8 ms·

HP to produce one more batch of Touchpads

• voxmatt 15y ago
  I've been wracking my brain on this one and have yet to come up with a theory that doesn't end in: that place is on fire. I think WebOS is wonderful, and wished HP had stuck to its guns, but this is just strange. It reeks of internal anarchy.
  • wavephorm 15y ago
    The HP saga is like watching an episode of "Intervention".
• mikeknoop 15y ago
  Did HP accidentally just find the best way to break into the tablet market? Sell hardware at a loss and make it up on software. Console makers have been doing it for some time now.
  • yumraj 15y ago
    I think you're onto something as that is the only theory that fits. Otherwise, why would they take more loss as I'm pretty sure this thing costs more than $99/$149 to make. Another, rather remote theory is, there is a buyer for WebOS, perhaps Samsung per some rumors, and that is funding this batch to get more devices in the market before it is able to bring its own device. But, it seems too far fetched.
  • escoz 15y ago
    Selling at a loss works when every game costs 50 dollars.. for 1/2 dollar apps, it's a much harder ladder. I hope that's the case, though, bcse I still love Palm, and would love to see WebOS succeed.
    • mgkimsal 15y ago
      Don't forget $99/year developer program. That's would offset quite a few app sales as well. I, along with many others, derided the $499 price point, and called it stupid. $99 is fantastic, but they've obviously decided against making it a long term viable business for them. Despite what many others said, I strongly believe these would have sold well at $249-$299, and could have enabled HP to make a play to be a strong outside third, and then possibly a second, in the tablet space.
  • martingordon 15y ago
    The analogy doesn't hold. Try to use a TouchPad without buying apps and you'll find that it works pretty well. Try to use a console without buying games. Hope you enjoy navigating menus!
    • wmf 15y ago
      Except the PS3, which is a pretty good Blu-ray/Netflix/DLNA player and probably had problems with low attach rate in the first few years.
      • ktsmith 15y ago
        I can't recall the last time I actually used the PS3 to play a game. It's probably been more than a year. We do use it every day however to watch Netflix or Hulu. It's used a couple times a week to stream content using DLNA and Twonky Server. That being said I'd replace it in a heartbeat due to the extremely loud fan, I've not done so to this point because I'm being cheap.
        • evilduck 15y ago
          The first generation PS3 is a noisy energy hog. I picked up an AppleTV 2nd gen for Netflix and streaming media because it runs silently at 6W, compared to the fat PS3's 170-200W. Depending on how much you watch, the AppleTV might pay for itself in energy savings alone in 12-18 months.
          • ktsmith 15y ago
            If the Apple TV wasn't stuck at 720p I would probably consider it. I have a friend currently doing a similar setup to what I have with the PS3 via a Logitech Revue and if that ends up working out well I will probably pick one up. The addition of Android 3.0 on the Revue also makes it a bit more of an appealing idea. While I won't save as much energy over the PS3, just the reduction in fan noise will likely be worth the $99.
            • 15y ago
  • ridave 15y ago
    No, probably not. Console games average price is $50 USD, what is an average tablet app cost -- $3.99? Even if they were selling millions of first party apps, it wouldn't recoup the amount of money they lost on the tablet + app development.
    • mikeknoop 15y ago
      I'm not sure what HP's app market looks like. Do they take 30%? Also if they can't directly monetize their hardware, this might be a strategy that Amazon (or Google if they ever make an in-house tablet) should look at since they both have large web platforms to extract life-time value of hardware owners.
  • terhechte 15y ago
    They don't make money on software right now. I guess they still have lots of spare parts for future batches around, or contracts with third party suppliers that require them to buy certain amounts of parts. So given the huge demand, they may simply want to make less of a loss (i.e. just trashing the spare parts may be more expensive)
  • jasontsui 15y ago
    To make a significant dent in the market, enough to attract developers in droves (good ones at that) would require a significant user base. Im not sure they can afford to lose $200-300 every time they sell one and expect to recoup it in the lifetime of the product. The life cycle of the PS3 and Xbox 360 have been extended for that very reason. How many iterations of discounted tablet devices would HP have to sell before they could demand profitable prices right off the bat? They certainly wouldnt make it back by selling $2 apps.
