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HP to produce one more batch of Touchpads

h20435.www2.hp.com

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Re: HP to produce one more batch of Touchpads

#21

Post by heydenberk »

heydenberk wrote: post #20
markstahler wrote: post #6

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?

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.

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.

Re: HP to produce one more batch of Touchpads

#22

Post by mikeknoop »

ridave wrote: post #15
mikeknoop wrote: post #3

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.

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.

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.

Re: HP to produce one more batch of Touchpads

#23

Post by ktsmith »

wmf wrote: post #18
martingordon wrote: post #14

Earlier quoted context omitted.

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!

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.

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.

Re: HP to produce one more batch of Touchpads

#24

Post by martingordon »

heydenberk wrote: post #20
markstahler wrote: post #6

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?

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.

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.

Re: HP to produce one more batch of Touchpads

#25

Post by terhechte »

mikeknoop wrote: post #3

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.

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)

Re: HP to produce one more batch of Touchpads

#26

Post by yumraj »

heydenberk wrote: post #20
markstahler wrote: post #6

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?

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.

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 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.

Re: HP to produce one more batch of Touchpads

#27

Post by untog »

martingordon wrote: post #10

Whoever made this decision should be fired. "We took a $100m loss on the first batch of TouchPads, what's a couple million more?"

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.

Re: HP to produce one more batch of Touchpads

#28

Post by Hyena »

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.

Re: HP to produce one more batch of Touchpads

#29

Post by corin_ »

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.

Re: HP to produce one more batch of Touchpads

#30

Post by ansy »

martingordon wrote: post #10

Whoever made this decision should be fired. "We took a $100m loss on the first batch of TouchPads, what's a couple million more?"

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.

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