I've started to wonder when Apple is going to offer hardware subscriptions. I guess that's not much different than leases, but I don't think consumers ever lease hardware. It's surprising that they don't because the phone market is so driven by just the monthly payment amount.
Apple CFO Peter Oppenheimer stated that "We run the App Store just a little over breakeven" during a shareholder meeting earlier this year. An analyst from Citibank estimated that the App Store would account for $2B in yearly revenue for 2011. Compare that to the $24.67B revenue that Apple had in Q2 of 2011 alone, and that puts the App Store at approximately 2% of Apple's yearly gross revenue. Also, a Trefis analysis of $AAPL puts iTunes and iOS Apps at a combined 4.3% share of the stock's perceived value. While the App Store does provide the ecosystem that allows the iPhone and iPad to thrive, it does not act as a significant revenue source for Apple.
I don't see how that invalidates my point in anyway, yes Apple doesn't make a significant proportion of their revenues from their app store, but that doesn't mean that $2 billion dollars of revenue is insignificant in absolute terms.
It is when you are trying to recoup losses form selling hardware below cost. I think App Store revenue last quarter was 1.4 billion. Take out content providers share and you are left with 420 million. This is for the entire store mind you.
HP's fire sale will cost them something like 100 million and it is not as popular as the iPad. Not even Apple could pull something like this off.
This is a classic example of the problem of selling things below cost. It always "works". People always love you for it - it's basic manners: "don't look a gift horse in the mouth."
But not only does it teach you nothing about the actual market, it actively misleads you. Even if you try to consciously remember that your popularity is illusory, that you bought that popularity - even if, like the triumphant Roman generals of old, you employ a servant to stand behind you at all times whispering: "Remember your company is mortal and these happy people are all paid shills" - psychology is psychology, and smiles are contagious, and you are going to fool yourself, and you are going to make bad decisions under the influence.
And then the paid-for popularity will warp your product, as you begin to build features based on feedback from the existing users, the ones who did not pay a fair price. These people aren't your market. But that doesn't mean you can just ignore them either, because they are in contact with your actual market, so you have to keep them happy...
That's the point of Groupons: to buy first customer visits with below-cost products, instead of throwing money away in newspaper ads.
He's not saying selling below cost is a discredited tactic. He's saying it's a discredited strategy. He's not saying selling below cost means there's no market. He's saying it doesn't tell you what the market is.
If you're selling cupcakes, you need to go to Groupon knowing your cupcakes are good enough, and that there's sufficient demand, to clear in the market. Then it makes sense to spend resources to promote your business so that people are aware of your cupcakes.
Groupon might be a pretty good illustration of the perils of confusing awareness marketing with demand generation.
I'm sure selling something for 1/3 the cost to make it is attractive to buyers... But of course, HP can't afford such a thing indefinitely. It was merely an attempt to get rid of this embarrassment as quickly as possible.
And it worked, too... I couldn't get my hands on one.
Why not? This is traditionally the video game hardware model where you sell the hardware at a lost and make up for it on video game sales.
Some smart company out there, if done right can easily undermine the Apple dominance by lowering the cost of hardware and trying to make up for it in app sales. You would have to own the entire vertical system like Apple, which now there are two -- RIM and Google with their Motorola acquisition. Google has the best chance, they are sitting on a pile cash and can easily subsidized the losses for their hardware partners like Samsung and HTC. However, I think RIM is the most ideal as they are dealing with a chicken-and-egg type scenario with developers and lack of apps. They are desperate to stay relevant in the market, so why not do something crazy.
That requires an exclusive system where only licensed developers can create games/apps for the device, and the device creator gets money from the game/app developers.
Without that, there's no way to recoup the money lost on the equipment sale.
And none of those involve losing 2/3 of the cost of the device.
And yet, now they have this sizable user base waiting to be monetized. It's like selling razors for cheap and making real profit in selling the blades. If only HP had "blades" to sell on top of the touch pad.
They do... they have an official stand thingy that incorporates wireless charging (I think it's called the touchstone). It's a nice accessory and one that I wish was available for my iPad.
An update pushed out yesterday was prepared entirely before HP made their big announcement, though. Will there be any WebOS updates for the TouchPad now that HP has discontinued it and is exiting that space entirely? Seems highly doubtful.
at my work the devs have ordered like 2-3 each and 6 for other employees, so £90 for an android tablet is brilliant, the ubuntu port is news to me though, but all the better
I know the reasons, but the price reduction lead to a lot of people just buying those in batches.
