HP could lose as much as $300 million on TouchPad

The HP TouchPad may be selling like hotcakes now that the company has cut the price of the webOS-based tablet by 75 percent or more, but the damage has already been done. The device, which launched on July 1, didn't sell many units so HP pulled the plug on further TouchPad production last Thursday. Now AllThingsD.com is trying to come up with some estimates on what HP will end up losing in this failed attempt to compete with Apple's iPad tablet.

According to some reports, HP ordered between 500,000 and 1 million units of the TouchPad for its first, and likely only order from its Taiwan-based contractor. According to a tear down of a TouchPad from the research firm iSuppli, the 16 GB version cost $306.65 to build while the 32 GB version cost $328.65. Assuming that HP got the full 1 million unit orders for the TouchPad it likely cost something around $317.7 million to build all of them. The article also makes an assumption that HP has only sold about 50,000 of those unit orders in stores at the initial higher price (sales of the TouchPad could actually have be much lower) which means that HP is stuck with $297.7 million in non-sold TouchPad units.

That's just pure hardware costs. The number doesn't take into account other charges, including the huge marketing and promotion campaign for the TouchPad that included three TV spots with celebs like Lea Michelle and Russell Brand pushing the TouchPad in ads that ran nearly non-stop for the past few weeks, even after HP pulled the plug on the device.

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HP had all that was needed to succeed in the tablet market but yet somehow all they managed was this? Something has to be very wrong at HP and if I were a shareholder I'd be wanting to see the person/s responsible fired.

it was a mistake to make one in the first place. people only bought the ipad because apple made it not because they needed it.

of course when teh price dropped to 99... well why wouldn't you get one, it's a nice toy you can play with for a month.

capr said,
people only bought the ipad because apple made it not because they needed it.

hahahaha....nice joke man. U know what? people buy iPad only because of Apple makes it.

capr said,
people only bought the ipad because apple made it not because they needed it.

Nobody needs anything electrical, really. Nothing like that is essential. However, people like to buy 'em. Apple product or not.

Faisal Islam said,

hahahaha....nice joke man. U know what? people buy iPad only because of Apple makes it.

It's true. Tablets (smartphone OS based ones) are not the right tool for the job 99% of the time. At home? A laptop browses the internet much faster, holds itself up, and you can type faster on it. On the go? A smartphone is much smaller and also can be typed into faster.

What is a tablet good at? It doesn't beat the laptop in anything but portability, and even then netbooks come close. Netbooks are cheaper, more powerful, and allow you to actually multi task.

Tablets are lighter and last a bit longer on battery. If all you want to do is browse facebook status updates or watch videos in an awkward position, sure, tablets are great.

I would never have bought a tablet. But $100? I guess so. It'll make a nice clock if nothing more.

Tech Star said,
Pocket change for them.

i wish i could find that much pocket change down the back of my couch

In this case it could just be classified under "The cost of Market share". Ok so you lost 300 million but you also have 1 Million touch pad users now.

What good is 1 million touchpad users if all they'll ever generate is support obligations?

1 million xbox live, warcraft, or HBO subscribers are great news: every month you get a cheque from them. You might give away your cable box or videogame now, but you can make that back with monthly revenue. No such option exists for HP.

What does HP gain from having a million Touchpad users? Even if the iPad was the only other tablet computing device on earth, HP paid 300m for less than 2% market share. What value is there in that position?

A repeat customers? HP is looking to shed their hardware business.
More WebOS customers for the App store? Does such a thing even exist, what are the odds that Google, Microsoft, or EA, is going to be porting their next title to WebOS with such an uncertain future?

I'm not seeing a positive side to this, can you help me out?

$300,000,000 for a company that made $126,000,000,000 last year? I thought it would be more than $300m. $300m is absolutely nothing for HP.

P!P said,
$300,000,000 for a company that made $126,000,000,000 last year? I thought it would be more than $300m. $300m is absolutely nothing for HP.

Most of the revenue you quote goes into operating expenses (e.g. actually buying stuff to assemble and sell). $300,000,000 is hardly nothing. It would be like saying a $500 traffic ticket means nothing because you have a $50000 salary.

Shining Arcanine said,

Most of the revenue you quote goes into operating expenses (e.g. actually buying stuff to assemble and sell). $300,000,000 is hardly nothing. It would be like saying a $500 traffic ticket means nothing because you have a $50000 salary.

That's a valid point. Given the actual percentages though, it would like someone with a $50,000 salary having to pay a $115 traffic ticket which they couldn't care less about.