Editor’s note: This is an op-ed.
I woke up on Sunday and started fussing about the apartment. Made a cup of tea, cleaned the kitchen, turned on the Roku and sat down on my couch with my iPad to check the news.
That is when I saw that HP had turned the TouchPad into a fire sale.
Tablets priced at $99 flying off the shelves and what had been a significant headline on Tuesday (Best Buy has 250,000 unsold TouchPads) had completely turned around on Sunday (Good Luck Finding a $99 TouchPad). It got me to thinking. As much as consumers love their Apple products and the iPad is a terrific device, consumers want something that is price efficient, even if it is a touch flawed. With literally hundreds of thousands of TouchPads sold over the weekend, a significant note should be playing in retailers’ and manufacturers’ heads – opportunities await for those willing to make a sacrifice.
Everybody has been waiting for the “iPad killer.” Foremost, let us get one thing straight: the iPad is not going to be killed. It is a terrific device that has become the standard of the current technological revolution. Apple has too much money to let the iPad fall behind or become obsolete. Death will not come to the iPad anytime soon.
In the tablet market, nothing but the iPad is selling well. HP spending near $100 million to liquidate the TouchPad and the $99 price point is a reflection of that. HP is taking a loss on the whole webOS division as it mulls the options to spin off its intellectual property (patent sales), license it to OEMs or integrate it into its enterprise software business. Good chance we will see HP do a bit of all three.
As an aside, many in the tech punditry game are saying “the TouchPad is not even worth $99, do not even consider buying one.” Forbes had a short post with the tired refrain “it is all about the apps, and webOS does not have them.” To a certain extent, this is true. Apps make the device. Yet, that does not take into account the tectonic shifts happening under the device market. HTML5 is coming. It is going to make browser-based mobile applications viable and through a series of discussions with developers in the past several weeks, I discovered there are a lot of HTML5 Web apps coming. The better the mobile browser, the better the HTML5 will function. The great thing about webOS is that it may be in perfect position to run these Web apps because its browser and integrated system (webOS was designed for the mobile Web, not apps) because it has the best browser of the bunch between iOS, Safari, Android, Windows Phone IE and BlackBerry. So, come the wave of apps from Facebook’s so-called “Project Spartan” or other concurrent initiatives and the TouchPad may look like a terrific option.
Motorola, Samsung, HTC and Research In Motion are seeing tepid tablet sales. Samsung should eventually gain traction (as long as they are not significantly blocked by Apple) with its flood-the-market strategy of three different tablet sizes and partnerships with all the major carriers. Yet, at the current prices ($499 for a BlackBerry PlayBook or a Samsung Galaxy Tab 10.1), they are not going make a dent. For any of those companies to start selling mass amounts of slate, they are going to have to pull an HP and liquidate stock for the sake of temporary market share bump. HP is a huge business with its fingers in a lot of pies. It is taking its fingers out of the OEM pie and putting them elsewhere. A company like RIM or HTC cannot do that. They are what they are and have to try and survive within the existing mobile market. They are going to struggle to compete until they have to sell off existing stockpiles of devices or create a new killer product.
Joe Wilcox from Betanews argues that the $99 price and subsequent fire sale of TouchPads ruins the tablet pricing market. Consumers should not come to expect the $99 price point. It is unrealistic and HP is spending a huge amount of money to get rid of the TouchPads. Yet, eyes should pop that a tablet that is being put to pasture just sold several hundred thousand units. A quality tablet with a great price from a known brand will sell well.
There is another company that knows this well.
The original Kindle debuted in 2007. It was less than $300 $400 and it sold out in a matter of hours. Amazon will be the last major entrant into the tablet wars (presumably) with a device coming probably before the holiday season. The question is this: can Amazon recreate the Kindle furor by introducing a tablet into the market at $200 or less?
There is not an “iPad killer” device in any OEMs hopper. Nor will there be anytime soon. The great equalizer will be price. Amazon and to a certain extent Microsoft (with Windows 8) have actually benefited from waiting to enter the tablet wars. They now see the battlefield in front of them and what it will take to make an impact. Quality devices with reasonable prices. Then turn and make money through value-added services.
HP was unwilling to do this. Most will agree that pulling the plug on its webOS hardware division was a bit premature. But, it taught the market a lesson. In the end, that lesson will be of significant value to consumers.