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5 reasons HP TouchPad discounts don’t spell disaster

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The web is buzzing with several HP(s hpq) TouchPad price discounts and other great deals on the webOS tablet in the U.S. is offering the 16 GB version for $379 today, while HP has a weekend special of $100 off for both HP TouchPad models, making them $399 and $499. That matches a current Staples promotion, but it gets even better at that retail outlet, with another $100 off coupon from FatWallet, dropping the entry level tablet to just $299.

Given that the recent software update made the TouchPad much better, I’m likely to bite on this deal. But do all of these discounted prices mean the TouchPad is already a flop? Some are implying that on Twitter today, due mainly to the Woot deal.

Nothing against these folks and many others that tweeted similar doom and gloom thoughts; I respect their opinions, but I disagree for several reasons.

1. If you’re paying full MSRP for an HP product, you’re doing it wrong. The company constantly discounts nearly all of its products on a rolling basis. This isn’t a new strategy, either. HP’s standard operating procedure is to run various special deals, instant rebates or small coupon code promotions for as long as I can remember. By doing this across a wide product mix, HP can better combat pricing promotions against competitors. Need an example? I recently bought a $199 wireless printer from HP that supports Apple’s AirPrint (s aapl) and Google Cloud Print(s goog). The cost? $79 shipped, because I waited for an instant rebate, which just happend to coincide with a special discount. By the way, the printer works great with the TouchPad, too.

2. Sales will attract developers (which will attract sales). HP knows it has to build up a wide number of compelling applications for its webOS product line. Developers are understandably focused on money so iOS has the bulk of their attention, followed by Android. Those two platforms are firmly entrenched at the top, but it’s a land grab for platform no. 3. Microsoft appears to be the front-runner here with Windows Phone 7(s msft), ahead of BlackBerry(s rimm) and webOS, so HP needs to jumpstart developer attention. It can afford to give up short term device profits if it brings more apps in the long term, because more compelling apps can help sell more tablets in the future.

3. You don’t spend $1.2 billion and call it quits early. That’s the amount that HP spent to buy Palm in a transition from the PC world to the mobile space. Aside from iPaq handhelds and a few early smarpthones, HP really hasn’t been in the mobile game. It is the no. 1 PC maker in the world, but that market is slowing just as the mobile market is growing. This isn’t a $1.2 billion fire sale, folks. Essentially, that’s what Steven DeWitt, SVP & GM, of HP’s webOS global business unit Personal Systems Group tweeted this morning: “Its about building new relations thru webOS. $100 off a HP Touchpad is a great deal. We r in this for the long haul!”

4. The BOM for both tablets is under these reduced prices. A recent iSuppli teardown pegged the materials cost for the 16 GB and 32 GB TouchPad at $296 and $318, respectively. Add in an estimated $10 per device for manufacturing and the production prices are still well under the special deals — except for that extra $100 coupon, which isn’t likely to appear often. There are indeed marketing and other costs that cut into device profits, but HP isn’t taking a financial bath on these deals, even if some of the lower price points happen to stick.

5. HP will still sell tablets at “full price”; even today. For all of the tweets sharing the special TouchPad deals, a number of customers will buy the tablets at full price. They simply may not hear about the special. And just like with many HP promotions, if you don’t know about them, you might not see them; even on HP’s own site. While writing this article, I searched for the HP TouchPad product page on Google and added a 16 GB tablet to my cart. There was a $50 instant rebate, but that’s not the $399 deal. If I didn’t know any better, I’d think I was getting a great discount and never be the wiser that I could save another $50 just by using a different entry point to HP’s site.

We often say the tablet market is different from the PC market, and in many aspect, it is. But HP has become the top PC seller in the world by using these pricing strategies, and there’s no reason it shouldn’t do the same thing where it can in the tablet market. Put another way: if you miss this weekend’s TouchPad deals, don’t worry, because I expect to see more in the future. Then again, I’m not waiting around: $299 is too good a deal for me to pass up!

47 Responses to “5 reasons HP TouchPad discounts don’t spell disaster”

  1. J. Nicholson

    I would have stood in line to get a Touchpad the first day they were offered if I had been able to get a Pre3 at the same time , Without, I’m not interested.

  2. Allan D

    I thought it was interesting that I saw an uptick in Touchpad Ads on TV corresponding to the weekend sale. This is probably a good move for HP. I own a Touchpad and an iPad2 and wouldn’t regret buying a touchpad by a mile.