    • epscylonb 15y ago
      It amazes me how long this console generation seems to be lasting. The XBox360 was released in 2005, at this point you would have thought we would know details about its successor, yet we know virtually nothing. It is almost as if Sony and Microsoft have made an agreement to keep the current consoles going.
  • w33ble 15y ago
    Even without selling apps, building a huge customer base and finally attracting developers to write apps for the platform is hugely beneficial. If they have a large ecosystem with millions of users and thousands of apps, it'll be much easier for them to license the OS to other OEMs. Either may actually be their plan, but I suspect it was a plan made after the fact; otherwise they wouldn't have killed the Pre3 before the US launch.
    • mrtron 15y ago
      Why would OEMs license a dead OS over android? It would have to be a better ecosystem than android which I don't see happening after hp dropped it themselves.
      • w33ble 15y ago
        But HP hasn't dropped the OS, just the hardware. They still are invested in the software, they just don't want to make the hardware. At least that's what VP of Developer Relations has said. http://developer.palm.com/blog/2011/08/the-work-of-webos-continues/ http://developer.palm.com/blog/2011/08/the-work-of-webos-con...
        • daeken 15y ago
          If they really want the OS to keep going, then they were idiots not to partner with a hardware vendor and get new devices out the day they killed their own. Horrible move.
          • w33ble 15y ago
            Agreed. Their actions made no sense. I suspect management were planning to just throw it all away, but the WebOS Developers begged for a chance to make the software viable on more than just the desktop on their printers (printers?! seriously?!!). This is more or less backed up in the news about the announcements, in which nobody but the very upper management knew it was happening until all the tech blogs were reporting it. The explosion of sales from the reduced price was probably enough to buy the WebOS team some time. Just my speculation though. All around terrible, terrible decisions with regards to WebOS, the Touchpad and the Pre3. It's been really amazing to see just how badly HP keeps handling all this. I do hope it won't spell the end for WebOS though, as I honestly think it's a contender against iOS, which is something I don't personally think about Android.
  • patrickk 15y ago
    It appears Apple doesn't make money from apps, apparently they roughly break even from the app store with a 30% cut of apps: http://news.ycombinator.com/item?id=2649475 http://news.ycombinator.com/item?id=2649475 "...Peter Oppenheimer added, “We run the App Store just a little over breakeven,” implicitly making the case that the App Store was not a big profit generator for the company." http://www.macobserver.com/tmo/article/apple_app_store_runs_just_above_break_even/ http://www.macobserver.com/tmo/article/apple_app_store_runs_... If Apple can't make money from apps, do you think HP can do better? How viable would it be to sell hardware at a major discount and hope to recoup it from apps (as others here have noted)?
    • nkassis 15y ago
      I wonder why it's so expensive to run the thing? I mean, it should be pretty cheap to deliver small applications like that. Maybe the labor to check all the new apps?
      • throwaway32 15y ago
        i frankly wonder if there isnt some form of holywood accounting going on so their 30% cut can be "justified".
        • caf 15y ago
          As an example of how this could be done, the App Store business could be internally charged a large license fee for the use of the Apple brand.
        • rodh257 15y ago
          also to deter competitors from undercutting at hoping to make it up on apps (just as we are discussing about HP here). If they see that even Apple supposedly couldn't make a profit from its app store, they might be deterred.
      • jestar_jokin 15y ago
        Probably licensing for all the ridiculous patents (see: Lodsys et al)
  • eli 15y ago
    Sure, they'd only have to sell what? 500 apps per person?
• swombat 15y ago
  They'll make it up on volume, eh?
• markstahler 15y ago
  Why would they start another production run for a discontinued product sold at a loss? Am I missing something or will HP come out next week and say "Surprise! Here is a great new update for the Touchpad" and start selling them for $200?
  • hollerith 15y ago
    they've probably bought the parts or some such.
