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HP

One Final Manufacturing Run of Touchpads 221

Posted by Unknown Lamer from the this-is-too-painful-to-watch dept.
Accepted on the first attempt, lochnessie writes "HP has announced a limited manufacturing run of Touchpads to be available in the next few weeks. The HP employee making the announcement posted 'I think it's safe to say we were pleasantly surprised by the response' to their massively discounted, sold-at-a-huge-loss tablet."
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One Final Manufacturing Run of Touchpads More

One Final Manufacturing Run of Touchpads

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  • So first come first serve, should be "interesting".
    • Well, I put my name on HP's email list for when they got more in...hoping they give those of us on the list the first chance at the new ones....I could go for a $99 toy to futz around with....something fun to do on the weekend.

      • HP has a new notice up on their website intimating that they received a huge number of sign-ups for that notice. I'm not sure the small number of Touchpads still in the pipeline will be enough to satisfy all of that interest. I'd keep a close eye on your email over the next few weeks and be ready to jump right on that.

        Fingers crossed though. I too would really like to get my paws on one.

  • If they're selling for around $200 on ebay, maybe HP should try to sell them for $250 or $300, whatever their break-even point is (not counting R&D), just to keep their name out there. It seems like Marketing 101: if there's demand for your product, keep making it.

    Of course, I was against their pulling out of the PC and handheld markets. I was also against their buying Compaq to begin with. The more players out there, the more competition and innovation. With fewer players, we'll see a reduction

    • Re:Maybe they should just make them (Score:5, Insightful)

      by nine-times ( 778537 ) <nine.times@gmail.com> on Tuesday August 30, 2011 @03:40PM (#37257176) Homepage

      if there's demand for your product, keep making it.

      I'm not sure that works if the reason for the demand is that you're selling it at a huge loss without any business model to recoup the loss.

      • Nah, it'll be okay, they'll just make it back in VOLUME!

      • Comment removed (Score:5, Insightful)

        by account_deleted ( 4530225 ) on Tuesday August 30, 2011 @05:19PM (#37258258)
        Comment removed based on user account deletion

        • Or sell them for $300, make a small loss from each one, build a large installed base, and charge 30% for apps sold through your store. If people spend an average of $60 on apps, you've broken even. If they spend more, you've made a profit. Even if they spend less on the first generation, you encourage app development by having a large base of potential customers. And the cost of the components only has to drop by a few percent before you're making a profit anyway.

          Oh, and if you think putting Android

        • Re: (Score:2)

          by shmlco ( 594907 )

          "... but the one that hits those price points with decent specs WILL take a HUGE chunk of the market, mark my words."

          That price point AND decent specs? Want a pony to go with?

          People pull numbers out of their... ah... the air, and then bitch because manufacturers don't hit their imaginary price points. It's like saying a Ferrari that cost $10,000 with decent specs WILL take a HUGE chunk of the market, mark my words!!!

          That said, Amazon will do just that. Unfortunately, they're the only ones who can, since an

          • Comment removed (Score:5, Insightful)

            by account_deleted ( 4530225 ) on Wednesday August 31, 2011 @12:00AM (#37261454)
            Comment removed based on user account deletion

            • Re:Maybe they should just make them (Score:4, Informative)

              by shmlco ( 594907 ) on Wednesday August 31, 2011 @02:44AM (#37262130) Homepage

              First, look at the iSuppli BOM...

              http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carries-$318-Bill-of-Materials.aspx [isuppli.com]

              The display is $69. The Touch Screen is $63. $45 for 32GB NAND. $26 for DRAM. $20 for the dual-core processor. $12 for power management. $8 for sensors. $5.50 for WiFi. $30 for the case, connectors, PCB, etc.. $20 for the battery. $5 for box and contents. $10 for manufacturing.

              You're right in that there's not one single component that would kill those numbers... IT"S ALL OF THEM ADDED UP TOGETHER.

              Your wonderful set of suggestions dropped the BOM down to $273. How many more corners and features are you going to have to cut to hit your numbers? And once you do, is the POS even worth buying? A plastic 5" tablet with an anemic processor, half the RAM needed to do anything, and no storage? Right. Ask Dell how well the Streak 5 sold...

              (Oh yeah, add SD slot hardware and a controller chip to your BOM.)

