HP's TouchPad fire sale: The fallout

HP's TouchPad fire sale: The fallout

Summary: HP's TouchPad liquidation sale says a lot about the company, the tablet market and its ability to keep an e-commerce site running.

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HP's TouchPad liquidation sale this weekend was telling on multiple fronts as techies drooled over a good deal, servers blew up and the tablet market pricing structure was upended. However, the fallout may go well beyond those areas.

It's a bit stunning how a liquidation sale---16GB TouchPad for $99 and 32GB for $149---can be so revealing.

Here's a look at the fallout:

HP's TouchPad liquidation fiasco hurts its reputation with consumers and businesses. HP's Web site couldn't handle the load as the masses tried to land a TouchPad for $99. On Saturday, HP had a cart glitch that where the company's systems wouldn't recognize the liquidation prices. By time, HP fixed that issue Saturday afternoon, the company's e-commerce site served up a series of errors that looked like this:

Microsoft VBScript compilation error '800a03e9' Out of memory /LM/W3SVC/600510919/Root/dStore/http://global.asa, line 0

Meanwhile, HP's call center blew up Saturday afternoon. The reps did the best they could---and I had a good experience---but they were outgunned by orders. On Sunday morning HP made progress with its shopping cart---the site delivered 404 errors, which are a step up from database outages. HP spun this as a case of overwhelming demand. That's fair enough, but HP also sells IT infrastructure---adaptive infrastructure to be specific. Why didn't HP throw more servers at the problem? How about a few database admins? How about some cloud capacity to handle the demand spike?

In the big picture, HP could have turned this TouchPad liquidation lemon into lemonade. HP could have used its internal cloud to handle the spikes. If HP handled the traffic well, it could have spun a whitepaper out of it to pitch its wares. In the end, HP could have highlighted how its data centers saved the day even amid TouchPad adversity. Also: HP TouchPad insult to injury: Cart glitch hampers SMB fire sale

The reality: If I'm an SMB, say one of those self-serve yogurt joints popping up all around my house, I'm a bit skeptical about HP in the future. If I couldn't complete a TouchPad sale on HP.com how will the company run my infrastructure?

HP looks willy nilly. We've heard through the grapevine that Todd Bradley, the guy who runs HP's PC business, didn't find out that the company was going to spin off the unit until a Wednesday night dinner at CEO Leo Apotheker's house. It's no wonder that the news of HP's PC unit spin-off looked rushed. The inability to handle the e-commerce load for the TouchPad liquidation also highlighted a lack of planning. And the $10 billion purchase of Autonomy also looked a bit jittery and leaves the company vulnerable. Don't be surprised if Oracle launches a hostile bid for HP within a year. Now we're sure that Apotheker and HP's board has a well thought out master plan, but it's hard to argue for an IBM moment for the company right now. The problem: HP appears to be winging it. In business, perception can become reality in a hurry. The TouchPad liquidation is another data point for HP critics to use.

Retail partners are going to be wary of HP going forward. Some outlets went with HP's liquidation pricing right away. Others chose to sit out the sale. Best Buy flip flopped. Amazon pulled out. In any case, HP will have to cover retailers on inventory and costs, but no future product launch from the company will be looked at the same way again. Killing the TouchPad in a mere seven weeks will be remembered for a long time. Also: BestBuy.com is offering the HP TouchPad for $100 until supplies run out

Tablet pricing is shot. If the TouchPad---a flawed device that still managed to have a lot of redeeming qualities---calls for an exit after a few weeks and a $99 to $149 price tag what does that say for all the other Apple iPad rivals? It's no wonder retailers initially balked at HP's prices. If the TouchPad is ultimately worth $99, what's an Android tablet worth? How about $250 max? HP's TouchPad experiment showed what price matters to consumers and the path to market share gains on Apple. The rub: No tablet maker can make money at HP's fire sale prices. Something has to give. BetaNews' Joe Wilcox argued that tablet pricing is ruined after HP's fire sale. I'm inclined to agree.

Also see: Six reasons why HP's IBM moment will prove elusive

Analysts crush HP’s revamp: ‘Juggling in a wind tunnel’

Topics: Laptops, Hardware, Hewlett-Packard, Mobility, Tablets

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74 comments
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  • RE: HP's TouchPad fire sale: The fallout

    Prices always matter but all this shows is that consumers cannot resist a deal! Any of the $499 tablets would be flying off the shelves at similar prices and the Touchpad was the weakest of the bunch in terms of features and hardware.
    slickjim
    • RE: HP's TouchPad fire sale: The fallout

      @Peter Perry I am not sure it was fair of Larry to single out Non apple devices. I think it puts a mark on all Tablets bar none. Since a recent Neilson study shows most apps are a one time use and most people regularly use no more than 10 on a regular basis it nullifies the app count!!! Obviously HP do not know what they are doing. A product life of 7 weeks is ridiculous!! I smell a class action from people who paid full price and expected HP to support the OS.
      striker67
      • RE: HP's TouchPad fire sale: The fallout

        @striker67 "most people regularly use no more than 10 on a regular basis it nullifies the app count"

        The bit you are missing is that the people who purchase iPads aren't using the SAME 10 apps on a regular basis. Choice is good.
        jgpmolloy
      • RE: HP's TouchPad fire sale: The fallout

        @ John...choice is good, but just how much choice does anyone need. Whether it is 10000 apps of half a million there is has to be a tremendous amount of duplication. So how much choice really is there?
        striker67
      • So everyone uses the same exact 10 apps?

