Apparently, huge price cuts on HP’s Touchpad didn’t save the tablet from flopping hard. Sources tell All Things Digital that Best Buy has sold just 25,000 units — less than 10 percent of its inventory. Analyst Rich Doherty of the Envisioneering Group says sales are also poor at Walmart, Microcenter and Fry’s.
WebOS, the operating system that runs on the TouchPad, is supposed to be HP’s future, the key piece of the company’s $1.2 billion acquisition of Palm last year. HP desperately needs to sell more TouchPads, so it’s no surprise that HP is pleading with Best Buy not to send back its unsold inventory. Indeed, HP needs more time, but the company must also take some drastic measures to get WebOS and the TouchPad off the ground.
Here are the company’s options as I see them:
Option 1: Bigger holiday price cuts
Slashing the TouchPad’s price by $100, to $400 for a 16 GB model, wasn’t enough. HP needs to bring WebOS into impulse buy territory — as in, the $200 to $300 range. The problem with this strategy is that it sets a permanent expectation that WebOS products will be dirt-cheap, and in the long run HP is in this business to profit on hardware. The short-term sacrifice may preclude HP from selling tablets at higher profit margins down the line.
Option 2: Bundle lots of content
As Doherty said to All Things Digital, HP’s “wildcat pricing moves” actually had a chilling effect on sales, because people are now wondering what HP will do next. Straightforward price cuts would only reinforce that feeling among potential buyers. Instead, HP could offer credits on content from the WebOS App Catalog and on downloadable movies and music. These deals could be extended to existing TouchPad users as well, and they’d would get people acquainted with the WebOS ecosystem without giving away the hardware.
Option 3: License WebOS
Business Insider’s Matt Rosoff mentioned this option in light of Google’s planned acquisition of Motorola Mobility. With Google’s other Android hardware partners potentially feeling shunned, the time could be right for HP to step in and offer WebOS as an alternative. Of course, HP has the same problem as Google-Motorola — its own hardware is likely to get preferential treatment — and given the TouchPad’s poor sales, there’s no guarantee that other hardware makers would even be interested.
Option 4: Take a page from Microsoft and rebuild
Windows Phone felt like an incomplete platform when it launched in 2010. So instead of pushing the phones aggressively throughout the following year with new hardware and big ad campaigns, Microsoft let Windows Phone languish and is putting all its weight behind a big relaunch with the upcoming Mango update. The TouchPad needs a lot of work. It’s buggy, it’s sluggish and there aren’t a lot of great tablet apps available. If HP can weather this storm, it may have a better chance of relaunching the TouchPad next year, with better hardware and a slicker operating system.