HP Touchpad Tablet Fire Sale: Is It A Ploy To Gain Market Share?

A few days ago, HP made some remarkable announcements regarding the structuring of it’s business and the future of webOS.  Since this announcement, the price of the 16 GB TouchPad tablet is down to $99 at most retailers while the 32 GB model is now selling for $149. I stopped at several big box and office supply type stores yesterday trying to pick one up, but none are to be found. I did get to play with the demo model. It actually isn’t a bad little device. Is a TouchPad worth $400 or more?  No.  Is it worth $99?  I think the answer is clearly, “Yes”.

Is this drastic price reduction a ploy by HP to gain market share in the tablet business? Would it help HP and the future of webOS if they could sell all of the devices that had been sitting on store shelves or in retailer warehouses?  Would it help the future of webOS if an army of gadget-toting geeks bought and hacked webOS?  Could they eventually make money by selling in large quantities rather than high price? In my opinion, the answer to all of the above is, “Yes”.

HP CEO Leo Apotheker was quoted in a recent conference call, “Our webOS device has not gained enough traction in the marketplace with consumers and we see too long of ramp-up in the market share.” He also said, “Continuing to execute our current device approach in this marketplace is no longer in the best interest of HP and HP shareholders.”

It seems obvious to me that HP is attempting to change their “current device approach” by doing this significant price reduction.  If HP was able to gain even a small percentage of market share through this strategy change, it could be a game-changer for them and for webOS.

If HP was really serious about killing off webOS and the TouchPad, why has there website ordering system changed to “NOTIFY ME WHEN AVAILABLE”.  Yesterday, most sites listed the TouchPad as “Sold Out”.

Touchpad at HP

Touchpad at HP







I believe this is the first volley of companies doing really significant price reductions to gain market share in the tablet business.  If at all successful, I would look for something similar to occur in the Android tablet marketplace. Apple really needs to watch this carefully too. I really love my iPad and they would probably have to pry it from my cold, dead hands. A person new to the tablet world who has no investment in the iOS ecosystem to protect may vote a bit differently with their wallet if they could save $500.

At several stores yesterday, I asked if I could purchase the demo model.  I was told that those had to be returned to HP.  If this was truly a fire sale, wouldn’t they want to sell every last one of them and move on with life?

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2 Responses to HP Touchpad Tablet Fire Sale: Is It A Ploy To Gain Market Share?

  1. jimspice says:

    $99 is clearly below the break-even point. I could understand this for a reader-type device, like the Nook Color, where you could expect to generate profit later from eBook sales. Or if there were an extensive app store that would produce income down the road. But that’s not the case with webOS. I think HP just wants out.

    I too attempted to get my hands on one or two. However, I would have used the most assuredly forthcoming hack to install Android. Now THAT’S a deal.

  2. helpmeusetech says:

    I don’t know what the manufacturing cost of the device is. I’m fairly certain they lose money on each one at this point. If this webOS venture fails, they are already out the money the spent to buy Palm as well as all of the hardware/software development costs incurred since then.

    Something I read this morning indicated that the TouchPad sales were second only to the iPad recently. Would it be worth taking a bath on one version of the hardware to keep the operating system viable? It doesn’t mean that the hardware needs to remain this inexpensive going forward. Perhaps they could also sell updates and upgrades to the OS or bundle them with a certain number of purchased apps. That could increase their revenue stream a bit.

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