HP's TouchPad launch, inventory under the microscope

HP's earnings conference call is likely to feature a bevy of questions about the TouchPad and the marketing and research and development resources it sucks up.
Written by Larry Dignan, Contributor

When HP reports its fiscal third quarter results Thursday one prickly set of questions for CEO Leo Apotheker will revolve around the company's launch of the TouchPad.

AllThingsD's Arik Hesseldahl is reporting that Best Buy is stuck with roughly 250,000 TouchPads that didn't sell. Now HP and Best Buy are bickering over who will pay for all these TouchPads. HP has cut the price of the TouchPad in an attempt to move more units.

The fact that Best Buy and HP are fighting over TouchPad inventory isn't all that surprising. It's clear that the TouchPad wasn't a hit with consumers, but Best Buy didn't give the tablet much support either. At my local Best Buy you can barely find the TouchPad. HP's tablet is in a corner---a device ghetto---as brands like Acer and Samsung get more play. Apple's iPad still attracts the crowd, but it's clear the TouchPad is bottom of the barrel when it comes to selling priority.

Contrast Best Buy's approach to the TouchPad with RIM's launch of the PlayBook. Best Buy sales folks were well versed in the PlayBook. These same people barely know the TouchPad is there.

Jason Perlow noted the Best Buy-HP friction at the TouchPad launch. Perlow pointed out there was little signage and HP quickly contacted Best Buy.

Perhaps HP isn't providing enough incentives to Best Buy, but it's clear that there isn't much priority for the device. Who gets the blame? Probably both parties.

Auriga analyst Kevin Hunt said in a research note:

The tablet launch appears to be a failure at this point, and the degree of R&D and marketing spend that is being burned there is also a valid question going forward.

Fortunately for HP, the TouchPad---and any financial hit from the launch---is a pimple on the arse of an elephant. HP's quarter will revolve around server, networking and storage sales. The consumer PC business will struggle, but enterprise gear and services will make or break HP's financial results.


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