              And THAT'S only the BOM. Then it has to be shipped. Distributed. There's R&D, engineering, and development costs. Admin. Marketing. Patents, licensing, and legal. Recouping $1.2 billion in acquisition costs. Costs. Costs, and more costs. And that's before it's even in a store and the retailer marks it up yet again by another 10%. Then there are returns, damaged goods, shrinkage, and demo units.

              30% profit? In your dreams. People look at the BOM and COGS and think, "Damn. They're making out like bandits."

              Get a clue. To make ANY money selling a tablet at $149, your BOM would have to be less than $50. Good luck hitting that price point.

    • Re: (Score:2)

      by Kenja ( 541830 )
      Odds are their break even point is much closer to $500 once you factor in support etc.

    • Re:Maybe they should just make them (Score:4, Interesting)

      by tgd ( 2822 ) on Tuesday August 30, 2011 @03:44PM (#37257226)

      There is demand because of the discount, not because of the value.

      At an 80%+ discount and $100, its in the impulse buy range for a lot of people, no matter if it ends up being a useful device or not. Hell, I've got a drawer full of discounted crap in that price range.

      I wouldn't assume a tablet at $250 or $300 would sell even remotely like $100... and if it was always $100, it also wouldn't have sold like that.

      • At an 80%+ discount and $100, its in the impulse buy range for a lot of people...

        I hear ya....Hell, I've pissed away $100+ easily on a good night of drinking out and about town. I'd lay that down on a $99 tablet...especially with news that the cyanogen folks were working to get it to install on these units.

        $99 is definitely impulse buy for many people....

    • Marketing 101 maybe but Marketing 510 no.

      Selling your product at a loss or break even isn't going to help. Because it will mark your brand name as the cheap product. At the low price there will be more buyers yes. However you cant make up a loss by selling in bulk.

      • Sell it at $300 and a tiny loss, continue to improve the software (for the love of god how much behind the scenes logging do you really need!?) and as soon as possible put out a hardware revision that drops you below $250 for the bill of materials plus assembly. Killing production is killing the entire platform and, having recently gotten my $99 touchpad, I'd say the platform (with a half dozen patches and tweaks) is actually very strong.

        • This would interfere with the suicide of the company...

        • Re: (Score:2)

          by shmlco ( 594907 )

          First, there's a whole team of engineers that need to eat. They build the stuff, design it, and write the software for it. The platform has to grow for people to buy into it. Look, for example, at the huge numbers of people waiting to buy Android 2.1 tablets...

          Second, there's the minor matter of recouping 1.2 BILLION dollars.

          Third, the only good way for a seller that's not doing huge numbers to get the BOM down to $250 is to wait for the screen and processor and so on to come down, which happens when better

          • What they SHOULD do is move WebOS into their Enterprise division, and work on special-purpose designs and custom solutions for various industries, and forget trying to out-Apple Apple.

            I'm rather surprised they didn't go this route. HP has a reasonably large presence in the medical field, high end monitoring systems and such. It would be fairly easy to gin up a couple of apps to view / manipulate / input data to the systems. These medical systems sell for over 100K a pop so a couple of $300 extras is nothing. Get people hooked on the idea of medical tablets, bring the tablet into the mainstream of electronic medical records (EHR).

            One of the big hangups in EHRs (as far as clinicians ar

    • Yes, but you're reasons seem more consumer oriented ("reduction in quality and an increase in prices"). One thing Steve Jobs set out in Apple when he took it over is to only make things that turn a profit (that's why he cut a ton of lines).

      The Japanese had a mentality of a "market share uber alles", and that was fine for taking over the American steel industry when they didn't care about the low margin rebar market or the subcompact cars in the 60s/70s. And it worked there as they worked themselves up th

      • Re: (Score:2)

        by shmlco ( 594907 )

        "...that's why he cut a ton of lines..."

        He did. But there are also plenty of iPod nanos out there in multiple colors and RAM sizes. And shuffles. And iPods. And Touch's. There's a white and a black iPhone, on two different systems (GSM/CDMA), each with 8/16/32 GB of RAM.

        People carry the simplification metaphor too far. Steve is not afraid of SKUs.

    • Re: (Score:2)

      by Fjandr ( 66656 )

      It would seem like Marketing 101, but it's not.

      Case in point, Logitech's Trackman series of trackballs. They only sell a single cordless variety now, but the Marble FX+ and the successor now sell used for what they used to sell new for. The FX+ has been discontinued for nearly 10 years and they still sell for the new price when they come up on eBay. New ones sell for double what they did when they were still being manufactured, if you can actually find one still in the box.

