The $99 price is no business model, but cracking the artificial $499 barrier could be the HP tablet's real legacy.
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.
NEXT STORY: A government tablet from the ground up