by Alexei Rivera | September 8, 2011 10:39 am
Manny Pacquiao promoting the HP TouchPad
Hey guys, we got a simple business question for you. If you launched a device that got terrible sales figures; then killed the product 49 days later; then sold the remaining stock for 1/5th its original price, losing about $200 and change in each unit sold (not to mention the massive R&D and marketing money you spent on it); would you then decide to make more of said failed unit? The answer seems like a pretty obvious no, right? Well, HP thinks otherwise. After a tepid response and subsequent killing of its just-launched WebOS based TouchPad Tablet, it plans to produce one more batch to “fill demand”. Why? It seems the demand for the units have skyrocketed after they went all postal on its suggested retail price. But since HP is losing money with each and every sale, why perpetuate the hemorrhage of money? Sounds like we should discuss this a little further.
So the HP TouchPad is actually a pretty decent spec tablet being a dual-core device on its own. It has a 9.7” capacitive panel at 1024×768 resolution, 1.2Ghz dual-core processor with Adreno 220 GPU, 1.3MP Camera (weirdly low for a tablet though), and the usual other tablet/smartphone connectivity options. It runs on a completely different OS though called the WebOS which ultimately led to its demise. Seems the consumers have voted and there only seems to be space for two tablet OSes around – the Android ecosystem and the iOS / iPad devices. With the TouchPad competing with a third, relatively unpopular OS, (albeit very functional) it ended up not catching on for its price of US$500 – despite Manny Pacquiao’s glowing endorsement ads. (Watch one below.)
Shortly after the launch (about 2 months later), HP decided to kill off the brand and product line – including the WebOS based phones. Then went on a firesale for its remaining TouchPad stock, bringing the price down to US$100 in some cases. This new price of course prompted those consumers who were skipping the TouchPad over Apple or Google’s devices to flock to the extremely budget, dual-core 10” tablet with a perfectly decent OS. The tablet became a hot commodity everywhere and it was nearly impossible to find. So much so that HP top brass thinks it would be a good idea to bring it back shortly from the dead to sell off some zombie TouchPads into the market. But why, when analysts say that they’re losing about $200 in components per unit sold? Not even accounting for shipping, handling, and other taxes on top. This is like driving your car straight into the wall, backing up, and then ramming it onto the wall again, right?
Well supposedly, the move is to get rid of all the components that were still left in production facilities slated to build more TouchPads – including a 7” version that was in the works. That makes some sense, right? But it reflects even more poorly on HP’s CEO to not have the hindsight to think it through. If we didn’t know any better, we’d imagine a toddler hitting red and green buttons at HP headquarters signaling the entire organization to launch, produce, kill off, stop production, then restart production all over again. We’ll forgive them the part about launching a product that didn’t catch on – they were entitled to try given their $1.2B investment in WebOS – but why kill it so quickly, then bring it back again once the popularity soars, at a huge loss? Somebody should have realized that immediately halting production of a product would mean a huge load of components will be left in production facilities. Somebody should have realized that bringing the price of a 10” dual-core tablet down to $100 would skyrocket its demand. Somebody should have realized that they should have just slowly ended the production run ahead of its announced demise which would then lead to no component losses and not make themselves look like a completely out of control company with no direction in sight.
Let this be a wake up call to HP – find a direction, consider your gains and losses first, then make that decision and stick with it. Dilly-dallying only makes you look weak.
Source URL: http://www.thetechnoclast.com/2011/09/08/hp-wants-to-lose-more-moneywill-make-another-batch-of-already-dead-touchpad/
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