Products and strategies fail sometimes, but rarely so quickly. Tech giant Hewlett Packard has, withing 6 weeks of launching the TouchPad tablet, not only ceased sale of the tablet but announced it is withdrawing from the tablet game completely and that it is ceasing to develop webOS tablets and phones – the very things which were meant to have been the reason it acquired Palm Inc for $1.2b just over a year ago. That’s a very expensive mistake.
Hewlett Packard acquired Palm Inc (best known for the once ubiquitous Palm Pilot PDAs) for $1.2b back on 1 July 2010. At the time, it trumpeted Palm’s webOS operating system as the key asset in the purchase. HP would combine its expertise in hardware with Palm’s webOS software to make smartphones, tablets and computers using webOS: a new ecosystem to challenge Apple, Google and Microsoft.
The first flagship product was to be the HP TouchPad tablet. With the market crying out for a competitor to the iPad and none of the Android tablets really biting or providing something new, hopes were high (and HP’s marketing hype was in overdrive) that the TouchPad and webOS would provide that competition. The TouchPad launched on 1 July 2011, the first anniversary of HP’s acquisition of Palm.
Launching at the same price as the iPad, the TouchPad had mediocre reviews and webOS (at least as implemented on the TouchPad) didn’t seem to offer much that existing operating systems didn’t have covered. To put it bluntly, no-one bought it. Rumours have been flying that Best Buy has sold only 10-15% of the 270,000 TouchPads they ordered and was trying to force HP to take the unsold ones back. It’s certainly not the first new tablet to bomb in the marketplace. What is new is HP’s reaction.
Rather than leaving the tablet out there to gain brand recognition, releasing an update with new features to maintain interest, and trying to come back with a second improved version to get the serious sales figures (a strategy followed by pretty much every smartphone and tablet maker to date, Apple included, lest we forget that the original iPhone had no app store or 3G internet connection and that it was the iPhone 3G which really launched the little phone that could) HP has refused to throw further money at the project and has quickly, simply and brutally written off the money it spent on acquiring Palm and the money it spent developing and manufacturing the TouchPad and whatever other devices were in the pipeline. Clearly, HP management had no confidence whatsoever that webOS could be made into a product that would sell, though publically they have claimed they think there is still value in it as they would kind of like a buyer to take it off their hands so they can make back SOME of that money.
To keep this in perspective, HP’s quarterly revenue was $31.2b and it is forecasting yearly revenue of over $127b. $1.2b, if not pocket change, will not max out the corporate credit card.
Update:
It has come to my attention that Lea Michele was in ads for the TouchPad:
Crasstalkers will be saddened to hear that as a consequence of the product being discontinued, Crasstalk fan favourite (ahem) Lea Michele will now be appearing less often on their screens.
