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TouchPad frenzy holds a lesson; should Apple be worried?

Thousands of desperate consumers with fists full of dollars can’t be wrong.

When Hewlett-Packard announced recently that it was killing the HP TouchPad, the company slashed the price of the doomed unit to $99. And then a funny thing happened. It became one of the most popular gadgets on the planet almost overnight, with people snapping up practically every one in existence.

Demand is so high that HP’s spokesman Mark Budgell announced in his company blog that there will be at least one more previously unplanned production run for the product. And he hinted that HP may be considering supporting the TouchPad in the future. It seems even HP was shocked at the sudden demand for its flagship tablet.

To me, this was surprising only because HP has made some real boneheaded decisions lately, such as buying Palm for $1.8 billion to get WebOS, and then killing off the only product to really showcase the elegance of that operating system.

In fact, I wrote recently that feds should be mad as hell about this, because the HP TouchPad is just about perfect for government work. A lot of readers commented on the column, and many people e-mailed me asking where they could find one of the few remaining TouchPads.

HP just made that task a bit easier. Although the company can’t promise that everyone who wants a TouchPad will get one, my guess is that they will keep rolling off the assembly lines until demand subsides.

There now is talk that, instead of dumping their personal-systems group altogether, HP might spin it off into another company, something that should make stockholders happy if HP can actually pull that off. So the whole TouchPad debacle may have actually kept HP in the personal computer business, at least in a roundabout way.

So what have we learned from all this? I can’t speak for HP, but if I were in charge of a tablet-producing company, my take on this would be that the prices of tablets are just as important as features.

The fact is (and I know Mac-folks will jump all over this comment) that there are a lot of tablets on the market as good as or even better than the iPad, especially when you need to do things like business and government type applications. There are tablets that run Flash, and, yes, that is important. There are tablets that can have multiple applications open at the same time. And there are tablets that are easy to connect to enterprise networks and make use of existing agency protocols to keep data safe at rest and in transport.

So why don’t more of these tablets sell? Because even though companies are matching or beating Apple’s iPad in features, they stubbornly stick to the identical prices. When we review a new tablet, I almost don’t have to look at the price data because I know it’s going to be $499 for a 16G model and then $599 and $699 for units with more memory. It doesn’t matter if it’s an iPad, TouchPad or BlackBerry PlayBook. Everyone seems stuck on those prices, which were set by Apple.

Instead, why not try giving us a full-featured tablet for $200 or even $300? Granted, the $99 price of the TouchPad is a little crazy, and HP is probably losing money on each unit sold just to push up the installed base of WebOS. Although that might bode well for the future of the OS, it’s probably not a tablet business model that many companies can embrace.

But there has to be some room between $99 and $499 that would sway people to purchase a tablet while still making a profit for the company. And the cracking of that artificial $499 barrier might be the real legacy of the TouchPad, whether it ultimately survives or is forcibly retried.

 

About the Author

John Breeden II is a freelance technology writer for GCN.

Reader Comments

Sun, Sep 4, 2011 James

There are several reasons the iPad copy cat also ran tablets don't sell as well as the iPad. First and foremost, it's because Apple is selling more than just the device. It has developed a whole infrastructure around the iOS that the other manufacturers, to date, simply can't replicate in a year or two. Keep in mind it took Apple several years to put the whole package, device, services, applications, and content in place. It didn't happen overnight, and other manufacturers would have to pretty much do that to match Apple at this point. Two possible exceptions are Amazon, which has significant content, and Sony, which recently released their own tablets, and have sufficient content to make a run. Another reason besides the whole experience, it the fit and finish. Many of the copy cat tablets are not as well manufactured and feel and look cheap. And while there is a part of the market that will by that a lot don't. Other tablet manufacturers don't do enough to distinguish their devices from the iPad. They wrongly figure that me too devices are good enough, and as you point out, at the same price point, they aren't. And while Apple sets the price point for their products they don't set the price for the market, the market does. So if other manufacturers don't want to set the prices lower than Apple's that's on them and not on Apple. There is no Apple price barrier, there is only the greedy manufacturer's price barrier, they can break it at any time. It's true, in part because of cash purchases for long-term component contracts, that Apple can buy and build their devices for less than other manufacturers, which again puts price pressure on those copy cat manufacturers, and ensures that Apple is one of the few companies making significant profits on their products, that Apple could probably afford to drop the price of their products, but they won't until the time is right. As long as they keep selling everything they make, there is no incentive to lower prices until something else comes along to put price pressure on Apple. I don't think that HP selling all their remaining inventory at $99 in a fire sale qualifies as a legitimate option putting price pressure on Apple. And as a response to Brian's comment above, Apple isn't forcing any one to buy an iPad or other device. What significantly changed, besides the HP pricing, that would have made that iPad you bought for you wife less of a value? And finally, What is it exactly about Flash that makes it an important feature for a tablet? Tens of millions of iOS devices don't have it, and no one has made any significant complaints. Thanks

Sat, Sep 3, 2011

I just moved from a Palm Pre Plus to a DroidX instead of a Palm Pre II because the Palm Pre pluses hardware was soooo bad. I couldn't even FIND a Pre II to look at. My kids have been touting the Droids for two generations. Now out of the Pre I never realized how much I could POSSIBLY miss an operating system. WebOS was AWESOME... the card stack was AWESOME. I can't believe how much my expectations had to shrink to move to the Droid. I now have a flash light app, but I can't keep up with mutiple Internet feeds at once. This damn Droid can't walk and chew gum!

Sat, Sep 3, 2011 jo5385 california

I just sold my apple's top of the line tablet 64gb wifi+3g ipad 2 to get the touchpad instead, but i was too late...I wonder if apple would reduce their price because of the touchpad's fire sale...i'm just waiting for their next move,i'm not buying my tablet right now..I know the touchpad has a lot of potential with the right price, i would definitely go for it.

Fri, Sep 2, 2011 Stephen Seattle WA

The cost to build an iPad is about $230 for the base model, so there is plenty of room to reduce the $499 price, additionally, look at the value of distribution of OS. Selling it at or slightly below cost to increase the WebOS base is not a bad idea.

Fri, Sep 2, 2011 Captain Obvious Earth

Ubuntu is free, has 33,279 apps available (mostly free), and runs on cheap generic hardware. So let's get going, Christmas is coming.

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