We’re living in crazy times, that’s for sure. Less than two weeks ago, HP announced it was going to quit making webOS devices. To get rid of existing stock, HP drastically cut the price of the TouchPad to a mere $99 – and this has resulted in a massive run on the device. Lines formed everywhere, and the device is now completely sold out. So, HP has just announced it is going to… Build an additional limited run of TouchPads.
Sales of the TouchPad have been stellar – the combination of top-notch hardware and the insanely low price has ensured lines outside of stores that carry the device. It’s so crazy, that the TouchPad is en route to become the world’s second-best selling tablet (far behind the iPad, of course).
This has prompted HP to announce its intent to produce another run of TouchPads. HP made the announcement on its blog. “Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand,” writes HP’s Mark Budgell, “We don’t know exactly when these units will be available or how many we’ll get, and we can’t promise we’ll have enough for everyone. We do know that it will be at least a few weeks before you can purchase.”
This is just crazy. I’m trying to come with an analogues technology product which was also canned, rose in popularity, and then brought back to manufacturing to meet demand. I’m sure it happens with popular product which get canned – but unpopular products? I’ll be glad for any examples you may have.
All in all, this just illustrates that there is a market for cheap tablets – it’s just that the current crop of cheap tablets are silly devices with resistive touch screens; not even close to the kind of quality the TouchPad delivers. It also makes you wonder if Apotheker ever had any plans to continue the webOS business; you’d think such a large company employs market experts who know about pricing and such.
For those of you who missed the $99 fire sale – you may get another shop in a few weeks. And you know what? Even if webOS will no longer be supported – Android is on the way.
Seriously, not hard to believe PSG is the least profitable group at HP.
A few years back, I had a sales rep at our company come to me for authorization to book a large deal below established margin thresholds. I took a look at the deal, pointed out that the pricing the customer was demanding was $10K below our cost so we would be losing money, and she replied that was ok, she needed the revenue for her quota. Boggles the mind.
So, I’m sure people are going to be shaking their heads and wondering how HP plans to make a profit off “volume losses”…
The current speculation is that they have many spare parts and/or manufacturing contracts that they’re already committed to – and rather than throw these away (and possibly pay a huge fee in hazmat recycling costs, etc.), it makes more financial sense to use the remaining stock to assemble/build more units and give people a chance at having one to recoup some expense that has already been realized anyway.
It also gives webos app devs a few more devices to potentially eek some revenue from
Edit: Damn, missed!
Edited 2011-08-30 21:34 UTC