HP’s $99 TouchPad fire-sale burns Apple’s iPad foes

“In a triumph of madness over common sense, HP says it will manufacture one more batch of its loss-making TouchPad tablet ‘to meet unfulfilled demand,’ but won’t say how many or when they will ship: no great surprise when you think about just how much cash HP has already lost competing with Apple and its iPad juggernaut,” Jonny Evans writes for Computerworld.

“If Apple’s sobbing non-iPad tablet-making competitors thought things were bad already, HP’s low-cost giveaway move made things worse. There must be hundreds of thousands of unwanted tablets from sundry manufacturers filling up the distribution chain, making a holiday season price war inevitable,” Evans writes. “In other words, HP’s decision to sell its tablets at a loss will eventually be emulated by all Apple’s other competitors.”

Evans writes, “You’ll see tablet makers struggling madly to sell devices at price points which only barely cover their costs. If pressed, Apple has the nuclear option of dropping iPad prices in order to further starve the market. Amazon will be seizing as much oxygen as it can, shunting devices from other makers and OS developers to the sidelines. The end result will be that after a disappointing Christmas quarter executives in boardrooms outside of HP will also be asking if it is worth losing money in a market Apple owns. And Apple will be planning to raise its game again with the introduction of the iPad 3.”

Read more in the full article here.
 

[Thanks to MacDailyNews Reader “King Mel” for the heads up.]

Related articles:
Why the undead $99 TouchPad might portend iPad’s doom – August 31, 2011
HP to produce one final run of TouchPads to meet ‘unfulfilled demand’ – August 30, 2011

20 Comments

    1. I would imagine that Apple would have to keep manufacturing the iPad 2 to satisfy demand because of the likely limited yields of the iPad 3’s rumored Retina Display. The higher the quality, the lower the yields and it will take time to increase the yields unless Apple does have multiple sources to compensate for high iPad 3 demand.

      Apple could certainly afford to lower the price of the iPad 2 to $399, but I would think that would only happen if there is a weakening of demand of the iPad. A $50 cut seems reasonable but $100 seems a bit too steep for Apple if it’s unnecessary to do so.

  1. Well, you can see that old Leo A. never managed a hardware business. BTW, this is exactly how Oracle, SAP and others sell their ERP wares. They discount the heck out of the product, and sign you up for years and years worth of maintenance, and the occasional major upgrade support.

    The implementation of these systems is so poorly supported and managed that the pain organizations feel during installation lingers for a decade or more! Meaning companies will do anything not to have to change and go through a new implementation.

    Oracle did exactly this when the CEO of my middle market organization purchased Oracle ERP about 8 years ago. They discounted the price on ALL modules available at the time by a more than half, and the CEO just couldn’t resist the “great” deal he had just struck. Meanwhile 8 years later people still have night mares of the the 2 year implementation debacle.

    Smaller industry tailored ERP is the way to go.

  2. HP’s Cunning Plan:
    When APPL sues them for IP theft, they will sue for profits. Because the HP pad resulted in a loss, this will force APPL to be paid in negative profits, so APPL will owe HP $200 for every HP Pad sold.
    Right?
    So every pad they make at a loss will earn them money!!

    1. I thought the same thing the first time I filed for income tax. Using the deductions, etc., I came up with negative income.

      Alas Internal Revenue does not pay you in such a situation. Nor will Apple pay HP.

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