WHEN the price is right

HP Touchpad - Loved only at the fire sale price

HP Touchpad - Loved only at the fire sale price

What can happen WHEN the price is right:

A truly remarkable phenomenon occurred this weekend and it is related to the Hewlett Packard entry I posted on Friday (see “If I had a Billion Dollars”).

Simultaneous with the announcement they were leaving the Hardware business altogether, HP officially gave up on its TouchPad product line and the WebOS that runs it. As you may recall this Technology was acquired as part of HP’s purchase of Palm for $1.2 Billion (US) back in 2010.

The line came to market in July of this year, with the 16GB TouchPad retailing at $499 and the 32GB model at $599.

Sales of HP’s TouchPad, which they touted as an “iPad slayer” were disappointing and retailers, in particular Best Buy, were displeased at their remaining inventory of the devices (rumored to be nearly a quarter of a million units). HP had offered $100 (retail) discounts from the original price in an attempt to soothe the pain. It apparently didn’t help much and articles were published about Best Buy’s desire to return them all to HP.

Sometime late on Friday (August 19, 2011), HP dropped its retail price on the 16GB TouchPad to $99.99 and on the 32GB TouchPad to $149.99 – through their Employee Purchase Portal (EPP) site. Best Buy’s Canadian website followed suit. Word spread like wildfire on newsgroups and social media. EPP codes were shared and the HP site sold out of stock in a few hours. BestBuy.ca either sold out or the link was removed.

http://www.engadget.com/2011/08/19/let-the-liquidation-begin-hps-16gb-touchpad-on-sale-for-99/

http://www.engadget.com/2011/08/20/hp-touchpad-fire-sale-spurs-online-sell-out-brick-and-mortars-m/

Some units were purchased on spec and ebay listings for TouchPads surged in numbers.

Retail outlets were faced with two choices when they opened their doors on Saturday:

Drop their sale price to match or pull the units from stock.

Of the sources I checked, WalMart dropped their web store price, but quickly ran out. They did keep a fairly up-to-date status of in-store availability at walmart.com. The first store I visited showed the 32GB models as “In Stock” (I had bypassed the stores with “Limited Stock”), but was sold out by the time I arrived (a 45 minute spread).

The hhgregg salesperson I spoke with said there was a line of TouchPad customers waiting when their doors opened on Saturday. They sold out their stock at the fire sale price.

Best Buy apparently chose to pull their stock. Their TouchPad kiosks were stripped of all signage. A sales person told me that they had “completely sold out, store wide” when, I suspect, Corporate either told them to pull stock off the floor or ship it back to HQ while they contemplated their next move.

Best Buy’s website changed from listing TouchPads at the $100 off price, but Out-of-Stock (on Saturday morning) to a special page explaining what customers who had purchased them within the last 60 days could do (return for full refund – they were not matching HP’s “Clearance” price).

Today (Monday, August 22, 2011), TouchPads are listed at the fire sale price on bestbuy.com, but “Sold Out Online”.

Their real inventory status is unknown at the time of this writing. Could they have cleared 250,000 units already?

I don’t know why, but I’m fascinated by Marketing/Merchandising/Advertising stuff like this. There are many interesting things to note about this event, including, but not limited to:

1) Was the HP TouchPad an “iPad Slayer”? No. Did the market support its retail pricing? No. But, is it a heck of a deal at $99.99 / $149.99? Yes! It is a sterling example that just about anything will sell WHEN the price is right.

2) Information spread so quickly over the web that sales resembled a “Flash Mob”. I’m kicking myself for going to sleep on Friday night and missing the initial discussions (lesson learned!).

3) We are still a Country of Entrepreneurs. Not only did some people snatch up the cheap offerings on the web, in hopes of reselling them at a profit, but some purchased at the higher prices, in hopes they could negotiate the price reduction later. Time will tell how successful those approaches were.

4) I wonder just how much HP lost or gained through the $1.2 Billion acquisition of Palm, plus the development and production of the TouchPad? As a Publicly Traded Company, they can’t withhold such information. But, they can bury so deeply in reports so as to make it impossible to deduce. Some PhD Candidate should do a Dissertation on this, to save the rest of us the time.

5) Is Loyalty a thing of the past? Best Buy and HP had historically been great Partners, yet these events seem to indicate there are hard feelings over HP’s recent decisions. Ironically, an OfficeDepot email just announced this is their “HP Week”. Enjoy it while it lasts!

6) Will HP launch fire sales of more of their Hardware products as part of their plan to focus on Software and Services? Will they bother to inform their Retail Partners? Do they care?

7) While everyone loves a bargain, will this behavior ultimately result in a backlash against Hewlett Packard in its next incarnation?

Stay tuned. I have a feeling this will continue to entertain. And, you’re not going to want to sleep through it!

Dave

Disclaimer: I do not work for or own stock (other than what might be held inside Mutual Funds) in any of the Companies named above or their direct Competitors.

About Dave Pluke

Dave Pluke served as "the man behind the curtain" (Principal and VP of Technology) of a successful Structural Engineering firm for over 2 decades. Overseeing the transition from two, stand-alone 80286 Personal Computers, through Computer Aided Drafting (CAD) and Design to a fully networked, Building Information Modeling (BIM) integrated environment has provided plenty of "life lessons" (sounds better than "battle scars", doesn't it?). This blog's purpose is to share those experiences and apply lessons learned to better assist meeting the challenges of the future.
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