I'd have prefered a price cut to 50% so that not everyone and his mother buys 12 'just in case' to have a real chance to be part of the deal. Bad luck :(
Check http://slickdeals.net. Occasionally someone will find a store with more stock. It's rumored that HP will have more in about a month, and/or we'll see these again around Black Friday (post-Thanksgiving sales in the U.S.).
@BrynaAtHP: "K getting of Twitter for a bit for dins dins. For the record: New inventory coming is from a warehouse, not being manufactured. #justsayin"
Several $99 tabs have emerged in India. I am yet to get my hands on them but I suspect Indian companies have simply imported some cheap Chinese low quality stuff and branded as their own.
All of the cheap tablets are using resistive touchscreens. After 5 minutes of using one you'll want to throw it out the window. They're impossible to stay calibrated, they can't do more than one-point touch, and if you're lucky you'll remember where the stylus is for the first few days before it's gone forever.
Funny; I used a Palm III then a Psion 5 for several years in the past. Both were resistive touch screens, both were accurate, I didn't lose either stylus. In fact, I found the resistive screen more accurate than my current capacitative on my phone, because I quickly realised I could use the end of a fingernail as a very precise makeshift stylus - which is obviously out with capacitative.
Is there a specific reason these are that much worse than 12-13 year old devices?
My hypothesis is that the larger the screen, the harder it is to keep the resistance within tolerance for the price.
Don't get me wrong, there are large-format resistive screens that work well. You can see them on a lot of commercial and industrial products (ask any waiter or waitress working with a Micros system).
But I think what is being put on the $99 tablets are very cheap films with loose tolerances and cheap knockoff controller chips. You can literally feel the film floating off the cover lens on some of these tablets. I tried one chinese Android tablet, SuperPad III, and you could feel the film moving.
Whether or not this helps HP, this is probably going to turn out to be huge for the future of tablets. Millions of people who would not have bought one for years will very soon take tablets for granted.
The publication of the API allowed for clean room engineering of BIOS clones, but the publication of the IBM BIOS source was a defensive move to taint the pool of engineers that would be trying to write clones.
The publication of the source code was not a defensive move. It predated the clones - it was a time in which it was customary to include schematics with manuals (I still have an "XT Technical Reference" at home which includes full schematics and commented bios source code.
Sure. Apple did it too. I still have the original ][+ Monitor ROM listing somewhere. Apple listed theirs to aid hobbyists. Did IBM do the same? I would think to IBM it had more to do with copyright than aiding hackers.
They didn't do it to aid hobbyists or hackers per se. It was just standard practice at the time. Televisions, radio receivers, amplifiers, washing machines -- almost everything came with schematics.
Also, at the time, IBM did not consider the PC a "serious" business - they just did the minimum possible to not lose out on a possible new market. The original PC (PC-g) and even the PC-XT were basically not much more than Intel's reference 8086 / 8088 design with not a lot of modifications -- I don't think anyone at the time (1982) thought there was much IP there anyway.
I was - sad. I'm a WebOS fanboy, watched live streams of the HP revelations in the beginning of the year? What? 'Available in Summer?'
The price reduction was amazing, but the servers didn't hold out. And - and this is where I'm really unhappy - lots of people I heard about used this as a business chance. 'Hey, let's order six of these devices and sell them for profit on eBay'..
Bah. I own a Palm Pre Plus, really looked forward to buy Pre 3 & Touchpad. After waiting and waiting and waiting I gave in and upgraded my phone with an Android device. The price reduction would've been a nice chance to grab at least one current WebOS device (and look into tablet use cases), but 'entrepeneurs' like those above ruined it. Really, I spent all in all ~10~ hours of manual refreshing and checking if I can get one. Meh.
It has been disappointing. I spent more time than I probably should have trying (and failing) to snag one. All of the scalpers will probably saturate the market though and when people realize that it is now a dead ecosystem, the aftermarket price might be acceptable to you.
Looks like eBay and craigslist are stabilizing the 16 gb version around 250-300, but there will probably be a drift downward as time wears on and this story falls off the news. What I'd hate is to be pricing Chromebooks at $429 right now.
55 comments
[ 4.4 ms ] story [ 110 ms ] threadhttp://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...
HP's fire sale will cost them something like 100 million and it is not as popular as the iPad. Not even Apple could pull something like this off.