        @striker67

        That is what you said:

        <i>"Since a recent Neilson study shows most apps are a one time use and most people regularly use no more than 10 on a regular basis it nullifies the app count!!!"</i>

        Given Hp has already said there will be rebates coming to early adopters, that nullifies you class action suit.
        Bruizer
      • RE: HP's TouchPad fire sale: The fallout

        @striker67 : If Apple raises the price they will sell as much if not more IPAD's. Combination of the most loyal fans in at least the tech world if not for any brand in any industry (and the free marketing they spread via word of mouth) and perception if the price is high is must be great will do the trick.
        edkollin
      • RE: HP's TouchPad fire sale: The fallout

        @Bruizer...obviously I was unaware of the announcement stating early adopters would be refunded.

        In most cases people will find the apps they want/need on any of the platforms. You can quote me/flame me on this all you want, but no one will use all of the apps on any of the platforms. Not even come close. The app count is for bragging rights and not any practical reason.
        striker67
      • RE: HP's TouchPad fire sale: The fallout

        @striker67.. as other have said not everyone on the planet uses the same 10 apps.. a huge app selection means that you get the core apps plus those niche apps that just you and a few other people use.. basically their is an app for everything you might think of.. this just isn't the case with the other tablets.. even some of the "core" apps are missing e.g. netflix is not available on TouchPad or most android tablets and phones either... no on uses 500,000 apps but a 500,000 app library means that that niche app you are looking for is going to be there.. a 10,000 app library.. maybe, maybe not..
        doctorSpoc
    • I agree. the TouchPad sales are compared to that of the iPad

      @Peter Perry
      yet in the overalll computer landscape, iPad sales are a miniscule percentage of overall PC sales ("PC" includes Apple computes).

      Should Apple drop the price to that of 99 dollars, then sales of the iPad would likely "rocket through the roof" as humans would say.

      Yes, price does matter, as these events are showing.

      :|
      Tim Cook
      • RE: HP's TouchPad fire sale: The fallout

        @Mister Spock - PC sales for this year will be around 400 million, Apple will probably sell around 40 million iPads. I would hardly call 10% "miniscule." Besides, Apple can barely keep up with demand (their sell-through is effectively 100%), so there is little incentive for them to reduce prices.
        rbgaynor
      • RE: HP's TouchPad fire sale: The fallout

        @Mister Spock
        And paper clips. Apple comes nowhere near moving the same number of iPads as paper clips. If the iPad cost as much as a paper clip, then you'd see some real numbers for sales.
        DannyO_0x98
      • RE: HP's TouchPad fire sale: The fallout

        @rbgaynor
        400 million PCs but the average price of a PC is much higher than ipad. And for most corporate purchases, its not just the price of the PC. Most large enterprises will buy the PC with warranty and have some form of customized service contract as well.
        rengek
    • RE: HP's TouchPad fire sale: The fallout

      @Peter Perry
      Your comment is so telling about why HP couldn't sell their units:
      http://www.youtube.com/watch?v=AcDEGUzYtqE
      HP's mistake that was that they were hoping consumers would perfer to have a higher quality product and then develop on it later. Doesn't help when NO ONE realized that was the case.
      copperfoxf5
  • Honestly, do you trust a heavily trafficked commerce site to

    VBScript?......... :/
    Dietrich T. Schmitz *Your
    • RE: HP's TouchPad fire sale: The fallout

      @Dietrich T. Schmitz * Your Linux Advocate
      When your traffic spikes 10,000 fold, any server farm would struggle if there is not the capacity. Even ones running Linux.

      Even Linux running Amazon struggled not so long ago when they were running deals of the day - e.g. Wiis for $50.
      dazzlingd
      • RE: HP's TouchPad fire sale: The fallout

        @dazzlingd

        Except with Linux I can spin up servers a lot easier and for far less cost to offset the spike in traffic. Something you can't do for Windows.

        It costs $0 to spin up another CentOS box from the hardware side. You can have one built and up and running in under an hour.

        You cannot say that for Windows. It is well known Windows can't hold up without lots of boxes.
        itguy10
      • RE: HP's TouchPad fire sale: The fallout

        @itguy10
        <i>Except with Linux I can spin up servers a lot easier and for far less cost to offset the spike in traffic. Something you can't do for Windows. </i>

        Wrong. For stuff like this you really should go with Azure, Amazon or another cloud service. Building boxes and trying to add them on premise is so last decade.

        Azure has a big advantage in that it provides actual cloud infrastructure, not just farmed virtualized boxes.

        Anyway, VBScript became legacy and was deprecated a decade ago.
        honeymonster
      • RE: HP's TouchPad fire sale: The fallout

        @dazzlingd
        Based on what I'm reading it sounded like a lot of people at HP did not know about the consumer side demise and probably a lot did not know about the fire sale as well. They were not prepared for it. If they were prepared, they would have had their networks setup like a holiday season and have more redundant servers ready.
        rengek
    • RE: HP's TouchPad fire sale: The fallout

      @Dietrich T. Schmitz * Your Linux Advocate I know, sad isn't it?
      Jeremy-UK
    • RE: HP's TouchPad fire sale: The fallout

      @Dietrich T. Schmitz I trusted it enough to buy a Touchpad from the HP SMB site. I felt better once I got a confirmation email. Classic ASP is pretty solid, albeit old. The web server was never set up to handle this much traffic and it was trying the best it could.
      K B