    • Re: (Score:2)

      by tibit ( 1762298 )

      I've looked for completed sales on eBay, and it seems that more than a 100 of them sold for $400 and up! Almost a thousand sold for $200 and up. And they still keep on selling between $200 and $300. It seems that HP just doesn't know how to do marketing.

  • Return of Dotcom accounting? (Score:3)

    by kervin ( 64171 ) on Tuesday August 30, 2011 @03:34PM (#37257112)

    Is this the return of Dotcom accounting?
    Sell at a loss, make up in volume?

    • If I had to guess... (Score:5, Informative)

      by KingSkippus ( 799657 ) on Tuesday August 30, 2011 @03:39PM (#37257168) Homepage Journal

      If I had to guess, it's probably because they already have orders in with their suppliers that they can't cancel and contractual obligations to fulfill. The costs of making this final run are probably sunk costs, and they figured they might as well go ahead and make those last $99 sales before everything is shut down and done.

    • Maybe something like that. I got the feeling they are trying to expand the user base to increase the value of the WebOS division when they sell it off. I don't know how any increase in value would make up for the money they are losing on the hardware.

    • Re: (Score:2)

      by Machtyn ( 759119 )
      Perhaps they can go the console gaming route: Sell at a loss to gain critical mass, sell development packages. Or, perhaps, create their own app store and skim profits from the sales of 3rd party software. Maybe these will be enough to make up total costs, maybe not (I'm no accountant), but it seems to work for others out there.

    • Is this the return of Dotcom accounting? Sell at a loss, make up in volume?

      Almost. I think it's the model Toyota used to create a market for hybrids before the battery technology was affordable: sell at a loss to build a base of loyal supporters who can recognize a superior product. Though in some ways, this is the opposite; rather than heralding the future, this is more akin to exploring the past (which is to say, what could have been). I'd definitely call this a stunt; why else would they make another run at something they're selling at a loss anyway? Why was the HP Pre 3 de

  • Profit!!!

  • 'I think it's safe to say we were pleasantly surprised by the response' to their massively discounted, sold-at-a-huge-loss tablet."

    All I have to say is: really? Wow, and to think I was surprised the HP tablet failed... actually, I wasn't but oh well.

    On the other hand, the fact that they are doing another manufacturing run indicates that the first was probably profitable even at the reduced price (why the hell else would you make more?), meaning HP probably made up in quantity for the lowered price. Also, maybe tablet makers should consider lowering their prices. Just, you know, a thought.

    • Yeah, this doesn't make sense. If they are not making profit on the $99 sales... why make more (the way it reads is that they are making more...) Liquidating parts? Tax write off?

      • Re: (Score:2)

        by Kenja ( 541830 )
        Because they have parts they already paid for that would otherwise be destroyed or put into storage? Getting back 20 cents on the dollar is better then nothing.

      • Re: (Score:2)

        by Andy Dodd ( 701 )

        Probably liquidating parts they already have in stock or may not already have in stock but are contractually obligated to buy (e.g. long-lead items they already ordered to support production.)

  • Sometimes it pays to invest (Score:4, Interesting)

    by a_nonamiss ( 743253 ) on Tuesday August 30, 2011 @03:38PM (#37257156)
    How much money did Microsoft burn trying to get the XBOX off the ground? Sometimes it pays to make a little investment in the future. If HP had sold these even at $150/$200 or maybe $200/$250, sure they would have lost money on each unit, but how long until it overtook iPad? Tablets are going to be selling for $100 in 5 years anyway, and HP could have sold a LOT of them at a loss to make it into the market. Once the established leader had been displaced, they could have made tons of money on licensing, app store purchases, etc. Maybe even eventually on hardware. I think they were looking for a home-run, and when they didn't get it, they just gave up all hope. Bad move on HP's part.
    • Game consoles are a little different as companies are willing to take a loss on hardware due to making up a percentage on each game sold on the console.
      I don't believe HP or any of these other tablet makes make enough from their App stores to keep them afloat.

    • Re: (Score:2)

      by blair1q ( 305137 )

      But did MS ever EOL the XBOX and cut it to the price of the packaging just to boost market share?

      And then make more of them, even though the cost of the parts is 3X the price they're asking?