But not only does it teach you nothing about the actual market, it actively misleads you. Even if you try to consciously remember that your popularity is illusory, that you bought that popularity - even if, like the triumphant Roman generals of old, you employ a servant to stand behind you at all times whispering: "Remember your company is mortal and these happy people are all paid shills" - psychology is psychology, and smiles are contagious, and you are going to fool yourself, and you are going to make bad decisions under the influence.
And then the paid-for popularity will warp your product, as you begin to build features based on feedback from the existing users, the ones who did not pay a fair price. These people aren't your market. But that doesn't mean you can just ignore them either, because they are in contact with your actual market, so you have to keep them happy...
He's not saying selling below cost is a discredited tactic. He's saying it's a discredited strategy. He's not saying selling below cost means there's no market. He's saying it doesn't tell you what the market is.
If you're selling cupcakes, you need to go to Groupon knowing your cupcakes are good enough, and that there's sufficient demand, to clear in the market. Then it makes sense to spend resources to promote your business so that people are aware of your cupcakes.
Groupon might be a pretty good illustration of the perils of confusing awareness marketing with demand generation.
And it worked, too... I couldn't get my hands on one.
Not 1/3 the cost, 1/3 the BOM. It does not include software, shipping, building and packaging costs, just buying the hardware parts.
Some smart company out there, if done right can easily undermine the Apple dominance by lowering the cost of hardware and trying to make up for it in app sales. You would have to own the entire vertical system like Apple, which now there are two -- RIM and Google with their Motorola acquisition. Google has the best chance, they are sitting on a pile cash and can easily subsidized the losses for their hardware partners like Samsung and HTC. However, I think RIM is the most ideal as they are dealing with a chicken-and-egg type scenario with developers and lack of apps. They are desperate to stay relevant in the market, so why not do something crazy.
Without that, there's no way to recoup the money lost on the equipment sale.
And none of those involve losing 2/3 of the cost of the device.
Tell your devs that I hate them, everywhere in the UK is now out of stock and we have only rumours to go on.
I know the reasons, but the price reduction lead to a lot of people just buying those in batches.
I'd have prefered a price cut to 50% so that not everyone and his mother buys 12 'just in case' to have a real chance to be part of the deal. Bad luck :(
Best Buy, which touched off the deep discount, is out of them: http://www.bestbuy.com/site/HP+-+TouchPad+Tablet+with+16GB+M... and the next cheapest results (for $200) are all ebay listings: http://www.google.com/search?q=hp+touchpad&tbm=shop&...
@BrynaAtHP: "K getting of Twitter for a bit for dins dins. For the record: New inventory coming is from a warehouse, not being manufactured. #justsayin"
https://twitter.com/#!/BrynaAtHP/status/105823537037717504
Is there a specific reason these are that much worse than 12-13 year old devices?
Don't get me wrong, there are large-format resistive screens that work well. You can see them on a lot of commercial and industrial products (ask any waiter or waitress working with a Micros system).
But I think what is being put on the $99 tablets are very cheap films with loose tolerances and cheap knockoff controller chips. You can literally feel the film floating off the cover lens on some of these tablets. I tried one chinese Android tablet, SuperPad III, and you could feel the film moving.
https://www.insight.com/search/ppp.web?materialId=FB356UT%23... https://www.insight.com/search/ppp.web?materialId=FB454UT%23...
Interesting history to compare with discussed in another thread Google's Java API "infringement".
Also, at the time, IBM did not consider the PC a "serious" business - they just did the minimum possible to not lose out on a possible new market. The original PC (PC-g) and even the PC-XT were basically not much more than Intel's reference 8086 / 8088 design with not a lot of modifications -- I don't think anyone at the time (1982) thought there was much IP there anyway.
The price reduction was amazing, but the servers didn't hold out. And - and this is where I'm really unhappy - lots of people I heard about used this as a business chance. 'Hey, let's order six of these devices and sell them for profit on eBay'..
Bah. I own a Palm Pre Plus, really looked forward to buy Pre 3 & Touchpad. After waiting and waiting and waiting I gave in and upgraded my phone with an Android device. The price reduction would've been a nice chance to grab at least one current WebOS device (and look into tablet use cases), but 'entrepeneurs' like those above ruined it. Really, I spent all in all ~10~ hours of manual refreshing and checking if I can get one. Meh.