What a $99 HP TouchPad Does and Doesn’t Teach Us

By  |  Monday, August 22, 2011 at 11:50 am

Weird: By flopping so badly, HP’s TouchPad tablet has become a monstrous hit. After HP CEO Léo Apotheker decided to terminate HP’s WebOS hardware business, the company slashed the entry-level TouchPad, which sold for $499 just a couple of weeks ago, to $99. The new price is causing riots at Best Buy and has made the TouchPad the #1 electronics product on Amazon.

HP is now selling TouchPads as fast as it won’t make them. It’s a poignant end to a device that once seemed full of potential.

Are the folks snapping up TouchPads making an intelligent buying decision? It depends. HP says it’s not giving up on WebOS, and will continue to operate the WebOS app store and hold developer events. I’m not sure what the status is of any software updates for the TouchPad: it could certainly use some additional bug fixes and enhancements, but I’d be startled if HP poured energy into development of anything as ambitious as an iOS 5.0 or an Android Ice Cream Sandwich, at least while the fate of WebOS is so very uncertain.

What buyers of $99 TouchPads have probably gotten themselves are tablets that will feel largely frozen in time–good for fooling around with, but not rough equivalents of the iPad or Galaxy Tab 10.1 that happen to sell for 80 percent less. That’s fine, as long as the buyers understand the terms of the deal.

Some people are now wondering what would have happened in an alternate universe where the TouchPad sold for $99 (or even $199) from day one. Could HP have built up massive market share in short order, thereby gaining enough traction to get Apotheker excited? Would reviews (like mine) have been kinder if the TouchPad had been the same product as it was, but had drastically undercut the iPad’s price rather than matching it?

Probably. We don’t expect $400 Windows laptops to be as polished as $2000 MacBook Pros, after all, and there’s a thriving market for both. But I can’t imagine any rational scenario that would have involved HP selling TouchPads that cheap except to get rid of a defunct product.

iSuppli performed a teardown of the TouchPad and concluded that the parts inside cost HP about $300–assembly, marketing, and other costs not included, and without any profit margin for retailers. The more $99 TouchPads HP sold, the more dough it would have lost. And while it might have made a little extra money from TouchPad owners who bought apps from HP’s store, there’s no way it would have recouped the initial losses. (It would take selling a lot of 99-cent apps to cover $200 or more money lost on every new TouchPad sale.)

No, the only way that selling TouchPads for $99 makes sense is as an alternative to dumping them in landfill. HP may lose slightly less money this way than if the existing TouchPads had just quietly gone away.

Still, the fact that so many people are so interested in a tablet under $100 leaves you wondering how soon a tablet might arrive that costs that much from the get go, and how well it could do. Back in March of last year, chipmaker Marvell showed off a reference design for “Moby,” a tablet that it thought could retail for $99. As far as I know, no Moby tablets have shipped, at least at that price point. They’d be a lot more basic than a TouchPad or iPad, but it would still be intriguing to see how well a tablet could do at 20 percent of the iPad’s starting price. (The $250 Nook Color comes as close to testing this theory as any device currently on the market.)

We know that many people are intrigued by tablets. It’s probably a safe bet that more of those intrigued people aren’t willing to pay $499 than are prepared to do so. But the TouchPad fire sale–which probably appealed more to bargain-hunting gadget nerds than the masses–is such a bizarre event that it just doesn’t tell us that much about the potential market for very low-cost tablets.

 

 

 

 

 
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27 Comments For This Post

  1. cheapdaddy Says:

    I might have bought one if it was an Android Honeycomb model. I did buy $100 tablets a Pandigital Novel that can run as a tablet though I use it as a multireader Nook, Kobo, Kindle, Wattpad, & pdf reader. I also bought a Coby Kyros & Craig 738 that I use for basic web browsing and as a media player Pandora, You Tube, Netflix etc The best usage is just to run apps you wouldn't want to overload a phone with. So having a working app store is crucial. Also being able to run flash and java are key as well. Dell made a convertible netbook that folded into a tablet. (Remember the Clio) Does Android run on an Atom cpu? $300 is the sweet spot for a tablet with a Clio like form factor, decent camera mike and speakers with 16G expandable memory, 1G ddr ram, and a min 1.2 Ghz cpu with a 10" capacitative touch screen.

  2. John W Baxter Says:

    I wonder how many more TouchPads are in transit on ships (or trucks heading toward or away from ships). I think there will be one or two more flurries on hp.com.