      HP is one fucked-up company. The only way this makes sense is if this "one more run" is to avoid an inventory sale of parts they'd have to sell by the pound as they wouldn't fit anything else. They're going to have to charge the revenue against the writeoff.

    • Microsoft had already lost $4B on the XBox by 2005, and lost another $1B over the poor quality of the XBox 360 ('red ring of death' etc.) just in 2007. Checkout the Xbox 360 [wikipedia.org] wiki page. They may never recoup that investment. Suggesting HP should follow their example is not such a great idea.

    • But did Xbox ever turn a profit for MS yet?

      Just breaking even for HP isn't good enough, when you figure warranty servicing and R&D going forward.

      Just having market share in something doesn't mean much if it cannot be leveraged into profit.

    • "Once the established leader has been displaced"

      Apple has already sold 29 million iPads, and analysts are predicting that will likely at least double through the end of the year. So if you take a conservative number like 50 million, and you lose $100 on each sale, you just sunk 5 billion before making any money. And that is a stationary target, and iPad sales are certainly not stationary.

      No problem, HP has like 13 billion in cash. Oh wait, they just spent most of it buying a software company, perhaps ev

    • That's something that's called "predatory pricing". There are laws against it in the United States... not that they ever get enforced.

      Of course there's a huge gap between what HP did ("If we build it they will come") and sinking a fortune into predatory pricing to kill off competitors. HP's execs apparently didn't have a clue where they should have gone within that range.

    • How much money did Microsoft burn trying to get the XBOX off the ground?

      Total running expenditures are in excess of 5 billion dollars. On the upside they made a couple million dollars each of the last few quarters and they might just pay back that investment in 50-100 years depending on how frequently they want to spend $2+ billion to sell a new console version.

      In all seriousness, the XBox has been a colossal money sink for MS and likely will never ever return the money invested. On the upside they used th

  • So, HP is making another batch of Touchpads, after already announcing that they were being discontinued. The 'overwhelming demand' is based on the $99 'firesale' price, which leads us to assume they were being sold at a significant loss. A few possible conclusions:

    1.) HP was marking up their hardware costs by an astronomical percentage. If they are putting more touchpads into production, and planning on selling them at or near the closeout price, that must mean they still see room for profit to be made (

  • Nobody else has a 9.7 in screen, so they can't sell the surplus screens to some other tablet manufacturer, They probably thought of dumping them, but they are probably chemically hazardous so that would cost them money. (These days you can't get away with dumping PCB's (printed circuit boards) into a landfill...

  • I'm beginning to think this whole HP TouchPad sell-off is just a marketing ploy to get people to group-think and buy up every available unit as the price grows, due to demand, beyond the original value of the product, where people then get into an availability craze, and thus HP swamps the populous with an extreme number of TouchPads with users who want apps for their WebOS, and so HP expands their app store and makes billions.

  • I actually really wanted one, strictly for web browsing. I don't care if it won't have apps or support in the future, though the projects going around to put Android on them will certainly add value to something I only wanted to a browser anyway.

    • I actually really wanted one, strictly for web browsing. I don't care if it won't have apps or support in the future, though the projects going around to put Android on them will certainly add value to something I only wanted to a browser anyway.

      Mod up. This is precisely what the manufacturers are missing, including Apple. A tablet that does web and NOTHING ELSE would still compete very well against a tablet that cooks you breakfast. And this web surfing tablet could replace the computers of millions of people that never do anything else but www and webmail. It is insane that competitors allowed Apple to be the only light tablet on the market for so long... I can't believe that Microsoft didn't at least rush something out the door that was half-bak

  • If they're making more in order to keep selling them at the promotion price, then it sounds as though they're still making a profit at that price. Why would they stop?

    (Unless this whole thing was just a marketing ploy to stimulate demand.)

    • I doubt they're making a decent profit on them. I think this has more to do with various stock parts they have to make them with and also good faith for those who wanted one but missed the sale.

      To be honest I'm quite upset they no longer have the "notify me" link on the product page anymore. I was considering putting myself on said list but since this was merely to get rid of stock I "knew" they weren't going to have more. Now I'll have to be even more diligent because those who requested notifications are

  • I've been under the layman's impression that electronics are priced on the low-volume for X profits side as opposed to the high-volume for X profits side of the curve. Does this indicate that maybe that isn't such a good economic model, or is this a fluke case were demand will quickly evaporate?

