HP Touchpad: The breakout success of the summer? Only at £89!

There’s always a market, it just depends on the price.

Sometimes it’s free. Sometimes you need to pay folk. Other times you just need to adjust the price a little.

It turns out that there is what us economists refer to as dramatic elasticity when it comes to tablets that aren’t named ‘iPad’.

Whilst nobody seems to think twice about spunking £399 on an entry-level iPad, everybody develops a brain freeze when it comes to any other brand. That’s partly because — in fairness — the majority of iPad competitors are utter tripe. Worse than tripe. Tripe with about a ton of shit squeezed in.

Witness, for example, the abomination of the Motorola XOOM. The hardware? Middling. The user interface? Traditional rubbish from Google.

I won’t even bore you with the 100-quid-shitters that are bordering on offensive to anyone with a technical mind. You know the ones — the half-inch-thick Android 2.0 specials.

[The PlayBook is a special case — that, I shall address at a later date]

Back to HP. It turns out that HP’s nano-brain senior management are on to a winner with the Touchpad. As retailers across the West are discovering this week, there’s actually huge demand for the HP Touchpad. Just, not at the iPad price.

Stick it down to £89 and everyone I know want’s one.

I’m not kidding. Everyone I know. And half of them haven’t ever tried WebOS. Half of them couldn’t pick WebOS out of a basic screenshot line-up. But they’ll all have an £89 16GB Touchpad.

If I’d had, say, 30 Touchpads in my hand this evening, I think I could have shifted every single one at £89. I’ll go further: I reckon I could have sold 100 via Twitter in about 10 minutes at 6pm this evening.

The Background

The neolithic incompetence of the HP board aside, here’s a quick primer: HP effectively announced the death of WebOS last week. Oh the OS may well be licensed. But hardware? No. Dead. If you own a Touchpad: Hahah. That was the message from HP last week. There were quite a few units sitting on shelves though. They needed to be cleared. Rather quickly over the weekend, rumours began flying of Touchpads being substantially discounted. News hit the UK on Monday evening, courtesy of a few tweets from the Dixons PR chaps. UK pricing has been ‘corrected’ (i.e. reduced-to-flog) at £89 for the 16GB Touchpad and £115 for the 32GB version.

The Results

As news was confirmed during the early evening, thousands of geeks lined up on the Dixons/PC World/Currys websites with their fingers poised. Although I had a meal to get to, I arrived at Bank in the Square Mile at 6.02pm and promptly flipped out the BlackBerry Bold 9900. [I wanted to give it’s browser some real-time in-anger usage]. I’m delighted to say that the new Bold’s browser handled my requirements brilliantly. Unfortunately when I tried to order the Touchpad at the new price, I got an out-of-order message.

Dang it.

Judging by the Twitter messages, some lucky people managed to get hold of one. MIR reader @bragbpenders managed to snare one. Numerous other readers and followers appear to be planning on actually visiting shops in the hope of picking up extra stock.

What’s this mean?

Fundamentally, it’s a statement by the wider market that the Touchpad wasn’t a complete dullard. It’s got some worth. Granted, at £89 (or $142) that’s only about half the estimated build cost. But it’s got worth. And lots of people are scrambling for the Touchpad at that price. Further, I don’t think queues are out of the question. Any retailer that announces a decent chunk of in-store stock is set to be besieged with people wanting a good deal.

Stick some of the Android abominations to £89 and, no. No thank you. I don’t want one.

Basic logic tells me HP and Palm got something right with the Touchpad — the price was wrong, but the basic product was right.

The future?

Ah dear.

I would have loved to have seen a balls-out strategy from HP. Come on, it could have been brilliant!

Let’s be clear: The tablet market is completely owned by Apple at the moment.

At the moment. There’s plenty of opportunity to innovate — and it doesn’t just have to happen on the hardware. Price is an important innovation point. Apple famously uses price to completely wrong-foot competitors. It’s done this brilliantly in the tablet market, with other manufacturers struggling to get anything out the door to match the iPad price — with a decent margin to boot.

Why not go the other way? Invest in the ecosystem. Invest in the market. Invest in the fact that you were fracking late to the party, but that you have a meaningful contribution to make: But that it’s going to cost you.

Wan Billyin Dollurz

So set aside a billion dollars. You’re big enough and you want the ecosystem. The only way anyone is going to pay any attention is if you own a section of the market.

Let’s get out the fag-packet and do some calculations.

$99 purchase price, right?

Assume HP is currently taking a $200 haircut on each one at this rate. But let’s aim for an 8GB Touchpad. Or perhaps even a 4GB. I think folk would still go for an 8GB one at $99. So if you assume the market is happy to stump up $99 for a Touchpad — and that HP would need to subsidise each purchase by, say, $150, how many could HP sell if it had a billion dollars to play with?

$1 billion divided by $150 is 6.6 million.

So HP could sell 6.6 million units.

Is there a big enough market for Touchpads? Arguably, yes.

Would folk be queuing round the block for them? Arguably, yes.

Would Western developer attention be re-tuned to prioritise or focus on WebOS? Arguably, yes.

6-7 million units is pretty good. That’s just over half of what Apple sold in 2010 (thanks Wikipedia).

So a billion dollars could potentially buy you into the tablet ecosystem.

Wikipedia reckons that in March there had been 15 million iPads sold. That isn’t much, is it? Not in the context of this imaginary 6-7 million Touchpads. As of today, Wikipedia reckons there have been 28 million iPads sold by the end of June 2011.

Could HP — with some clever pricing and some audacious nail biting accounting — find itself with a 25% chunk of the tablet market in 6 months? As this post at The Week points out, such a strategy would also more or less wipe out the other Android pretenders. Even the current fire sale could seriously damage the rest of the market:

3. Tablet pricing will be thrown in flux
The TouchPad may have been flawed, but its exit from the market at fire-sale prices may force other tablet makers to slash their prices, too, says Dignan. “It’s no wonder retailers initially balked at HP’s prices. If the TouchPad is ultimately worth $99, what’s an Android tablet worth?” If Google tablets want to really compete with Apple, they’re going to have to offer a much better price — $250 max.

I know there’s a lot of ifs. I just wanted to explore the possibilities.

It’s a big ask.

It’d cost way more than a billion of course. But it’d keep you in the game.

I had high hopes for HP. You never know, perhaps HP’s management might grow a pair and decide to get stuck into the mobile marketplace once again.