“…it took HP and Samsung 10 months to sell 2x the amount of tablets to consumers that consumers themselves resold [to Ebay] yesterday.”
[Via Kelly Guimont]
Brian X. Chen, writing for the New York Times, explains how H.P.’s TouchPad — more precisely, WebOS — was doomed from the start. As Chen points out, it sold for a mere seven weeks before H.P. removed it. I was surprised and disappointed. When H.P. bought Palm and WebOS, I figured it had a winning combination. Like Apple, H.P. would control the hardware and the software. The software, however, was a problem from the start.
“From concept to creation, WebOS was developed in about nine months, this person said, and the company took some shortcuts. With a project like this, programmers typically start by creating the equivalent of building blocks that can be reused and combined to create different applications. But with WebOS, Palm employees initially constructed each app from scratch. Later, they made such blocks, but they were overhauled once by Palm and then again by H.P., forcing programmers to relearn how to build WebOS apps.”
Ouch. Consider that by 2009, as Chen points out, large numbers of developers were busily creating apps for iOS and Android. The situation previously described would put a real damper on H.P.’s recruitment efforts. Additionally, the TouchPad was released after Apple’s iPad 2, which provided a snappier OS and overall more pleasant experience. Seven weeks and $3.3 billion dollars later, the TouchPad was gone. The post-cancellation update to firmware 3.0.4 reportedly increased performance significantly, but it was obviously too late.
Again, it’s unfortunate. I owned several Palm devices in the late 90’s and loved all of them. I figured the TouchPad would be a fantastic device. I, and H.P., was wrong.
HP has announced its intention to build and sell more TouchPads at or around $99. [1. Retailers will be able to set their own price.] Since HP is taking a huge loss with each TouchPad sold at $99, why do it? It’s a matter of dealing with its inventory of parts, as well as existing contracts with manufacturers and suppliers.
I imagine HP thought it could cut bait and run until someone in accounting figured that it would be cheaper to assemble existing parts and sell the resulting units to offset the sunk cost, as opposed to sitting on a mountain of unused screens, etc.
Also, Digitimes suggests that existing contracts may prevent HP from halting production entirely. Suppliers who were surprised by the TouchPad’s discontinuation are sitting on a huge and suddenly unwanted order:
“The sources pointed out that the inventory level is capable of producing about 100,000 7-inch TouchPads and was originally set to start production at the end of the third quarter, but HP’s sudden change of strategy has completely messed up upstream player’s schedules.”
As Philip Elmer-Dewitt suggests, HP likely took delivery of those parts to maintain important relationships:
“Repair relations with your Asian suppliers by pushing those components through the factories. And then give it a positive spin by telling your customers that you are doing it just for them.”
What does this mean for the iPad’s future? Nothing.[1. This is beyond silly.] However, that’s not the case for other tablet manufacturers. Jonny Evans explains how consumers’ desire for iPads and suddenly inexpensive TouchPads is a one-two punch for the remaining players:
“iPad competitors will be combating each other for the smallest slice of the market. HP’s recent move to sell $99 TouchPads means many consumers already have a device they can use for the next year or so. That reduces potential sales numbers, and creates an expectation that non-iPad tablets aren’t worth much money. All vendors will feel this pricing pressure.”
A huge price war is about to erupt, just as the holiday shopping season begins. It’s going to be an interesting winter for the tablet market. If there even is such a thing.
Now I see why my TouchPad demo unit never arrived. It’s unfortunate, really. I wanted the TouchPad to do well.