  3. Kevin Liu

    Great Article Kevin, I did so much research in the past on which tablet was the right one for me. I went with the HP Touchpad for two reasons, first reason I really enjoy having both a Palm Product and a HP Product, I love both companies. Since HP bought Palm I felt kinda good because Palm had created a wonderful operating system. My first laptop was from HP and used it through High School and College. Now I have an upgraded HP Laptop. HP make awesome products, I think it makes perfect sense that a huge computer manufacturing company (HP) bought a small company like Palm. Great Software + Great Hardware = Success.

    Second Reason: $299 when will you ever see this great price again? If a new and wonderful gadget came out a month ago and now there are coupons and discount I wouldn’t hesitate. Everyone Loves Discounts.

      • OTOH, I expect readers to apologize if they were able to move a 100 thousand of these because of the sale and discounts.
        They have an uphill battle with Android first before the war with Apple.Its better to sell more of these than to keep them in the boxes.
        Some folks don’t get how the discounts work. Its beyond their cerebrum or how their cerebrum was trained.

    • As another reader here I think I have the right to ask the opposite! So what? If I wanted just news I would have been reading other sites with inferior reporters and un-challenging opinions.
      I like Kevin in general but also since he is thinking out side the box. Right or wrong – he makes me think too – and sometimes (when its not about Apple I grant you that) I even tend to agree ;)

      Keep it up Kevin. Never apologize about an opinion. Only if you got the facts wrong.

    • So I was sick in bed (still am) when the news of HP killing the TouchPad hit today. But the first thing I wanted to do was come back to this comment. I think it’s a shame that HP gave up after 6 weeks of retail. I’m still surprised, considering how the execs were talking it up just weeks ago. Clearly though, the price cuts were likely to spur sales and possibly stave off the extinction of webOS. I certainly didn’t think so, but when I’m wrong, I’m wrong.

      • I just bought one at $99 :). I know that the tablet is not that good as compared to iPad (oh, how much I love Apple) but $99 is just unbelievable and I know it’s definitely a steal at this price :)

        I’ll still give it to you as it is not easy to predict things. If it was, we could have predicted the stock market crisis, recession and a lot of other stuff before and wouldn’t have lost that much :). Nice try!

      • Lee J. Mendelson

        Thanks for coming back to the thread, Kevin. It was hard to believe that such a deep discount so close to release was anything but a Hail Mary. Too bad they didn’t even give the ball a chance to be caught before deciding the game was over.

  4. Say what you want I was on the fence until now. With $100 off + another $100 from Staples it’s a done deal for me, oh and I develop. I agree, with Kevin you are either better or cheaper, cheaper works for me and unlike many Apple-philes out there I have used other devices and WebOS has the potential to eat iOS for lunch. I would go on but I have a coupon to print.. :) Is it a “waste” to try non-‘i’ device? For the cost of two nice dinners in San Francisco I have to say I think not..

  5. Laxmikanta Dash

    This Article does not make any sense. Here is my math for those who want to buy a tablet.

    You may agree to disagree..
    HP Touchpad > Andoid (OS, GUI, Flash, Multi Tasking)
    HP Touchpad > Ipad(HW, OS, GUI, Flash, Multi Tasking)
    HP Touchpad < Android < Ipad (Apps)
    HP Touchpad Android > Ipad (VPN Support)
    HP Touchpad = Android = Ipad (Imp Games like Angry bird)
    Now HP Touchpad > Android(Highend) > Ipad(Price)

  6. Chirurgie

    HP is using its own ‘non-Apple’ strategy, one that has worked for its huge PC business, despite not being the ‘best PC build’ out there.

    As for ‘negative perception’ I think that is untrue. Most important is new users of webOS will be in the majority really enjoy using this OS. So much so that many will be very interested when Pre3 comes out, especially with Bluetooth calls&text link-ups & touch-to-share. Current users of webOS will know what I mean, ie once you use webOS, you will be frustrated using other OS.

  7. Gigamoe

    I think this apologia is simply grading on a curve. If none of these arguments would apply to Apple, why use them to justify the HP tablet? Dropping the price won’t make this thing more like an iPad.

  8. Vincenzo

    It’s so frustrating listening to people hollar doom and gloom because of a price drop. My memory of the most constant criticism of the Touchpad was the price. People wanted a cheaper option than the iPad. Now they have it for a weekend.

