“HP has plans to produce another round of its TouchPad tablets before the year is out, despite its earlier decision to discontinue its mobile hardware products,” Mike Isaac reports for Wired. “‘Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand,’ HP spokesman Mark Budgell wrote in a company blog post. ‘As we know more about how, when, and where TouchPads will be available, we will communicate that here and through e-mail to those who requested notification.'”
“Budgell says it will be a few weeks before devices from the additional run will be available for purchase,” Isaac reports. “The blog post signals further confusion from a company in upheaval.”
“Two weeks ago, HP announced suddenly it would end production on all of its mobile hardware, including the soon to be released Pre 3 and Veer smartphones. The decision also included the company’s iPad competitor, the TouchPad, killed off a mere 49 days after its debut in July. Circulating rumors suggested third-party retailers were sitting on hundreds of thousands of unsold stock,” Isaac reports. “HP followed its announcement by slashing prices on remaining TouchPad inventory, reducing the price of the 16-gigabyte TouchPad to $100, and the 32-gig version to $150.”
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Isaac reports, “There’s no guarantee, however, that HP will continue to sell the last round of tablets at a $100 rate. Hardware teardown web site iSupply speculates that, in terms of components alone, a 16-GB TouchPad costs HP approximately $300 to build. That’s a $200 bath HP is taking on each individual unit sold, not including the cost of labor, shipping and associated expenses.”
Read more in the full article here.
MacDailyNews Take: Hey, yeah, let’s ramp up another run and either lose hundreds of dollars per unit or fill up warehouses again with unsold fake iPads! There’s some real genius business acumen over there in OPIPL (Overpriced Printer Ink Peddler Land). By comparison, Apotheker has achieved the impossible: Making Ballmer look like a competent CEO.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Terry O.” for the heads up.]
So I can see already that HP received tons (errrr…a handful) of requests for the $99 bedside clock and they think “Hey maybe there is a demand for our product. Let’s make more.” Notification goes out to the 75 people that asked about the clock and say they can now have it mailed at a price of $399. Whoops, you were only interested at $99? I guess it will sit in a warehouse until we realize there’s only demand at $99.
The initial order from what I recall was approx 1 million units.
So lets be generous and say they sold a couple thousand before they decided to quit making them, and then dumped the rest at a $200+ loss.
THEY LOST BIG MONEY.
How could a guy from SAP be this bad at math?
Jesus put my 5 year old in charge of HP he wouldn’t hesitate to tell them they are losing their shirts on this gig.
Screw profits! We’ll make it up in volume… Eventually. Yeah, good luck with that.
What exactly are they trying to achieve by this? Perhaps making WebOS look popular so they can license it?
They are giving some time for the WS shyster banks to come up with a scam to spin-off the pc side.
>Perhaps making WebOS look popular so they can license it?
This is the only semi-rational explanation I’ve come up with for the whole “$99 fire sale” situation. Working at a retailer that sells TouchPads, I can tell you, there’s a metric shit-ton of unfulfilled demand for them at the $99 pricepoint. Hell, at $99 I picked one up myself despite being a pretty big Apple guy, because if nothing else I could always use it as a digital photo frame (a 10″ digital photo frame with this kind of screen costs quite a bit more, nevermind the internal memory).
They could *easily* have sold a great many (maybe all) of these at $199/$249. The only reason I can think of not to was to try and create demand/hype for it and build the WebOS userbase to make it more attractive to sell or license WebOS to someone else.
Frankly, I’d rather see WebOS as the primary competitor to the iPad than Android. I think WebOS is a way better OS than Android (though I prefer iOS to either). So I really hope that’s their game plan. If it is, it might work; they might ultimately add more to the price they get for WebOS than they spent on blowing out the tablets at $99/$149. From that perspective, another manufacturing run doesn’t seem quite as crazy.
How is this a good idea? Seriously? What is the point?
Jesus that new CEO is looking like the WRONG pick if you are vested in HP in any way.
How the hell did this decision get made exactly ?!??!??
WORKER: “Sir! We sold out of TouchPads”
CEO: “Well I’ll be damned! People DO want these things after all! That damn hippie Steve Jobs isn’t the only son of a gun with BRAINS in this here industry. Fire up the assembly line! We need to make more!”
WORKER: “Uh sir we have announced we are getting out of hardware and are losing over $200 on each TouchPad we produce. We sold what was left of them and took a loss to exit the market. This was your decision sir.”
CEO: “DIDN’T YOU HEAR WHAT YOU JUST SAID? WE SOLD OUT! PEOPLE WANT THESE! MAKE MORE! I’ll decide if we are really leaving the hardware business later, as for the cost, don’t worry about it, it’s only your pension and the future of a company I was never here to build or care about!”
HP
Onward to our doom!
That about sums it up’
It’s like they’re stalking someone that doesn’t want a second date.
While I think HP’s decision is a total sign of moronic business decisions I’ll gladly take advantage of the offer and grab one at $99.
There is already an alpha build of the CyanogenMod Android build running on the TouchPad. Its about the best community build of android out there.
HP is going to inadvertently create the cheapest and best Android tablet while they lose untold millions in the process.
I’m not sure if I should laugh or be sad for the employees stuck in this nightmare.
Yes, it might become the cheapest and best Android tablet made so far, but the funny thing was that HP tested WebOS on their own hardware and an iPad 2 – WebOS ran twice as fast on an iPad 2. Specs aren’t everything, obviously.
