HP to produce one more batch of Touchpads | Hacker News Reader

HP to produce one more batch of Touchpads

h20435.www2.hp.com

141 pointsyumraj126 comments

While selling at a loss to make profit on software doesn't look feasible in this market, here's an alternative suggestion, though I'm not sure if this is feasible either - just more likely than the first option.

Sell loads at a loss, I mean really loads. Announce that the platform isn't dead after all. Use the fact that so many people have the devices to bring in app developers, make it a more desirable platform. Then, when their future devices sell for a profit, people will actually want them.

This has been forwarded before and I agree with detractors to this kind of thinking.

First, HP is a big company that has much better ways to turn money into more money than making something people are unwilling to buy at a reasonable price.

Second, growing the webOS ecosystem in this way founds it on false principles. Everything that seems to work when you're selling for a loss, might not work at all when you're selling for a profit. Just imagine if HP started off selling a $99 TouchPad, blowing out the doors, piling up billions in debt, and then found out everyone wanted an iPad when the price went up to $500. Oops.

The best modern example of this I think is Groupon. Groupon has been growing like crazy by taking a huge loss. For every dollar it takes, two dollars go out the door in the form of advertising and client acquisition.

Groupon is already of questionable value to some businesses. When the time comes for Groupon to fix its profitability the value proposition may be lost entirely.

I might note that Microsoft lost money on every XBox initially. But gaming was a different business.

A business where they can extract enormous licensing fees from content sold at a much higher price point.

You are quite right. iPad apps have a much lower price point. Apple could have extracted significantly more rent if they hadn't allowed free apps.

But I doubt that the ecosystem would be anywhere near as large if the had, so doing that could have ended up making them a lot less money.

Exactly. The sort of people that are buying a Touchpad right now aren't the same type that will buy a $500 device and spend several hundred more on apps.

Heck, I'd like to buy a Touchpad at $99, but only because I'm interested in getting Android to run on it, which is probably the last thing HP wants.

I was going to disagree but then I worked out the numbers and it doesn't fly.

Suppose they invested $1b more. At a loss of $150 / device that would let them put ~6 million devices into the ecosystem, not counting phones. 6m devices would get it off to a start but it is still not enough to get it within an order of magnitude of the iPad and probably won't even get you ahead of the plethora of Android makers who will most likely sell more than that combined.

If you can't pole vault at least into a solid second place then you've essentially made no strategic gain at all - you're just in a slightly better third place.

Being able to sell a $500 product for $200 says nothing about whether anyone would buy version 2 or 3 when the price goes back up to $500.

Costs will decrease in the meantime.

Unlikely, unless you keep the same spec. If you want to remain competitive with Apple and Android, you're in a spec. race and now you've raised expectations, you need to match them.

The model could work like the console market. Sony and Microsoft both initially sold their core hardware at a loss with the hope of making up the difference in game license fees and big margins on peripherals.

However, it'd be a pretty tall order to get $200+ dollars per person out the HP App Store especially when Apple has pushed the expected price down to $1 for most apps. Also, with a device price so low I'd have to think you're already targeting the cheapskate market to begin with, so there is no reason to think these particular customers would be willing to buy tons of apps.

Clearly you'd prefer to be Nintendo and sell the hardware for a profit while also collecting generous license fees.

Actually I bet Apple could pull that off, if they charged more overhead for iTunes (audio & video). $199 iPad with included Apple TV -- might work.

If their market share ever dips dangerously low it could be a good option.

I've been wracking my brain on this one and have yet to come up with a theory that doesn't end in: that place is on fire. I think WebOS is wonderful, and wished HP had stuck to its guns, but this is just strange. It reeks of internal anarchy.

The HP saga is like watching an episode of "Intervention".

Did HP accidentally just find the best way to break into the tablet market?

Sell hardware at a loss and make it up on software. Console makers have been doing it for some time now.

I think you're onto something as that is the only theory that fits. Otherwise, why would they take more loss as I'm pretty sure this thing costs more than $99/$149 to make.

Another, rather remote theory is, there is a buyer for WebOS, perhaps Samsung per some rumors, and that is funding this batch to get more devices in the market before it is able to bring its own device. But, it seems too far fetched.

Selling at a loss works when every game costs 50 dollars.. for 1/2 dollar apps, it's a much harder ladder.

I hope that's the case, though, bcse I still love Palm, and would love to see WebOS succeed.

Don't forget $99/year developer program. That's would offset quite a few app sales as well.

I, along with many others, derided the $499 price point, and called it stupid. $99 is fantastic, but they've obviously decided against making it a long term viable business for them.

Despite what many others said, I strongly believe these would have sold well at $249-$299, and could have enabled HP to make a play to be a strong outside third, and then possibly a second, in the tablet space.

The analogy doesn't hold. Try to use a TouchPad without buying apps and you'll find that it works pretty well.

Try to use a console without buying games. Hope you enjoy navigating menus!

Except the PS3, which is a pretty good Blu-ray/Netflix/DLNA player and probably had problems with low attach rate in the first few years.

I can't recall the last time I actually used the PS3 to play a game. It's probably been more than a year. We do use it every day however to watch Netflix or Hulu. It's used a couple times a week to stream content using DLNA and Twonky Server. That being said I'd replace it in a heartbeat due to the extremely loud fan, I've not done so to this point because I'm being cheap.

