Sep 11

Doomed TouchPad dooms iPad!

I guess they’ve lowered the admission requirements at pundit school.

Either that, or they’re overdoing it in that one course where they teach young seers to “always take the surprising point of view.”

First, a quick review: HP buys Palm for $1.2 billion to get WebOS. They labor for a year to create TouchPad. TouchPad gets panned by the critics. After seven miserable weeks, it gets dumped by HP. Then comes the fire sale. People line up to buy the $499 TouchPad for $99.

Cue the pundits: if so many people will buy an orphaned TouchPad for $99 — iPad is doomed!

There’s an article at CNET entitled iPad met its match in the TouchPad. This article observes that only TouchPad has come close to “eclipsing the fixation that consumers have had on the iPad.”

Over at Forbes, they cut right to the chase: Why the Undead $99 TouchPad Might Portend The iPad’s Doom. Here, it’s noted that  TouchPad’s buying frenzy proves that a tablet can actually succeed against iPad by undercutting it in price.

Neither article notes the obvious: people love “steals.” Of course they’ll line up to buy a $499 device for $99. That’s 80% off. They’ll also camp out to buy a $60,000 car for $12,000 or a $400 washing machine for $80. This isn’t exactly a Mensa-level brainteaser.

The problem for Apple’s competitors is that there is no PC parallel here. Apple is selling iPads at a price that’s nearly impossible to undercut. When price isn’t the argument, it’s product vs. product — and it’s awfully hard to compete with the combination of Apple design, iOS and the App Store.

So watch out, Apple. TouchPad has proven that tablets will fly off the shelves if they’re priced at a fraction of cost. You don’t really think you can remain the leader simply by building better devices, do you?

This brand of punditry contains one serious flaw. That is, Apple doesn’t just sit still. iPad continues to improve year after year. And, in case no one noticed, Apple has incredibly good profit margins (thanks, Tim). Even if a competitor one day figures out a way to undercut iPad in price, Apple is perfectly capable of responding.

So, as HP starts making more TouchPads to dispose of all the spare parts in their warehouse, I wouldn’t take that as a sign of iPad’s pending demise.

I’d take it as a sign that if you don’t know what you’re doing in this business, your tablet will die a premature, grisly death.

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  • Jbelkin

    Apple will sell 20 MILLION iPads this q -presuming hp sells the next batch out, they will stand at 350,000 FORVEVER. AND HP will lose $200 -$400 per … Nice business to be in 2nd place and that’s NOT factoring in the 1.2 billion to buy the whole thing … AND hp competitors should be ticked that hp has set the bar at $99 for a non iPad … Why buy a non iPad for more, if hp can get belly up, why pay more for an acer, lenovo or even a moto? it might just drop to $99 after 30 days …

  • The headlines around this have just amazed me. What in the world are they thinking? You could sell a pile of dog poop at the right price without even calling it fertilizer.

    Second on the list of shame headlines and punditry is the whole Amazon is going to kill iPad meme. Since everything else has failed they have to glom onto something I suppose.

  • Selling products under cost is nothing new. It is pretty common in the console industry, where you can make lot of money with the games licenses etc… One day might be possible to see something similar in other industries, but can only be from Apple, Google and Amazon and not with this level of loss! :)

  • Jorge Carvalho

    And now for the funny part :

    “You surely recall how computer maker Hewlett-Packard announced earlier this month it would exit the low-margin PC business, stop selling smartphones and tablets and sell out or license the webOS operating business. Well, less than two weeks later HP’s PC chief Todd Bradley tells Reuters that the TouchPad could make a come back:

    “Bradley said the company could resurrect HP’s short-lived TouchPad tablet computer, which was introduced on July 1 before being terminated only about six weeks later. ‘Tablet computing is a segment of the market that’s relevant, absolutely,’ Bradley said.”

    Now thats long time stratagey isn’t it ?

  • Synth

    It’s quite simple. The AndroidOEMs, RIM and HP can all obliterate the iPad if they simply sell their devices at 60 – 70% loss.