    If there was never another piece of software made for the Touchpad, and you had what came with it, you would have a fantastic tablet for business or pleasure that is a breeze to use, looks beautiful, and surfs the web better than other tableets. Sounds like its worth the price to me.

    The best thing about a real free market is demand drives price. If a lower price raises demand, everyone wins.

    Apple can have their strategies, and let’s let HP have theirs. I have been waiting for a discount on a Touchpad as the economy is pretty crappy right now. Now, with a big discount like this, I think I’m in for the Touchpad this weekend.

  9. Glen Bierworth

    Went to Staples and the “sales”person would not honor the $100.00 discount HP was offering with the coupon from Fatwallet. So it was going to be $349 for the 16gig version. I didn’t get it. Bummed. I will wait for the next “fire sale”.

    • happyPre+guy

      Is there only one Staples store where you live? I believe the kind folks at suggested calling ahead first, to ensure that particular store would honor the discount. I ordered mine Sunday and received it Tuesday. I love webOS and my new Touchpad is the perfect compliment to my Pre+.

  10. Brandon

    You guys keep talking about this price drop as if its permanent Ala the 3DS… this is just a 2 day sale, after the 7th, its back to the normal price, so no, this isn’t them getting desparate or panicking, and it will put the touch pad in many more hands.

  11. Randall Bennett

    Turns out someone I know ended up buying me one offa woot. Pretty awesome. I’ll be probably developing WebOS apps for it, since it’s all cozy with node and the sort.

  12. Omar Moya

    Prices down in a month, brings lots of attention from media, and bad publicity. This is the kind of move you make to get rid of stock and move on. Of course there will be additional sales, but the image of the product and company is damaged. HP seems to be putting all their bets on the next Touchpad. It might not spell disaster, but rather spell disast…

  13. Price: $599.99
    Instant Savings: -$100.00
    Price after savings: $499.99Each

    **While supplies last. May not be valid in combination with other offers. Offer subject to change. No cash/credit back

    Offer Code: 28065 will be automatically added to your cart and applied to your subtotal at checkout

  14. Hey Kevin, I am with you. I wouldn’t own an Apple decide, MS is not ready got tablets and Android is too pricey for its mediocre applications on the big screen.
    If HP had the same offer this weekend in Canada I would have grabbed one for that much. 340$ including taxes here, would be the best deal I can find for a reader, video chats and internet browsing.

  15. Greg Strockbine

    webos is interesting from a developer’s point of view. It has node.js built in. My wife has an iPad and loves it, looks a little bit confining to me.

  16. Lee J. Mendelson

    C’mon Kevin. You’ve been around the gadget block to know that steep discounts on new gadget hardware is not a portend of good things. Either a new model is imminently on the way (highly doubtful), the gadget was woefully overpriced (maybe), or, as is most likely, the gadget is just not moving. Maybe the software is great, maybe the updates made it more usable – but it is going to be awfully difficult to not believe that this tablet is, unfortunately, D.O.A.

    • Lee, there actually *is* a new model coming out: with a slightly faster CPU and with integrated 3G. And if the gadget was woefully overpriced as you say, doesn’t this price make more sense for the market? In any case, if you were HP, what would *you* do to spur sales? I think this is exactly what they need to do on occasion. People say to compete with the iPad, you have to either be better, different or lower priced. We can argue if the TouchPad is better, but it’s certainly different and now lower priced.

    • This is HP way of selling more after the price drop. So HP sells x amount of TouchPad’s at cost for the next 3 days then others will want TouchPad and buy at regular price. I got mine yesterday at Office Depot because they matched the Staples price, so I payed $295 plus tax.

      • Lee J. Mendelson

        I have to believe that HP has a huge marketing department that is a lot smarter then me at these types of things, but I am just not buying it that the game plan from the beginning was to make an attractive piece of hardware, overprice it at launch, and then drop the price by 25% or more thirty days out to spur sales as a marketing ploy.

        It certainly makes more more sense to me to fire sale a device sooner rather then later if you’re looking to spur sales. At Staples and apparently Office Depot through price matching, we’re talking $200.00 off a $500.00 device. 40% off 30 days after launch smells like panic to me.

    • Pamela Hazelton

      Or, perhaps HP is doing some “unmarketing”? Not all businesses have to follow suit of Apple. Thinking outside the box can take someone a long way. I see these deals as getting the TouchPad in more hands, and thus, increasing social word of mouth. Read Guy Kawasaki’s book, Enchantment, and you’ll get what I mean.