I suspect they’ve sent someone down to the rubbish tip, to see if any can be cleaned-up and salvaged.
The one scenario where it might make some sense is where HP has a pile of components already committed to or purchased. They either throw all those components in the landfill and lose ALL the money, or they put them together and recover SOME money. In that scenario, even the fire-sale price is much better than zero.
In order to continue with the $99 TouchPad commitment, HP will have to scrounge for every rejected components from Taiwan and China to fulfill its money-losing proposition. HP has a big masochistic appetite for punishment.
Maybe the fire sale was a PR stunt.
It’s like a cereal company guaranteeing that you’ll love their product. If you don’t, they’ll give you a second box absolutely free.
They couldn’t meet “unfulfilled demand” with their product, because consumers are demanding quality products. They will have the same results if this additional run is producing the same craplets they made last time.
Smart move… Let’s make more and lose $300 per unit. HP is looking more and more “doomed” every day.
This may be an attempt to clear out the inventory of already sourced parts, in which case it would not make sense to sell below cost, so I think we can forget about them being sold for below $100.
However this is extremely bad news for any other company that is considering launching a rival to iPad. HP is burning the ground from beneath everybody else, but with no potential for gaining anything themselves.
There hasn’t been such a fire sale since General Sherman burned Atlanta.
But you are right HP has single handedly gutted the Android tablet market. What fool would pay $300 to over $600 for an Android when they can pick up an much better HP and install Android on it?
Apple even quietly adjusted their low end price by $100 to a new low of $299 for the read deal iPad on their refurbished generation one web site.
For those planing to waste their money on an HP I recommend they add a couple of bills and get the real deal iPad now with a half million apps.
>For those planing to waste their money on an HP I recommend they add a couple of bills and get the real deal iPad now with a half million apps.
I think you misunderstand a lot of the reasons people are buying the TouchPad. For a lot of people, it’s not because they want an iPad but are too cheap, it’s because even if you don’t end up using it that much, or hell, just want to use it as a photo frame, $99 isn’t a big deal, whereas $300 is. My boss already has an iPad 2 (and loves it), and he bought one just to let his kids play with because it’s not a big deal if they fuck it up, whereas he’s afraid to let them near his iPad 2.
This move has nothing to do with demand (or lack there of). HP had already asked their component suppliers to produce X amount of inventory. Inventory they meet. Now HP doesn’t want to build the pads and doesn’t want to buy the inventory but their component suppliers aren’t letting them renege on their contracts. So HP decides they might as well make them, they have to buy the parts anyway.
Good point! If HP already has to buy the components because of preexisting deals, then the true (opportunity) cost of producing a TouchPad is near $0 (other than shipping costs, etc.). So a sale at $100 is actually profitable for the company.
Nonsense, it still costs money to assemble, package, and ship them. Probably more than the $99 in revenue.
But that’s fine… For every tablet except Apple’s iPad, the consumer expectation will be going forward, if it’s released at $499 (or whatever price), just wait a few weeks and it will be $100 less. Wait a few more weeks and it will be on sale for $99. HP is only reinforcing this perception.
Apple’s pricing message is always consistent. Don’t expect any sale prices on the current model, until the next model is released. So, if you want one, you might as well buy one as soon as possible. And Apple gets full retail price, sells out inventory.
LOL! Don’t bother with it. HP give it a rest. It only moved because it was priced at bottom barrel POS level.
A. They found another warehouse full of inventory. (inventory error)
B. The number of returns were higher than they thought.
C. Their suppliers had more parts in stock that HP is contractually obligated to use.
None of the above would look good if they admitted to it. So they came up with the story of making more at a loss to meet demand.
Doesn’t make any sense, but it sounds better.
That’s another billion dollar wad of cash that they’ll never get back.
IF they really are producing “another run” of TouchPads, management at HP is unbelievably stupid. There’s no way these will sell even at $300, which MAY cover HP’s cost to produce the thing (but not R&D for webOS, let alone the $1.2 billion to purchase Palm).
The ONLY way this could be beneficial is to drive up sales numbers of webOS for either raising capital to spin off the PC division into a separate company or to sell/license webOS to another handset/tablet manufacturer, like Samsung.
Most likely, HP guaranteed and positioned a lot of material and parts with suppliers. They could just eat all that or try to resell to other companies, but some of it likely would have to be scrapped. So, if they’re on the hook for a certain amount, they may as well make news out of it.
Regardless, all these decision are weird.
You guys got it all wrong, they take the retuned touch pads, squirt a bit of windex on them, stick them in a new box and viola! a fresh supply of $99 tablets
Read much?
“…we have decided to produce one last run of TouchPads…”
Considering that HP has already admitted having to write off $1 Billion from this fiasco, (the exact amount of write offs that screwed over Apple’s reputation in 1997), it is likely that HP found some way to save on their losses by completing manufacture of further DouchePads. I expect this has something to do with parts on hand or contracted parts that would only be landfilled otherwise. Or they simply have stockpiled inventory on hand, despite their rhetoric.
The only “demand” existing for the HP DouchePad would be at the $100 inventory dumping price. It’s an End of Life product with no future.
… Props to the posters above, whom I find I have basically summarised. 🙂
Perhaps they had a purchase commitment with suppliers they couldn’t wriggle out of. Or the ink fumes are getting to the management, and they have lost there senses.
The Touchpads are all sitting in a warehouse somewhere. It’s still all coming from the overstock. They’re so full of it!
It’s not unfilled customer demand. It’s unfilled vendor demand upstream from HP.