HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
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HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
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Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#2No, here's the lesson:
You can't sell a me-too tablet for the same price as the "real deal" ipad. People with $499 get ipads, not Galaxies.
You can either be much better or much cheaper. If you've got neither then you've got nothing. Apple is damn hard to beat on the better front, but if you show up with a capacitive multi-touch screen and you're at least half as good, but cost a lot less, you get sales. Lots of them.
Nobody can do that yet, but now we know what happens if they figure it out.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#3I've seen this written by a couple of different people over the weekend and it terrifies me every time. It's as if the author is completely divorced from reality.
As if "just price it lower" is some kind of poignant observation that no one thought of. As if it were easy to compete on price when Apple is buying parts in quantities you couldn't hope to match.
I'm always critical of people who make the argument that "free is the right price" for services but at least that is somewhat valid. Suggesting companies like Samsung target "$200 or less" is just crazy.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#4I think if HP has to flood the market with zero margin devices to make a dent it did the right thing by getting out of that business once and for all. It has better ways of occupying its resources.
EDIT: I fully realize the TouchPad costs more to make than $99 and the margin during the fire sale was less than zero. If anything it probably barely covers the cost of supporting the units and software through the support period given some fixed costs of support and the small number of units. That only drives home the point further that HP was right to just shut it down and get out.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#5Pricing them at $99 with the current inventory amounts to almost a hundred million dollars in what would have been losses to establish a beachhead.
Except, there is no beachhead to be established here. Its not like the kindle because HP has no track record in selling media like Amazon, and its not like the iPad because they don't have the vertical integration like apple does, and its not like android because they don't have the massive advertising business to 'justify it.'
The only way to justify this was to stick it out long term and build a profitable product, and they chose not to. I still think it may have been a big mistake, but $99 bucks isn't a strategy.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#6I think if HP has to flood the market with zero margin devices to make a dent it did the right thing by getting out of that business once and for all. It has better ways of occupying its resources. EDIT: I fully realize the TouchPad costs more to make than $99 and the margin during the fire sale was less than zero. If anything it probably barely covers the cost of supporting the units and software through the support…
I don't think the firesale was even zero margin; I think it was just cheaper than dealing with the shipping/storage/recycling costs. I expect the hardware cost more to make than they were sold at.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#7I've seen this written by a couple of different people over the weekend and it terrifies me every time. It's as if the author is completely divorced from reality. As if "just price it lower" is some kind of poignant observation that no one thought of. As if it were easy to compete on price when Apple is buying parts in quantities you couldn't hope to match. I'm always critical of people who make the argument that "fr…
Not crazy at all. The rule in hardware is price it to sell, regardless of profit margins or lack thereof. Then — if you get sales traction — figure out how to drive your costs down through economies of scale, substitution of cheaper components, design simplification, etc.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#8$99 is obviously just 'get rid of them' pricing, but there's a big gap between $499 and $99.
$249 or $299 pricing may have lost HP a bit per sale, but during that time, they could have really established a bigger presence without using much advertising budget.
Is it better to have lose $30 per device and sell a million - which then gives you a million + devices in the marketplace with a unified hardware/software platform - or try to sell at $499, then spend $x on nebulous marketing/advertising which may or may not make a dent?
HP would have sold far more at $299 than $499. They'd have still had a business - even if they wanted to sell it to get out of hardware. It would have been worth far more than a massively damaged brand due to a total abandonment of a market that you've been public touting for more than a year.
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#9The Nook Color is an example of a $250 tablet with less functionality than an iPad. Though Barnes and Noble has not released any official sales figures, it is easily outselling all other tablets except for the iPad. This seems supportive of the authors assertions and I'm surprised this information was not included in the post.
http://www.businesswire.com/news/home/20110708005437/en/Medi...
And the following is the first 2 paragraphs of a Q1 digitimes report:
Barnes & Noble already takes delivery of 3 million Nook Color e-book readers, say sources
Yenting Chen, Taipei; Steve Shen, DIGITIMES [Monday 28 March 2011]
Barnes & Noble has taken delivery of close to three million Nook Color e-book readers from its production partner, according to an estimate by sources from the Nook Color supply chain.
With a clear differentiation to Apple's iPads in display size, targeted market and pricing, the Nook Color, priced at US$249, has actually taken up over 50% of the iPad-like market in the North America market, indicated the sources.
EDIT: inserted (accidentally omitted) word
Re: HP's $99 TouchPad Fire Sale Can Teach Everybody A Lesson
#10I think if HP has to flood the market with zero margin devices to make a dent it did the right thing by getting out of that business once and for all. It has better ways of occupying its resources. EDIT: I fully realize the TouchPad costs more to make than $99 and the margin during the fire sale was less than zero. If anything it probably barely covers the cost of supporting the units and software through the support…
I don't think the firesale was even zero margin; I think it was just cheaper than dealing with the shipping/storage/recycling costs. I expect the hardware cost more to make than they were sold at.
You're right: According to iSuppli, the BOM for the hardware was about $300.
http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...