    • wmf 15y ago
      It's possible that HP could sell the parts alone for over $100. But if they view the parts as a sunk cost (worth $0), it's possible that assembling TouchPads and selling them for $100 is rational.
  • heydenberk 15y ago
    It may be that it's worthwhile to produce and sell them at $100-$150 given the sunk cost of their leftover unassembled bulk componentry.
    • heydenberk 15y ago
      This also assumes that their calculation of what's worthwhile includes less tangible stuff, like being seen as a company that is receiving and meeting a high demand for devices and growing in device market share.
    • martingordon 15y ago
      If that's the case, just make them and restock the HP web store. Don't come out and say you're doing another run out of charity to not leave their dear customers disappointed.
    • yumraj 15y ago
      Actually this is not as far fetched as it may seem. Here's a potential scenario, building on the above, HP may have entered into contracts with manufacturers for 'n' units. When they shut it down, they had only received 'm' units, where m < n. So, they would have had to cancel contracts and pay a penalty. Here, they see a rather unusual demand and must have made some calculation that making the original 'n' units and earning good will by doing that, per the original contracts is better (even at a loss) than breaking contract and paying the penalty at a loss of goodwill.
• sjs382 15y ago
  What are they thinking!? They are losing tons of cash on each unit and I can't believe that their app store is making up for it. That said though, I bought one and never thought I'd love it as much as I do. Maybe I'll be able to get a 2nd.
• martingordon 15y ago
  Whoever made this decision should be fired. "We took a $100m loss on the first batch of TouchPads, what's a couple million more?"
  • VladRussian 15y ago
    at the scale of HP's finances and bureaucracy it is just a drop in the bucket and any reasoning behind it isn't comprehensible by a single unit of human species.
  • untog 15y ago
    I doubt it works like that. I imagine that they have a load of parts already purchased, and probably some spare labour time. Supply chains don't just stop when you click your fingers.
  • ansy 15y ago
    I suspect this is just HP clearing out the supply chain of already purchased parts and units still at the factory. HP's cost is probably just a few dollars per unit to ship and possibly assemble them. I find it hard to believe anyone approved an entirely new order of parts at $300 BOM just to sell them for $99.
    • martingordon 15y ago
      You may be right, but if it's not an ops guy getting fired, then it should be a PR guy. I mean, look at this: "Before I share, let me first say thank you for enthusiasm for this product. Since we announced the price drop, the number of inquiries about the product and the speed at which it disappeared from inventory has been stunning. I think it’s safe to say we were pleasantly surprised by the response. Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand." They didn't decide to produce one last run to meet unfulfilled demand, they're producing one last run to get rid of unused parts. Just put the new devices up on the store and send out a tweet; don't spin this like some grand gesture to please your adoring fans.
• heydenberk 15y ago
  HP should do what they should've done a while ago: promise to make WebOS well-supported and well-stocked with apps, and bring the TouchPad into production at $200 or $250 to still undercut the competition but not bleed cash so profusely. I'd buy into it as a user and a developer.
  • w33ble 15y ago
    Given that the tablets are still fetching that price on eBay right now, over a week after the firesale started, I think that's exactly the price they need to hit. The tablet simply had no demand at $500+, but at $250, people are willing to buy in. $250 for what is essentially a handy, high-tech toy is about right. Plus, HP wouldn't be senselessly bleeding so much cash. Ebay sales show up people are clearly willing to drop $200-250 on the things, there's really no reason they should have or should keep selling them at $100-150.
    • cpeterso 15y ago
      Based on some TouchPad teardowns, manufacturing a TouchPad costs about $318 in parts plus $10 in labor. If HP sold TouchPads for $250, they would "only" lose $68. http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...
      • w33ble 15y ago
        Right, but recouping a $68-118 loss is more feasible than recouping a $168-218 loss. There's a decent markup on their accessories and the potential for app sales. If it drives enough demand and gets companies licensing their OS and selling hardware running it, they have a chance to make it work, and it's probably money better spent than any advertising they do. Look at it this way; before the fire sale, how often did you see stories written about the Touchpad and how many people did you know that bought or wanted to buy one? And how many stories and interested consumers did you see after the fire sale? Food for thought. Time will tell if they can pull it off though.
