If labor and shipping per unit costs $50 (totally made up), then $99 ain't lookin so bad
HP to produce one more batch of Touchpads
31–40 of 128 posts
Re: HP to produce one more batch of Touchpads
#32While 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. The…
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Re: HP to produce one more batch of Touchpads
#33Whoever 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.
You may be right, but if it's not an ops guy getting fired, then it should be a PR guy. I mean, look at this:
"Before I share, let me first say thank you for enthusiasm for this product. Since we announced the price drop, the number of inquiries about the product and the speed at which it disappeared from inventory has been stunning. I think it’s safe to say we were pleasantly surprised by the response.
Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand."
They didn't decide to produce one last run to meet unfulfilled demand, they're producing one last run to get rid of unused parts. Just put the new devices up on the store and send out a tweet; don't spin this like some grand gesture to please your adoring fans.
Re: HP to produce one more batch of Touchpads
#34Looks to me like HP is fattening up WebOS for a resell.
I share your thoughts. It makes a lot of sense from this perspective as WebOS could be worth a billion or more so what is a loss of a few million on ensuring a good sale.
Re: HP to produce one more batch of Touchpads
#35Did 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.
To make a significant dent in the market, enough to attract developers in droves (good ones at that) would require a significant user base. Im not sure they can afford to lose $200-300 every time they sell one and expect to recoup it in the lifetime of the product. The life cycle of the PS3 and Xbox 360 have been extended for that very reason. How many iterations of discounted tablet devices would HP have to sell before they could demand profitable prices right off the bat? They certainly wouldnt make it back by selling $2 apps.
Re: HP to produce one more batch of Touchpads
#36Earlier quoted context omitted.
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.
You may be right, but if it's not an ops guy getting fired, then it should be a PR guy. I mean, look at this: "Before I share, let me first say thank you for enthusiasm for this product. Since we announced the price drop, the number of inquiries about the product and the speed at which it disappeared from inventory has been stunning. I think it’s safe to say we were pleasantly surprised by the response. Despite annou…
You're expecting a PR person not to spin it like some grand gesture? Have you ever heard any company say anything to the effect of, "well, we already paid for a bunch of parts, so we might as well?"
Re: HP to produce one more batch of Touchpads
#37Just 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.
Unfortunately with the acquisition of Autonomy, their pockets arent so deep anymore. They spent about 80% of their cash on the deal, leaving them with not much money to push devices like the Touchpad at a loss.
Re: HP to produce one more batch of Touchpads
#38While 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. The…
This has been forwarded before and I agree with detractors to this kind of thinking.
First, HP is a big company that has much better ways to turn money into more money than making something people are unwilling to buy at a reasonable price.
Second, growing the webOS ecosystem in this way founds it on false principles. Everything that seems to work when you're selling for a loss, might not work at all when you're selling for a profit. Just imagine if HP started off selling a $99 TouchPad, blowing out the doors, piling up billions in debt, and then found out everyone wanted an iPad when the price went up to $500. Oops.
The best modern example of this I think is Groupon. Groupon has been growing like crazy by taking a huge loss. For every dollar it takes, two dollars go out the door in the form of advertising and client acquisition.
Groupon is already of questionable value to some businesses. When the time comes for Groupon to fix its profitability the value proposition may be lost entirely.
Re: HP to produce one more batch of Touchpads
#39While 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. The…
Being able to sell a $500 product for $200 says nothing about whether anyone would buy version 2 or 3 when the price goes back up to $500.
Re: HP to produce one more batch of Touchpads
#40It's pretty clear to me that they underpriced it.
They should lower the price to the point where the clear out inventory. But not lower.
Considering how much unmet demand there is at 99$ it's obvious that have not even come close to optimizing the price/demand curve.