  3. Tom Ross Says:

    There's a lot of smoke, but I don't know how big the fire really is. How many TouchPads is HP dumping now? 500,000, maybe 1 million? Apple is moving 700,000 iPad every week without any hickups.

  4. MJPollard Says:

    @cheapdaddy: Doing The Google on “HP TouchPad Android” revealed that there is at least one group of people, possibly more, working on getting Android up and running on the device. True hacking at its finest. So, I wouldn’t be at all surprised to hear about TouchPads running Ice Cream Sandwich at some point in the future. Almost makes me wish I’d snapped one of these babies up for $99…

  5. GadgetGav Says:

    What it makes me wonder is; has the TouchPad $99 / $149 fire sale killed the market for a $199 retail tablet? What's the split of TouchPad buyers between geeks wanting to try out WebOS and people who would quite like a tablet, but don't want to spend more than $200 on one. If there's a high proportion of the latter, the TouchPad fire sale might have satisfied most of that 'intrigued' category…
    Based on what is bound to be a lackluster user experience when all these TouchPads get unboxed and used for a few weeks, how many of the previously intrigued buyers are going to think "That's OK, but what I really need is a real tablet" and how many are going to think "Well, that was disappointing. I'm glad I didn't spend any more on my tablet experiment. I'll go back to my laptop / netbook"…?

  6. Big Al Says:

    I think the HP fiasco tells us a couple of things.

    One, tablets are overpriced. Even the iPad. I'm not going to drop $400-$500 on a tablet…any tablet. To me, the value just isn't there. But at $99, lack of HP support be damned, a Touchpad is a smoking deal on a solid internet device. At $149, it's still a great deal. Sales prove it. Personally, I bought 3, one for me to tinker with, 2 as Christmas gifts for my 2 teenage boys. I'd NEVER spend $1500+ on tablets, but to get 3 for a little more than $300, it wasn't a hard decision. And I'll bet you dollars to Ice Cream Sandwiches, the Touchpad will be able to run Android sooner, than later.

    Two, there is definitely a market for an iPad alternative. But they'll have make inroads on price, instead of specs. See the Zoom or Galaxy Tab. Nice hardware, but not flying off shelves Price is why the Nook is such a popular device (and it has solid, hackable hardware, unlike the inexpensive, slow, badly made Chinese Android knock offs).

    As mentioned above, there is a sweet spot on alternative tablets. Sell a good running, up to date tablet for $250 or so, and you won't be able to keep them in stock. Which is why I think Amazon is going to be the company to watch in tablets. They've proven they can make good hardware, can make it a loss leader using the Gillette model, making money on selling apps/music/media thru their ecosystem.

    In the end, with all the new users from the fire sale, HP's failure may have been the best thing ever to happen to the tablet market.

  7. Tom Ross Says:

    So if HP sold the Touchpad for $19 that would prove that $99 is way to expensive for a tablet? No it wouldn't. A limited one-time 80 % discount will always attract a lot of interest, no matter which product.

  8. Cedric Says:

    As I see it there's another way of looking at this. To me this whole thing is just highlighting human nature at work. I don't see that there is a market for tablets, any tablet at any price. What there is is a market for iPads and that's due to a brilliant marketing strategy by Apple. The HP $99 tablet frenzy we're seeing is not about people desperate for well priced tablets, it's about people perceiving an 80% off bargain. As Tom Ross above implies this proves nothing. Other than perhaps: people are suckers for discounts.

  9. Ron Says:

    Looks like Barnes and Noble is pulling-back previously validated Touchpad purchases due to over-commitment. Shame on them! I'll never purchase from Barnes and Noble again! Who wants to buy my Nook Color?

  10. Johnny Says:

    Why would anyone want to ruin a perfectly good webOS device by porting Android to it? What kills me is that the fire sale may create an impression that the Touchpad is a bad device, which it is emphatically not. Both iOS5 and Android Ice Cream Sandwich will be introducing elements that have been in webOS from the start. With the 3.0.2 update, it doesn't take a fanboy to appreciate webOS; most of these new Touchpad owners will be very pleasantly surprised at what their few dollars have bought (especially if they've ever used a Honeycomb tablet).

    Finally, although HP made an unconscionably stupid move by officially killing webOS, the outstanding Homebrew community will keep it alive for a lot longer.

  11. MJPollard Says:

    @Johnny: Because Android has a future. WebOS does not. Doesn’t take a PhD to understand that.

  12. nickb Says:

    "But the TouchPad fire sale–which probably appealed more to bargain-hunting gadget nerds than the masses–is such a bizarre event that it just doesn’t tell us that much about the potential market for very low-cost tablets."

    so what you are saying is, 'my article is pointless.'