• dman 15y ago
  Here in NYC there are many stores which advertise 'Going out of business sale' throughout the year to target innocent tourists. Wonder if someone in HP marketing thought that this would be the best way to jumpstart an initial pool of users.
• toblender 15y ago
  Looks to me like HP is fattening up WebOS for a resell.
  • marcf 15y ago
    I share your thoughts. It makes a lot of sense from this perspective as WebOS could be worth a billion or more so what is a loss of a few million on ensuring a good sale.
    • w33ble 15y ago
      Same. Not sure they want the resale though, I think they rather get some manufacturers on board, license the OS and sell support. Seems to jive better with their current stated focus of software.
• Hyena 15y ago
  Just a possibility: HP is a large company with deep pockets, it can likely afford to sell TouchPads at a loss for quite a while. That would give them time to work out bugs, recoup some in apps and find a less costly manufacturing process (or let time do that work for them). If all they lose on it is $100 million a year, it might be a worthwhile investment in positioning.
  • jasontsui 15y ago
    Unfortunately with the acquisition of Autonomy, their pockets arent so deep anymore. They spent about 80% of their cash on the deal, leaving them with not much money to push devices like the Touchpad at a loss.
• corin_ 15y ago
  While selling at a loss to make profit on software doesn't look feasible in this market, here's an alternative suggestion, though I'm not sure if this is feasible either - just more likely than the first option. Sell loads at a loss, I mean really loads. Announce that the platform isn't dead after all. Use the fact that so many people have the devices to bring in app developers, make it a more desirable platform. Then, when their future devices sell for a profit, people will actually want them.
  • deleted 15y ago
    [deleted]
  • ansy 15y ago
    This has been forwarded before and I agree with detractors to this kind of thinking. First, HP is a big company that has much better ways to turn money into more money than making something people are unwilling to buy at a reasonable price. Second, growing the webOS ecosystem in this way founds it on false principles. Everything that seems to work when you're selling for a loss, might not work at all when you're selling for a profit. Just imagine if HP started off selling a $99 TouchPad, blowing out the doors, piling up billions in debt, and then found out everyone wanted an iPad when the price went up to $500. Oops. The best modern example of this I think is Groupon. Groupon has been growing like crazy by taking a huge loss. For every dollar it takes, two dollars go out the door in the form of advertising and client acquisition. Groupon is already of questionable value to some businesses. When the time comes for Groupon to fix its profitability the value proposition may be lost entirely.
    • teyc 15y ago
      I might note that Microsoft lost money on every XBox initially. But gaming was a different business.
      • danilocampos 15y ago
        A business where they can extract enormous licensing fees from content sold at a much higher price point.
• kingkawn 15y ago
  If labor and shipping per unit costs $50 (totally made up), then $99 ain't lookin so bad
  • ai_mateu 15y ago
    No need to make up wild guesses. iSuppli says the TouchPad bill of materials is $318. http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr... Even if you think they're off by 10%, $99 would never work.
    • mikeash 15y ago
      Right, but that's parts. If the parts are already bought, then only labor and shipping has to be paid on top.
      • kingkawn 15y ago
        yes this is what I meant. Obviously they're not going to make money on this fire sale, just hope to reduce their losses a tad and get some good PR (if they care about consumer PR anymore).
• ars 15y ago
  It's pretty clear to me that they underpriced it. They should lower the price to the point where the clear out inventory. But not lower. Considering how much unmet demand there is at 99$ it's obvious that have not even come close to optimizing the price/demand curve.
  • wanorris 15y ago
    The current lowest Buy it Now price at Ebay is $230-240. That means that's the price at which people will buy them -- but not so much that people will snap them up instantly, or the price you could see them available at would by higher. That suggests that they could probably move units pretty well at $199 -- it's below another psychological barrier from $230, and definitely still seems extremely affordable compared with the iPad or even the Asus Transformer. I'm not sure if they had a reason for marking the units down to $99 (e.g. "we need to get these things off the books as soon as humanly possible to get a clean slate") or if they just made a huge mistake.
