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HP TouchPad obituary: In defeat, it was a hit

The legacy of the HP TouchPad will be unfulfilled potential and going out in a blaze of fire-sale glory. Here is Jason Hiner's obituary of Hewlett Packard's short-lived tablet.

Written by Jason Hiner, Editor in Chief Aug. 24, 2011 at 12:29 a.m. PT

When Hewlett-Packard abruptly pulled the plug on its upstart iPad competitor, the HP TouchPad, it looked like a sad ending for a promising product that HP once called a single step in a long journey. However, within 24 hours, HP slashed the price of the TouchPad to $100 and suddenly the product was the hottest thing in tech.

I was as shocked as anyone on August 18 when HP announced that it was committing seppuku on the TouchPad. In June when I met with HP representatives in San Francisco, they were as bullish about their new product as any company I've seen in recent years. They felt confident they had a hit on their hands and they assured me that this was only the beginning of what they were going to do in the tablet market.

"HP is committed to being on this journey for a long time," said one of the TouchPad product leaders.

Once I got my hands on the product in the days before the official launch, I had two reactions. First, I was impressed by how functional it was -- easily the most productive tablet for basic business functions. Second, I was shocked by how bad the hardware and form factor were. With its bulbous, plastic casing, it felt bulkier and cheaper than the original Apple iPad from 2010 -- let alone the slender iPad 2 that had just been released in the spring.

The HP TouchPad just didn't feel very impressive when you picked it up. Plus, once you started using the TouchPad, it became clear that the hardware wasn't always powerful enough to handle the software. And then, there was the issue that it didn't have the entertainment or games that consumers want in their tablets. That led me to predict that gadget reviewers would pan the TouchPad -- and they did -- and consumers would likely reject it -- which they did. Nevertheless, I called the TouchPad an excellent choice for business professionals, and I still stand by that.

The HP TouchPad had potential as a business device. Photo credit: Jason Hiner

Once the TouchPad launched at the end of June, it became clear within the first month that consumers weren't buying. At the same price as the iPad, there was little motivation to purchase a tablet that didn't have the same options in multimedia and third-party apps as the iPad. The superior productivity and Web browsing weren't enough to attract the masses.

By early August, HP slashed the price of the TouchPad by 100 bucks to $400 for the 16GB model and $500 for 32GB. It didn't help. By mid-August, word leaked out that Best Buy was sitting on a huge glut of unsold of TouchPads. Consumers were holding out to see if the price would go any lower, while tech industry watchers were waiting to see what HP was going to say about the TouchPad at the company's Wall Street earnings call on August 18.

Still, no one expected new CEO Leo Apotheker to pull the plug on the whole thing. But, that's exactly what he did. At the earnings call he dropped the bomb, saying, "Our WebOS devices have not gained enough traction in the marketplace with consumers and we see too long of a ramp-up in market share... Continuing to execute our current device approach in this marketplace is no longer in the best interest of HP and HP shareholders."

The move is part of a strategic shift by HP to get away from the computer hardware business and become a software and services company. All WebOS devices are being scrapped and the world's No. 1 computer-maker is looking to spin off its PC business -- that was the other big surprise from HP last week.

The HP announcement immediately turned those unsold piles of TouchPads into $400 doorstops destined to collect dust or get disassembled by a recycler for the scrap metal. However, the next day HP and its retail partners slashed the price of the TouchPad to $100 for the 16GB and $150 for 32GB, and it almost immediately became the hottest product in tech.

There were reports on Saturday of long lines of customers waiting for Best Buy to open so that they could buy the TouchPad. Multiple Best Buy locations reported selling out and not having enough for customers who were ready to buy one (quantities were limited to one per customer). At Amazon, the TouchPad quickly jumped up to grab the No. 1 and No. 2 spots on the leaderboard of best-selling tablets.

The meteoric rise in TouchPad demand after the big price cut tells us a couple things -- 1.) The public saw value in the TouchPad, just not at the same price as the iPad, and 2.) There's still a wide open opportunity for a low-cost tablet maker to sneak in with a viable product and grab a lot of market share.

As for the TouchPad itself, this whole dramatic fiasco pretty much guarantees that it will become a popular tech trivia question and possibly even a cult favorite among technology collectors in the future. That's fine, but I'll admit that I liked it better as a product that could have potentially moved tablets in a more productive direction.

HP TouchPad obituary: In defeat, it was a hit

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