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Even veteran retailers like Staples and Best Buy can't sell the TouchPad.  (Source: Palm Infocenter)

Only approximately 600 people took advantage of Woot.com's fire-sale-priced TouchPad.

HP is letting its rebranded Palm unit return to its old ways -- overproducing and yielding new handsets at a snail's pace.  (Source: Business Blog)
Fire sale TouchPad prices are the latest sign that HP's troubled acquisition is continuing its old ways

Want further proof that Hewlett-Packard, Comp.'s (HPQ) webOS is going nowhere fast?  Look at Woot.com, veteran daily deals site, who tried its hand at selling HP's sole webOS tablet, the TouchPad.  Even the mighty Woot.com could only sell 612 of the infernal devices.

I. TouchPad Sales Get Ugly

When HP launched the TouchPad in July, it proposed a price of $500 USD for the 16 GB model and $600 USD for the 32 GB model, roughly in line with the pricing of Apple, Inc.'s (AAPLiPad 2 and top of the line Android tablets.

The problem was that the TouchPad wasn't exactly top-of-the-line when it came to its user interface, according to reviewers.  Most reviews complained of slow performance and a clunky OS layout.  The problem isn't so much that webOS 3 is terribly bad.  It's that it's not as good as the competition.  In that regard the OS appear to be exactly cut out for the world of tablets.  

HP is still laboring at trying to save the TouchPad -- and its bottom line.  It slashed $100 off the price of both models.  And it recently issued a major update full of tweaks to try to salvage the experience.  HP says the updated will make your TouchPad "even more like nothing else."

But that's done little to help sales.  Retail giant Staples, Inc. (SPLS) recently slashed another $50 off the price of the TouchPad, offering it for a bargain bin $350 USD and later lowered the price even further to $300.  

Rival retailer Best Buy Comp., Inc. (BBY) may soon find itself in a similar lot.  According to a report in All Things Digital, internal reports reveal that Best Buy ordered a stock of 270,000 TouchPads, hoping the devices would be a hit.  It's only been able to sell a reported 25,000 units in the month since -- less than ten percent of its inventory.

An All Things D source at Best Buy confirms that reports of the retailer being buried under the surplus stock are "consistent with what I've seen", and even goes as far as to say the sales figures might be "charitable".  They say that the actual numbers could be quite a bit lower as a substantial number of customers have sought refunds on the devices.

II. HP MUST Act Now

Plunging prices have hit TouchPad sales with a double whammy.  Not only are many customers not interested in the TouchPad, but many of those who are actually interested are now opting to wait in hopes of further price drops.  States Rich Doherty, head of the Envisioneering Group, an analysis firm, "After the initial surge of interest after the July release, all those price promotions have caused consumers interested in buying a TouchPad to pause because they think the price is going to fall further."

But you don't need a high-paid analyst to tell you that.  

Soaring back stocks?  Plunging prices?  Where have we seen this before?  We can tell you where we've seen this before -- the Palm Pre in its dogged final days of fire sales before Palm, Inc.'s own fire-sale-priced acquisition by HP.  Since the start of the smartphone era Palm has suffered from unrealistic expectations and a "shoot first, ask questions later" mentality when it comes to production.  That, coupled with a snail slow pace of handset releases, ultimately doomed Palm as an independent company.  Now HP's webOS devices unit is looking awfully familiar -- a lot like the Palm of old.

Of course HP does have one advantage over Palm, in that it's the top U.S. PC retailer.  HP may be able to push sales of deeply discounted TouchPads during the back to school shopping season by offering deep discounts to those who also buy an applicable HP personal computer.

Sales dilemmas aside, we feel that its high time for HP to commit to some serious intervention and soul-searching when it comes to its rebranded Palm unit.  HP has thus far seemed publicly nonchalant about its struggling unit.  In other words, HP is content to let Palm be Palm.  But in doing so, it's letting its unit sink even deeper in the mire.

At this point the webOS unit has less than 1 percent of the tablet market and less than 1 percent of the smartphone market.  It's beyond a failure in sales.  

On the other hand, it does have a decent operating system, which, with the proper TLC and imagination could be reborn into something bleeding edge (like Microsoft Corp.'s (MSFT) ambitious Windows Phone 7).

In short, the time for the world's biggest PC company to act is now.  It cannot tolerate the ex-Palm unit to return to its old ways.  Because if it does, it might as well kiss the lucrative tablet and smartphone market -- and it's goal of future sales leadership -- goodbye.



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RE: MAKE THE TABLET GENERIC!!!
By robinthakur on 8/22/2011 8:15:55 AM , Rating: 2
I think your statement about the iPad dumbing things down reveals that people only used Windows because they felt that they had to. For now people see the iPad as the new PC, in point of fact it virtually defines the phrase personal computer.

Everything changed after the iPhone was released in 2007 and that along with the iPodTouch and iPad define what people see as an interface which is both all around them and easy to use. Next to that, Windows with its pointer based system and pens etc seems as antiquated as trackball and command line to regular people (when I say regular people, I mean people that use computers to accomplish things rather then those that merely play with them) It is really only needed for certain business tasks. For everything else, a finger works fine. Unfortunately, an OS needs to be built from the ground up for touch control, not have it bolted on after the fact.

As you say, PC tablets never sold well. This is either a failure of product or marketing. I remember there was a big fanfare when they first came out but the devices themselves were not very good for either business or the end consumer due to bulky, ugly hardware, poor battery life, and lacking hardware specs. If a big company like MS and all of the other OEM's can't even work out who to target and sell to over a period of 10 years, why would a consumer want to spend more than they would on a regular laptop? For me they were always cool aspirational devices (like the Dell XT) but I would never spend my own money on them. Other than Photoshop and Onenote, not sure what else I would do with them.

Far from the fluffy language used in parts of Apple's marketing, they are actually very clear on what use-cases the iPads are good for. You can browse the web, do email, view photo albums, you can use Garage Band, Pages, Numbers and all the other apps on a device which is cheap compared to a laptop and feels like it came from the future. This is what the consumer wants, and it sells. Business also is made up of people who use the iPad, iphones etc. and they are now filtering through to business far more than some people here would like to imagine. Nobody should be surprised about that, there is no mystery. Microsoft for all their original invention of the Tablet PC model did not keep the momentum going and lacked the vision to take the idea forward.

It was obvious within moments of me using the first iPhone that this was the way touch screen devices should have always been approached. Whilst on paper, the difference between an older HTC resistive touch screen and this new capacative digitiser should have been slight, it made the difference between a usable device and one which felt unresponsive and unreliable. The software was the USP however. That it has taken MS 4 years to almost catch up is a testament both to their inability to know what the consumer wants and for Balmers propensity to do smack talk rather than doing his job, which is to provide strategic leadership. Considering all the money they spend on R&D, one would think they would come up with ideas that would compete with Apple if not blow them out of the water, but they don't seem to be able to bring that to market successfully, other than maybe Kinect.


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