Those following the tablet market has seen a whirlwind of activity over the last few weeks. First, HP announced the end of the WebOS line of tablets and phones. Next, the HP TouchPad was dropped down to $99, a truly bargain basement price, and that set off the fire sale. The HP TouchPad appears to have leapt over the competition to become the second most popular tablet on the market. Obviously, the iPad is first.
Now, HP has a problem. They have generated incredible interest for a product they no longer make. They have generated incredible sales figures, and probably incredible profits for the retailers selling their stock of TouchPads. HP probably won't see a dollar of that though, and now they have interest, and no product. Worse still, most of the interest was generated by a price they cannot maintain without taking a huge loss.
Now, rumors are surfacing that the TouchPad may not be dead after all. Is it possible that the TouchPad, like the Phoenix could rise from the ashes of its own destruction?
So, let's be sure of our timeline. On August 18th, HP announced that it was discontinuing the TouchPad and the WebOS line of phones. On August 20th, the Fire Sale commenced when HP announced that the remaining stock of TouchPads would be sold for $99. By August 29th, all the TouchPads in Austin, Texas stores had been sold. I don't know how many that was in Austin, but it appears that as many as 500,000 Touchpads may have been sold by the end of fire sale. With most of those sold in 10 days, those numbers might even approach iPad sales for the same period.
First, tech pundits were talking about the TouchPad being cut off at the knees. Next, there were rumors of an update. Late today, HP has pretty much said that the PC unit will be spun off into a new company, and that the TouchPad might go with it. Some are acting surprised, but why?
When you put a good tablet (I'll let others debate how good) at the same price as the bargain basement tablets, is it any sort of surprise that it sells?
HP has already said that they intend to keep developing WebOS for printers. Is it really a surprise that there would be updates?
Next, consider the following factors.
1.the reports (rumors) that some HP execs didn't know that they were pulling the plug on the TouchPad.
2.the supply train built to produce the TouchPad, which cannot be turned off overnight.
3.the new installed base of devices created by the fire sale.
I see a surprise announcement, an existing supply train, and an installed base to give the device traction.
Is it really a big surprise that HP might rethink the decision and give the TouchPad a second chance?
What if the HP CEO (I can never remember how to spell his name) really did make a decision and announced it publically first, rather than run it through channels? Maybe he knew that it would mean dozens of annoying meetings while the TouchPad guys pled their case and he didn't want to listen to it. He authorizes the Fire Sale to dump the existing stock. That cannot be a huge surprise, since their were already rumors that Best Buy wanted to send them back. If you have a dud on your hands, you try to lessen the impact. If retailers send them back, then you have shipping cost that you will probably have to pay, and you still have to dispose of the excess stock, which will probably cost you money, rather than generating revenue. I am betting that HP basically said to the retailers...price them at $99 and keep it. If they don't sell, then we will take them back.
The TouchPad folks within HP have had ten days to get their arguments ready, and now those arguments are stronger with half a million units in the wild. I don't think that HP did this knowingly as a ploy to gain market share at a loss, but I do think that someone may have found the silver lining in the dark cloud of the TouchPad failure and fire sale.
And now? With the news today, it looks like the HP PC line will survive under a new name, and with the changes in the market, including the sales figures for the iPad, it could be a good way for the new company to generate revenue, with a second generation tablet based on the TouchPad, with a installed base of users whose opinion of the original TouchPad will improve, if HP can provide some good updates to the OS.
Yes, I think that the TouchPad might just survive this and come out a winner.
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