Interesting view in Forbes on the impact of 99$ HP TouchPad on the iPad future: “Why The Undead $99 TouchPad Might Portend The iPad’s Doom”
However I can not really share the analysis and conclusion. Clearly the 99$ sale of the remaining TouchPads, which HP announced it will discontinue, was a big hit, but following all analysis in the Internet the price was well below the production costs. And while it is legitimate to sell products below costs, I assume you need to have a plan to recover those losses / costs at a later stage and this is where I miss to see HP’s end-game for this. (Except obviously to clear stock of a discontinued product)
So what is their plan to capitalize on the sold TouchPads? The only one I could see at the moment is getting market share for WebOS, which they announced to continue and potentially license to other HW manufacturers. But then they would also need to create the large application and developer community, something that HP has up to now also struggled to achieve. And they would need to price the HW sales losses into the licensing price, which again appears unconvincing considering the free of charge alternative by Google.
Following the experience the best way probably to put a dent into Apple’s table business would be to away tablets for free:
– Google could be doing it with Motorola acquisition and cross-financing it with their ad revenue, but I’m not sure what their Android partners would think of it.
– Amazon might be doing it. Reclaiming part of the costs through content sales.
But where is the secondary business model for HP, which could refinance this for a longer term ?
Additionally the analysis is probably also underestimating the excellent cost position – and 25% margin in HW business is clearly a sign of it – Apple has achieved in their tablet business. Apple’s products might be still high price, but they are not high cost as also the MacBook Airs prove. All the competitors with Intel-based ultra-portable Windows notebooks have still to achieve a similar cost and price position.
At the moment it looks more like HP is enjoying the ride as long as it goes (and maybe try to impress future buyers as part of the PC deal to which they could bundle the tablet HW) and clear the stock.