yARN: HP TouchPad fire sale shows tablets should be cheaper
- 29 August, 2011 17:17
It happened in a flash. Just four days after HP launched its first WebOS-based TouchPad tablet on the Australian market, the company made a global decision to back away from all hardware running the Palm operating system. The fourth major tablet OS was dead in the water before it really began.
From various accounts, exclusive Australian retailers Harvey Norman had about 6000 of the devices sitting in its stores nationwide when HP made its announcement to discontinue the platform. The initial reaction was to take the units off shelves, with staff members telling prospective buyers that the units were to be shipped back to HP the weekend after the announcement was made.
But the following Monday saw a change in strategy. HP agreed to underwrite a huge sale of the tablets, slashing prices from $498 to $98. The news hit Twitter and tech forums like Whirlpool, and an army of geeks swarmed on Harvey Norman, buying the tablets en masse and clearing out Harvey Norman's inventory within a matter of hours.
While HP was almost definitely losing money on every one of the TouchPads sold at that rock bottom price, there's still an important lesson to be learned for both manufacturers and retailers following on from the HP tablet sale.
For tablet manufacturers, the lesson is that the $500 mark is still far too high for the vast majority of potential customers. Makers of Android tablets in particular would do well to learn from the HP firesale. Drop the price - target the $200 mark for a wi-fi only 16GB model, for example - to take on Apple’s market dominance.
Sure, Apple isn’t going to follow that strategy, but considering it is competing in a category it essentially created, it isn’t playing catch up the same way Android tablet companies are.
For retailers, the lesson is in the power of the Internet to drive sales. Even though the TouchPad was a dead in the water product, customers looking to take advantage of huge savings almost universally overwhelmed Harvey Norman, and it was all because of the online buzz around the sale.
Consider for a moment the possibilities for driving foot traffic with a hot new product if you offer a substantial saving for a limited time. With networks like Twitter, Facebook and technology forums to spread the word, the potential to create demand for all kinds of products is huge. Given Australian retail’s struggle to capitalise on the web, technology firesales are a great place to start.