  • At that price point, it's worth the risk to see if I can find good use cases for myself. Experimenting with this technology at $400 is a non-starter.

  • Anyone got an idea how I can preorder one? I can't find them anywhere, but for $99 it would be great for my 3yr old to watch spongebob on and maybe play some games.

  • So the supposedly sell them at a big loss, yet they decided to make more of them? Either they're crazy, or those things cost way less than $99 to make in volume, and since they don't have to support them at all, their overheads on those sales are negligible.

    Perhaps HP has just found that there's big market for cheap, no-support, hackable computing devices? Sometimes opportunity may be staring you in the eyes and you can miss it!

    • By making more until their parts inventory runs out, they can get rid of their otherwise useless parts inventory for only a 70% loss instead of a 95% loss. The cost of the parts to HP was likely more than half of the initial $300 price for the tablet. At the same time it makes a bunch of new customers happy who are now much more likely to buy other products on which HP actually makes money. These new customers are disproportionately of the type that has a great deal of influence over tech buying decisions b

  • Price point (Score:4, Informative)

    by Dynamoo ( 527749 ) on Tuesday August 30, 2011 @04:55PM (#37257980) Homepage
    I got my 32GB one today, at just £115 ($190) it was a steal.

    If you want to see what sort of price the market has set, go onto eBay. The 16GB version is selling.. and I mean with real bidders.. at about £200 ($325), with the 32GB version coming in at around £230 ($370). So this is perhaps the sort of price point they should have been selling at.

    • The 16GB version is selling... at about £200 ($325), with the 32GB version coming in at around £230 ($370). So this is perhaps the sort of price point they should have been selling at.

      Except that the parts cost alone is higher than those price points. Unfortunately you can't compete with apple at a loss. Even if you only lose $100 a machine it will cost you $2 billion just to catch up with Apple's current sales numbers. And if Apple decides to price match you you are screwed in all sorts of unpleasant ways.

    • Re: (Score:2)

      by dgatwood ( 11270 )

      Prices are only high on eBay because there are a handful of people who really want one of these things, and there's a very limited supply available. I doubt they would sell at $325 on the open market. It's too close to the used iPad price for first-generation devices of similar size, and the iPad actually has a large and vibrant developer community producing apps for it....

    • Re: (Score:2)

      by Locutus ( 9039 )
      they _should_ have known from the netbook craze that $250 - $350 is the sweet spot for these kinds of devices. Like others have said, generating revenue from the device after the sale from cuts off the app market and advertising should be the direction forward. But HP is still thinking old-school.

      LoB

  • HP could keep Touchpads flying off shelves even at a more reasonable (to them) price point. All they need to do is take a note from Apple and include a bootcamp-like installable option for Android. Mac sales went through the roof when people realized they could always fall back to Windows if they didn't like OS X and at least they would have still have a rad computer. HP should use the same strategy to attract users to the Touchpad and get them using and hooked on WebOS.

    That's why I didn't buy a touchpad at

  • Inmates running asylum? (Score:3)

    by unitron ( 5733 ) on Tuesday August 30, 2011 @05:01PM (#37258056) Homepage Journal

    First you announce the discontinuation of the product you just brought out, so abruptly that the ads for them continue to run for another day or two, and institute a huge price cut (which means anyone who bought one at full price the week before will be an active HP hater for the rest of their lives), then, as people rush to buy them, you tell Best Buy to pull all their stock and ship it back, then you announce that you're going to build more of them.

    Do they now have 3 or 4 different CEOs who take turns running the company every few days without ever talking to each other?

    • Re:Inmates running asylum? (Score:4, Informative)

      by rahvin112 ( 446269 ) on Tuesday August 30, 2011 @06:02PM (#37258738)

      If you had actually followed the news you would be aware that HP offered to refund the price difference to anyone that bought a touchpad after a certain date (IIRC it was July 15th, a month and half before the price cut if not the very day they went on sale). You could do it through the retailer or directly through HP. It was a very fair offer IMO.

  • Anyone going to get an iPad is just going to get one.

    But lets say you had been thinking about ANY alternative tablet. Why would you get one now, when there's a possibility in a few months you can get a $500 tablet for $99?

    I'd almost think HP had been taken over by Apple, but I'm pretty sure they are just basically insane. It make no sense for HP to spend one dime more when they loose a LOT of money per tablet sold.

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