3 ms·

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 hi

by 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.
  - georgemcbay 15y ago
    I agree that this firesale is a valuable lesson in pricing, and HP clearly cut the price by more than they needed to to achieve their goal of unloading existing inventory, but there are more factors at play here than price alone. I'd bet that if HP had just lowered the price to $250 they would have sold far less units than are now selling on ebay for $250. The $99 price point set off a feeding frenzy on this sale, and once that frenzy started people who were trying to buy the unit for $99 and failing (due to all the retailers overselling stock and then cancelling orders) were able to rationalize themselves progressively higher until they were okay with the $250 price. I'm not convinced there would have been nearly as big an uptick if this started out with a price drop to $250. Certainly sales would have jumped, but I don't think it would have been nearly as drastic as what actually happened.
    - cpeterso 15y ago
      Perhaps HP should covertly sell the new TouchPads through eBay for $250. :)
    - w33ble 15y ago
      Yeah, you're probably right here. At $200-250 though, they would still be priced lower than any big brand names making tablets, regardless of OS. That alone would have sparked demand. Would it have been as explosive as it was? No, but they also wouldn't have lost as much money and might have avoided the potential doom to the platform. Consider this as well: http://www.zdnet.com/blog/hardware/hp-single-handedly-destroys-non-ipad-tablet-market/14340 http://www.zdnet.com/blog/hardware/hp-single-handedly-destro... HP has set the bar pretty low for tablet pricing. All these new Touchpad owners now have $99 in their head, and when it comes time to upgrade, they will probably walk away from the more expensive options. Personally, I don't think there is a tablet market, just an iPad market, and a big part of that has been price. Only Apple is Apple, and nobody else can demand that kind of money for what is essentially a toy and get away with it on the scale they can, for various reasons. Had HP set the bar at $200-250, they could have made the sales they were hoping to make, lost less money and still potentially make money on future, cheaper to produce hardware; or at least left that door open for another company to license their OS and do so. Nobody can make money at $99 without some huge profit margins from something else, and I don't think the tablet market has that something else (yet). Now, a lot of tablet consumers have that $99 price in their head, and it's going to be a hard sell getting them to spend more in the future.

by w33ble 15y ago

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.
- georgemcbay 15y ago
  I agree that this firesale is a valuable lesson in pricing, and HP clearly cut the price by more than they needed to to achieve their goal of unloading existing inventory, but there are more factors at play here than price alone. I'd bet that if HP had just lowered the price to $250 they would have sold far less units than are now selling on ebay for $250. The $99 price point set off a feeding frenzy on this sale, and once that frenzy started people who were trying to buy the unit for $99 and failing (due to all the retailers overselling stock and then cancelling orders) were able to rationalize themselves progressively higher until they were okay with the $250 price. I'm not convinced there would have been nearly as big an uptick if this started out with a price drop to $250. Certainly sales would have jumped, but I don't think it would have been nearly as drastic as what actually happened.
  - cpeterso 15y ago
    Perhaps HP should covertly sell the new TouchPads through eBay for $250. :)
  - w33ble 15y ago
    Yeah, you're probably right here. At $200-250 though, they would still be priced lower than any big brand names making tablets, regardless of OS. That alone would have sparked demand. Would it have been as explosive as it was? No, but they also wouldn't have lost as much money and might have avoided the potential doom to the platform. Consider this as well: http://www.zdnet.com/blog/hardware/hp-single-handedly-destroys-non-ipad-tablet-market/14340 http://www.zdnet.com/blog/hardware/hp-single-handedly-destro... HP has set the bar pretty low for tablet pricing. All these new Touchpad owners now have $99 in their head, and when it comes time to upgrade, they will probably walk away from the more expensive options. Personally, I don't think there is a tablet market, just an iPad market, and a big part of that has been price. Only Apple is Apple, and nobody else can demand that kind of money for what is essentially a toy and get away with it on the scale they can, for various reasons. Had HP set the bar at $200-250, they could have made the sales they were hoping to make, lost less money and still potentially make money on future, cheaper to produce hardware; or at least left that door open for another company to license their OS and do so. Nobody can make money at $99 without some huge profit margins from something else, and I don't think the tablet market has that something else (yet). Now, a lot of tablet consumers have that $99 price in their head, and it's going to be a hard sell getting them to spend more in the future.