• sliverstorm 15y ago
  The moment my eyes fell on the title of this article, my face cracked into a wry grin. Here we go...
• ddw 15y ago
  Forget about HP for a minute. Are there any devs out there that are considering creating a WebOS app because of this new influx of users? I'm genuinely interested...perhaps it would be worth it.
  • bradly 15y ago
    I have a developer device and have been following the threads in the WebOS developer forums and developers are pretty frustrated. Lots of people have purchased developer devices in the past 1-2 months and paid much more than the current fire sale prices. Also, registered developers are having to hunt to find retailers with existing $99 TouchPads, instead of HP giving WebOS developers early access to buying a device. If developers can't even get a development device when they want one, there isn't much hope for a diverse App Store
  • raganwald 15y ago
    Ok, I’ll pretend to be a VC. So you make a WebOS game/app. What kind of users do you expect to have? A whole bunch of cheapos who bought the tablet because it was $99. And how much do you think those people will pay for your app? Next question. Word of mouth. If those people like your app, they’ll tell friends. Will those friends have WebOS tablets? Let’s talk about the lifetime value of your code base. How long can we expect to make sales of your app? After we have saturated the market of existing Touchpads, will there ever be another piece of hardware running WebOS to sell to new customers who might buy your app? ===== Right now, I’d say this is a cherry-picking exercise. If you can port an existing app to WebOS and make money on a short-term basis over and above your porting costs, fine. Otherwise... Android and iOS are the two front-runners with Windows-Phone-whatchamacallit a distant third. IMHO.
    • w33ble 15y ago
      You're right, but I don't think OP is alone in thinking they way he does. Creating an app in pure HTML/CSS/JS and having it actaully run quickly is an interesting idea, and one that makes WebOS unique. The problem before was that there was almost nobody using the OS, but that's changed a bit now. Is it worth doing? Time will tell, but if you can bang out something quickly and not spend a lot of time/money getting it done, it might be worth a shot now.
• knotty66 15y ago
  The offer they mention: We are grateful for your patience and loyalty and to show our gratitude, we are offering you an exclusive one-time opportunity to save an additional amount on all of our products, valid through the end of the day tomorrow, Wednesday, August 31, 2011. You'll save 25% off all printers, ink, HP accessories, and PCs starting at or above $599. Not bad, if there's something specific you want.
• Tichy 15y ago
  I find this really annoying. I already wasted too much time trying to get one in the first round. Now I am supposed to waste time again? I actually considered setting up a web service for companies doing such a thing. I think the proper way would be to create a lottery where everybody could register in peace and there would be a couple of lucky winners. A similar thing happened with sparkfun electronics when they offered shopping up to 100$ (or something) for free - except it was impossible to get the order form to load, resulting in lots of wasted time. In the end I tend to be angry at the company for wasting my time. So companies, if you want to be generous, at least do it in the right way.
  • dangrossman 15y ago
    Woot.com has a "woot off" every few weeks, and one of the items that goes on sale at a random time during the day is a "bag of crap". For $8, you're promised they'll send you 3 leftover products from their warehouse. Some people have gotten really expensive products, like large LCD TVs and laptop computers, so everyone's willing to give it a try for $8. Every few weeks, without fail, before and after Amazon acquired the company, the site goes down as a hundred thousand people refresh the page trying to get the order form to load when that item is for sale. It's very frustrating and there are thousands of posts in their forums every time it happens from people that were there and tried to buy but couldn't get the order form to load before it sold out. A lottery would be better.
    • kinofcain 15y ago
      Woot knows exactly what they're doing. They lose money on every bag of crap, the fact that the site goes down adds to the fun. They could rent more servers for the day (or hour) that the BOC is available for sale, but why lose even more money? They're selling out of them in seconds, and they're driving insane amounts of traffic to their site for the entire day as people hit refresh on a leakfrog looking for the BOC. That said, they have taken steps to make it a little more randomized, but only because people figured out how to game the system, and most people getting BOCs were running scripts to do it.
