the PlayBook met stiff competition from Amazon's similar 7-inch tablet, the Kindle Fire, in 4Q11 and 1Q12. Although its storage capacity is only half, the Kindle Fire has the upper hand thanks to Amazon's retail presence and superior service. What made matters worse for RIM was that its tablet launched almost a year ago without the most basic features like email.

But next to Apple's iPad, RIM didn't have a chance. The company sold more that 500,000 PlayBook units in the three months to early March. Apple Inc sold 11.8 million iPads in its quarter to late March. Amazon's Kindle Fire was somewhere in between.

Still, RIM isn't calling it quits on the tablet sector. As previously stated, the 32 GB and 64 GB versions are still on the market, and the company reportedly has plans for another tablet launch. "We continue to remain committed to the tablet space and the 32 GB and 64 GB models of the BlackBerry PlayBook continue to be available from our distributors and retailers around the world," RIM said.

"There is more value for our customers in the higher capacity models (32 GB, 64 GB), and as such we have decided to focus our efforts here," the company added.

RIM's share of the U.S. smartphone market has taken a serious plunge over the last two years, falling from 44-percent to a mere 12-percent. Overall RIM has lost nearly 75-percent of its market value since last June. Just last week RIM told investors that it may face an operating loss for the current quarter. It even hired on bankers from JPMorgan Securities and RBC Capital Markets to help with a financial "transformation."

Although analysts don't think RIM will shut down immediately and render millions of BlackBerry devices as paperweights, consumers and investors are beginning to panic nonetheless. However there will likely be plenty of support to keep RIM gadgets up and running for the short term if the firm does in fact shut its doors.