  13. Hamranhansenhansen Says:

    No, you are wrong. iPad pays for itself. It does more than any other $500 PC. The 3rd party software is ridiculously cheap. It requires almost no training, and almost no administration. Because it runs 10 hours on a charge, you get double the use out of it that you would get out of an Intel PC, and iPad still uses less electricity, in spite of running for twice as long. And at the end of 2 years, you can sell your iPad on eBay for $200 and it brings your iPad cost down to less than a throwaway netbook.

    And there are many iPad apps that are worth buying a whole iPad for. For example, in music, it is common to pay about $800 for a device with knobs and sliders that remote controls a music production system like Pro Tools or Logic over MIDI. A $500 iPad with $10 AC-7 Core app does the same thing as that $800 device, except it does it wirelessly and it is about 5% of the size and weight. AND, there are thousands of other very cheap music app for iPad, so you get all that for free after iPad has already saved you $300.

    But notice that TouchPad can't join wireless MIDI networks, and has no music software. I can't replace a control surface with a TouchPad. I can't save $300 by buying a TouchPad.

  14. Hamranhansenhansen Says:

    They made so few TouchPads, the fact that they are sold out so fast doesn't really tell you anything about demand. They didn't even make enough for obsolete gadget collectors.

    The fact that they couldn't even sell 500,000 at $399 is what is really telling. After all the ink that WebOS and Palm and HP have gotten over the past year … to not be able to move 500,000 at $399 is amazing. But they did not even have Kindle and Netflix running on there. (The Kindle app appeared in the store, but once you downloaded it, it just says, "coming soon.") Just those 2 apps alone could make someone rationalize a purchase because at least it's books and movies on the go.

  15. tela Says:

    You have lost your mind a tablet is no substitute for a a desktop. A tablet is good for couch surfing but desktop and laptops brring far more computing power tot the table. Core 2 quads i5s and i7s run laps around snap dragons, cortex and tera. Sure logic and acid are on ipads, but these are severely scaled down verions compared to desktop versions. Tablets are good, but you cant dith the desktop just yet. I tried to argue that a touchpad was worthless even for 99, but for 99 it is an easy buy itll have andy soon and it will be a 300 sav kings on an up to date android tab its worth it easy.

  16. HoustonReal Says:

    Having played with a 32GB TouchPad now for a week, it is hard for me to believe anyone can sell these things for $500. I know netbooks aren't cool anymore, but my $300 Atom N550 netbook can run circles around any TouchPad. Tablets still seems to be toys, and not really useful for business purposes. I know an iPad has more apps, but it can't run demanding software.

    I am always amused when someone declares the death of a type of PC. The desktop is still around, and is hard to beat for power. Laptops come in all flavors, and netbooks still have their p uses. It will be quite a while before smartphones and tablets can replace a desktop PC in an office environment.

    I can imagine a day when tablets will be powerful enough to run real software packages, but right now they are entertainment devices with some utility. When they make an Android version of Photoshop, or you can run Dreamweaver on an iPad, then I'll be willing to pay $500-$600 for a tablet.

  17. Shares Says:

    Dreamweaver? Yeah, real professional.

  18. sam Says:

    can you watch porn on a ipad? i think not. notworth the money my freind

  19. sam Says:

    Here is a thought….webos can play your porn anywhere u are ;D got my hptouchpad today :)

  20. jame smith Says:

    What kills me is that the fire sale may create an impression that the Touchpad is a bad device, which it is essay writing emphatically not. Both iOS5 and Android Ice Cream Sandwich will be introducing elements that have custom essay been in webOS from the start. With the 3.0.2 update, it doesn't take a fanboy to appreciate webOS; coursework most of these new Touchpad owners will be very pleasantly surprised at what their few dollars have bough.

  21. bubbah Says:

    I bought one and now have a dual boot webOS / Android machine that works fine …so if webOS goes to the dogs, my touchpad with great internal resources will be a very capable android machine …further, with webOS came a 50GB free box.net storage forever!! …so my 32gb touchpad now is an 82gb touchpad …very cool!!

  22. blogc2011 Says:

    The desktop is still around, and is hard to beat for power. Laptops come in all flavors, and netbooks still have their p uses.Red Lobster

  23. blogc2011 Says:

    I think Both iOS5 and Android Ice Cream Sandwich will be introducing elements that have been in webOS from the start. Dillards coupons

  24. janenobelk285 Says:

    As Tom Ross above implies this proves nothing. Other than perhaps: people are suckers for discounts
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  25. Muay Thai Says:

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