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Ask HN: Why is HP making more Touchpads to sell them at a loss ?

7 points by webrakadabra ↗ HN
HP had put a firesale to clear their stocks, and thats understandably fair(sale)! But why in this world they want to make more touchpads and sell them at loss (presumably at the same firesale prices)?

8 comments

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j_col
In my opinion, they are creating a market for webOS with the Touchpad as a loss leader. What they intend to do with that market is anyone's guess, but if you think about it: it will be much easier for them to get other hardware makers and software vendors involved when they have hundreds of thousands of users out there, many of which will grow to like webOS and will want to buy new hardware when their Touchpads need replacing in 1-2 years time, as well as making app purchases which have already shot up according to the webOS devs I follow on Twitter.

Of course a few Touchpad owners will be technical enough to install some form of Android on their tablets and there are already efforts under way, but in my opinion these will be the minority. The majority will stick with webOS, giving HP a valuable user base to build on.

webrakadabra
But here is my dilemma - Now that the only webOS tablet is selling for so less, won't people get used to this pricing and take it for granted that webOS tablets are damn affordable ? Even if the user base is won, I think it is going to be relatively a small size compared to that of Apple's or Google's.

Will hardware companies risk this negative pricing to make webOS tablets ? Software companies already have two big platforms in iOS and Android. ok, Blackberry too albeit a very small platform. Will they want to do another platform ?

j_col
It's a good point, and I've thought about that one too and the only thing I know for certain out of all of this is that people won't pay 500 bucks for a tablet computer unless it has an Apple logo on the front. The new Amazon 7" tab for example is rumoured to come in around 250, so it might sell quite well.

Speaking as just one webOS end user, if someone brings out a Touchpad 2 or equivalent in 18 months time, I'd happily pay 300 for it.

webrakadabra
oh yeah, I have seen my friends who would kill for Apple logo'd products. I like good Apples but can't really subscribe to idea of buying them at so much premium.

Let alone $250, I will be really frustrated to buy a tablet(Apples included) for more than $99 since The Firesale.

Disclaimer: I had bought two iphones in the past at full price. But not anymore !

brk
I will bet most 'common' people aren't even aware of the HP Touchpad, or the pricing. This will have no measurable impact on the overall tablet market.

The iPad is popular because it works great. It is not $500 because it has an Apple logo. It is $500 because it delivers great value and utility to people.

No other tablet maker or OS has yet proven to be as well designed as the iPad. Perhaps if a truly viable competitor comes along, the iPad prices may drop.

rdp
HP publicly announced they were killing the Touchpad after only a few months on the market. What is the likelihood that they developed an entirely new business strategy around webOS within 3-4 weeks after announcing the death of their flagship webOS product? HP is clearing the channel at fire sale prices, and I think new Touchpads are being made solely is to satisfy commitments to manufacturing partners. Once these inventories are exhausted, Touchpad is dead.
brk
One theory is that they already have the components to build them purchased. They may also have a contract with the factory to build 'X' number of devices, in order to have achieved a discounter labor rate, etc.

So, HP has a sunk cost in components in stock, and an obligation to the factory to build more units (or else pay a penalty).

Is it then cheaper or even slightly more profitable for them to build more tablets rather than try to dispose of the parts and deal with broken contract issues.

(my theory)

webrakadabra
ok you are saying that HP wants to loose less when loosing is inevitable. If I go by this theory, this obligation to components and contract may better be reasonably big.

Because small numbers in neither component levels nor contract obligations, won’t make a huge loss. I assume that small numbers in either of the above two factors are negligible relative to the original firesale losses.

But If it is a reasonably big number, then I am waiting to buy my touchpad.