Is the HP TouchPad Untouchable?
Aug 17, 2011 12:00 PM PT
Battered by repeated price cuts and reportedly sluggish sales, it looks as if the HP TouchPad tablet is struggling in the market less than two months after it first hit retail shelves in July.
The Best Buy retail chain sold only 25,000 of the 270,000 units it ordered, AllThingsD has reported.
Best Buy apparently refuses to pay for its unsold inventory of TouchPads and demands that HP take them back. HP is reportedly sending a top executive to Best Buy headquarters in Minnesota to discuss the issue.
"Unfortunately, the TouchPad is a me-too product," Carl Howe, director of anywhere consumer research at the Yankee Group, told TechNewsWorld. "It's almost as good as the iPad and was initially offered at the same price, and I think that hurt it in trying to get a beachhead with consumers."
The TouchPad was also hurt by a lack of apps, Howe said.
Best Buy spokesperson Paula Baldwin declined comment. HP's Palm unit did not respond to requests for comment by press time.
The Short History of the TouchPad
HP announced the TouchPad in February. In July, HP announced that it would launch the TouchPad 4G on AT&T's mobile broadband network.
Several updates for the TouchPad followed, and TouchPad sales were reportedly sluggish at major retailers, including Best Buy, Wal-Mart and others.
Only 612 units of the 16GB TouchPad tablet have been sold on Woot so far, for example.
HP cut TouchPad prices three times in August, first offering a $50 rebate, then knocking $100 off the price for a limited time, and later stating that the $100 price cut was permanent, according to reports.
"That $100 price cut wasn't enough," Laura DiDio, principal at ITIC, told TechNewsWorld. "If you want to take on Apple, you must have the apps, and you must have an introductory price of $299."
HP's introductory pricing was $500 for the 16GB TouchPad and $600 for the 32GB model.
Office supplies retail chain Staples reportedly saw good sales of the TouchPad when it offered a $200 discount earlier this month.
Staples spokesperson Carrie McElwee told TechNewsWorld the company doesn't break out sales by product and declined further comment.
No Apps, No Sale
Sales of tablet devices are driven by apps, and the relative lack of apps for the TouchPad is "critical," the Yankee Group's Howe said.
"If you don't have at least 100,000 apps, you won't make any headway in the market," Howe added. "Apple has about 400,000 apps and Android about 200,000."
HP could perhaps have done better in supporting developers, Howe suggested.
"You really need to give developers a step by step process through which creating apps for your platform will make them money," Howe said. "HP's efforts are inadequate."
Time Is the Enemy
However, the real problem with the TouchPad is that it hasn't been out in the market long enough to really make an impact, Richard Shim, a senior analyst at DisplaySearch, told TechNewsWorld.
"The iPad wasn't an overnight success," Shim pointed out. "It leveraged a lot of the work that had been done on the iPhone, and it's been out in the market longer than the competition."
Not only does HP need time to mature the TouchPad, but it also has to develop a new skill set, Shim said.
"HP bought a new operating system. It's trying to garner a healthy developer community and help developers create good apps for the devices," Shim explained. "These are new things for HP."
Slipping in the Sales Channel
Yet another issue HP faces with the TouchPad is its distribution channels.
"Apple has a huge advantage here," Shim said. "It has its own staff so it can control the environment, it knows there's always going to be Internet connectivity and there'll always be someone knowledgeable to help customers."
On the other hand, the TouchPad is battling other competitors for shelf space and customer attention at retail stores.
"With its own stores and its own environment, Apple has the ear of consumers almost exclusively," Shim said.