By Richard Menta 9/2/11
The HP Touchpad was a resounding failure, not only in the execution of the product, but in it's attempt to be sold at a profit. But something interesting happened when the company dumped hundreds-of-thousands of unsold Touchpads onto the populace. The end result is HP should immediately try again to build and sell a tablet computer.
If the idea sounds ridiculous the chart on the left tells you everything you need to know as to why HP should reverse course and build the Touchpad 2. This snapshot was taken prior to the HP fire sale when 200,000 Touchpads were snapped up by consumers for $99 each. HP had only sold 25,000 units at this point and as anemic as those numbers were it was good enough for second place among all the makers hawking tablet PCs.
Now HP has 200,000 Touchpad units in marketplace, greater than all other tablets but the iPad combined. By blowing out backstock on the product HP unintentionally turned webOS into the second most popular tablet platform, well ahead of the Android OS (which, of course, has a huge base in mobile phones). Now there is a 200,000 webOS user-base looking for applications to run on their new toy, which endows webOS with the critical mass it needs to support a profitable App store.
HPs swift reaction to utter failure brought (or should I say bought) it a large user base, albeit a ridiculously expensive one with huge losses on every Touchpad unit. It also served as a crippling blow to all of the non-iPad competition like Samsung, Motorola, and RIM. Think about it, all these tablet makes including HP found themselves in the unenviable position of fighting for the iPad scraps, which turned out to be only a small contingent of consumers (at this point at least) willing to go in a direction other than Apple. $99 Touchpads sucked up almost all of that contingent, leaving little reason to consider $500 Galaxy, Xoom and Playbook tablets in the month of August.
The first HP Touchpad was a mediocre unit. webOS for tablet was unfinished, the hardware was underpowered and the marketing of the unit was ineffective. It deserved its fate. Now HP can and should take the next several months to refine all of it. They should correct all of the Touchpad's problems and limitations and then focus on the limitations of the iPad. Make a compelling product and leverage a consumer base that, while not anywhere near the size of the iPad's base, is still sizeable enough to build upon.
The HP Touchpad and webOS now have 200,000 reasons to try again, but this time to make it all work. If it is assembled in a truly compelling way the tech-boys will definitely consider it. Failure could be reversed.
But, HP has to commit to reverse course and actually build a Touchpad 2 (they already started producing some more of the first-gen Touchpad, but mostly that is to get rid of a pipeline of Touchpad components. Still, these units will add to the webOS base) Most critically they have to build it without undermining the product's ability with layers of corporate bureaucracy. HP is the number one maker of PCs, but it is not Apple. HP's board of directors seems more interested in battling each other (see here in 2006 and here in 2011) than leading a company through disruptive technologies.
Maybe that is why they are talking about abandoning the PC market.