• abbottry 15y ago
  When the announced this, I told my friends: They will drop the price, and every person that owns an iPad will buy one, they might lose their ass on the hardware, but what happens when they release a really nice app store and they have a zillion people now with their product in hand? I know it sounds far fetched, but.. its working, no? All they need now is the app store (is it already created?)
• ammmir 15y ago
  sometimes you have to lose money to make money. maybe they're trying to capture the long tail of ad/apps revenue? it's a very risky move nonetheless.
  • georgemcbay 15y ago
    I think the first part of your post is correct, but I think it has less to do with ad/apps revenue, and more to do with engendering good will toward the WebOS brand to keep the resell value of the IP high. The Touchpad sale thus far has tarnished the reputations of a few third party resellers who mishandled inventory management during the firesale, see: http://www.amazon.com/gp/help/seller/at-a-glance.html?ie=UTF8&seller=A33Y0YQUZ2NYD5 http://www.amazon.com/gp/help/seller/at-a-glance.html?ie=UTF... (note 30 day negative percentage) http://www.resellerratings.com/store/Onsale http://www.resellerratings.com/store/Onsale http://www.resellerratings.com/store/Datavis http://www.resellerratings.com/store/Datavis By making more units HP comes across as the 'good guy' here towards the (perhaps bargain-minded) early adopters and gives people an increased positive impression of the WebOS brand and I think they are hoping that'll help them get back something closer to what they paid for Palm when they attempt to resell it all (which I think they will do, though obviously this is just speculation on my part).
• lionhearted 15y ago
  Tangential: I think HP's stock might be selling for less than the company's liquidation value at this point, depending on what you think of their patents. That's ignoring the fact that they also have some profitable high margin businesses. Sure, they're doing some boneheaded stuff lately, but I couldn't resist buying some. Buying $1 for 88 cents is usually a good move. I sold some TIPS bonds to buy shares. Disclaimer: Obviously I just bought some of the stock. I'm not sure if they're selling for below their liquidation price. Check the financials yourself and do your own research. Etc, etc.
  • mcnees287 15y ago
    Dump the TIPS man.
    • lionhearted 15y ago
      > Dump the TIPS man. I had some USD, didn't see any good buys, and wanted to stay liquid in USD. I figured inflation was definitely coming, so even if interest rates rose (unlikely anyways, but the only real risk) it'd likely be cancelled by the inflation premium. The bonds appreciated around 7% in four months, so it worked out okay.
      • pinko 15y ago
        The big problem with TIPS is that the government gooses the CPI formula to understate inflation, so they're really providing an (inflation - n%) return, not an (inflation + n%) return. That being said, I also own a small amount of them.
  • epscylonb 15y ago
    I would rather buy bitcoins.
• brackin 15y ago
  They'll also make a loss with this shipment even though they won't sell them at $99 again. I think this is just to build more Web OS customers so they can open source, licence or sell Web OS and say "we have this many customers".
  • jdavid 15y ago
    they bought palm for $1.8billion and packaged up a few hundred million in a few product launches. If they want to sell palm at a profit or break even, it might be really important to add 1-5 million users even if there is a $100 loss per device.
• dharmatech 15y ago
  Can you also make one more batch of HP48's?
• MONDAYC 15y ago
  IT WAS SAID THAT ALL WHO SIGNED UP WOULD GET AN EMAIL TODAY AND THATS NOT TRUE.I CALLED AN SPOKE WITH A PERSON AND GAVE MY INFORMATION BUT DID NOT RECIEVE AN ALERT TODAY.
  • josefresco 15y ago
    Did you yell at them on the phone? FYI that is why you got downvoted here. Caps lock is frowned upon and considered yelling in many online communities.
• diegogomes 15y ago
  seriously?
• mahrain 15y ago
  Now HP is not just selling a platform, they're selling a platform with an installed base, developer support, enthusiasts and demonstrated demand. This makes their business a lot more interesting for potential buyers!