The first generation PS3 is a noisy energy hog.

I picked up an AppleTV 2nd gen for Netflix and streaming media because it runs silently at 6W, compared to the fat PS3's 170-200W. Depending on how much you watch, the AppleTV might pay for itself in energy savings alone in 12-18 months.

If the Apple TV wasn't stuck at 720p I would probably consider it. I have a friend currently doing a similar setup to what I have with the PS3 via a Logitech Revue and if that ends up working out well I will probably pick one up. The addition of Android 3.0 on the Revue also makes it a bit more of an appealing idea. While I won't save as much energy over the PS3, just the reduction in fan noise will likely be worth the $99.

Ah yeah. We mostly use both devices for Netflix, which doesn't do 1080 anyways. Also, the ATV2 can supposedly push lower-bitrate 1080 if you jailbreak and put XBMC on it, not sure what the Revue does.

I hated the setup process on the Revue, but after that, I really like it. Being able to play flash video in 1080p, hw accelerated, on my tv is nice. Looking forward to 3.0 and maybe more apps for it.

$300 is a pretty expensive blu-ray and streaming player.

not when standalone players were also $300+

It is now, but when the PS3 first came out it was one of the cheapest blu-ray players available.

> Except the PS3, which is a pretty good Blu-ray/Netflix/DLNA player and probably had problems with low attach rate in the first few years.

And it's precisely why it took Sony a while to make any money out of their PlayStation division. They underestimated how many people would find it useful 'out of the box'.

It's a great Blu-Ray player that just happens to play games. Sony sold it as the other way around.

No, probably not. Console games average price is $50 USD, what is an average tablet app cost -- $3.99? Even if they were selling millions of first party apps, it wouldn't recoup the amount of money they lost on the tablet + app development.

I'm not sure what HP's app market looks like. Do they take 30%?

Also if they can't directly monetize their hardware, this might be a strategy that Amazon (or Google if they ever make an in-house tablet) should look at since they both have large web platforms to extract life-time value of hardware owners.

They don't make money on software right now. I guess they still have lots of spare parts for future batches around, or contracts with third party suppliers that require them to buy certain amounts of parts. So given the huge demand, they may simply want to make less of a loss (i.e. just trashing the spare parts may be more expensive)

To make a significant dent in the market, enough to attract developers in droves (good ones at that) would require a significant user base. Im not sure they can afford to lose $200-300 every time they sell one and expect to recoup it in the lifetime of the product. The life cycle of the PS3 and Xbox 360 have been extended for that very reason. How many iterations of discounted tablet devices would HP have to sell before they could demand profitable prices right off the bat? They certainly wouldnt make it back by selling $2 apps.

It amazes me how long this console generation seems to be lasting. The XBox360 was released in 2005, at this point you would have thought we would know details about its successor, yet we know virtually nothing.

It is almost as if Sony and Microsoft have made an agreement to keep the current consoles going.

Even without selling apps, building a huge customer base and finally attracting developers to write apps for the platform is hugely beneficial. If they have a large ecosystem with millions of users and thousands of apps, it'll be much easier for them to license the OS to other OEMs. Either may actually be their plan, but I suspect it was a plan made after the fact; otherwise they wouldn't have killed the Pre3 before the US launch.

Why would OEMs license a dead OS over android?

It would have to be a better ecosystem than android which I don't see happening after hp dropped it themselves.

But HP hasn't dropped the OS, just the hardware. They still are invested in the software, they just don't want to make the hardware. At least that's what VP of Developer Relations has said.

http://developer.palm.com/blog/2011/08/the-work-of-webos-con...

If they really want the OS to keep going, then they were idiots not to partner with a hardware vendor and get new devices out the day they killed their own. Horrible move.

Agreed. Their actions made no sense. I suspect management were planning to just throw it all away, but the WebOS Developers begged for a chance to make the software viable on more than just the desktop on their printers (printers?! seriously?!!). This is more or less backed up in the news about the announcements, in which nobody but the very upper management knew it was happening until all the tech blogs were reporting it. The explosion of sales from the reduced price was probably enough to buy the WebOS team some time.

Just my speculation though. All around terrible, terrible decisions with regards to WebOS, the Touchpad and the Pre3. It's been really amazing to see just how badly HP keeps handling all this. I do hope it won't spell the end for WebOS though, as I honestly think it's a contender against iOS, which is something I don't personally think about Android.

It appears Apple doesn't make money from apps, apparently they roughly break even from the app store with a 30% cut of apps:

http://news.ycombinator.com/item?id=2649475

"...Peter Oppenheimer added, “We run the App Store just a little over breakeven,” implicitly making the case that the App Store was not a big profit generator for the company."

http://www.macobserver.com/tmo/article/apple_app_store_runs_...

If Apple can't make money from apps, do you think HP can do better? How viable would it be to sell hardware at a major discount and hope to recoup it from apps (as others here have noted)?

I wonder why it's so expensive to run the thing? I mean, it should be pretty cheap to deliver small applications like that. Maybe the labor to check all the new apps?

i frankly wonder if there isnt some form of holywood accounting going on so their 30% cut can be "justified".

As an example of how this could be done, the App Store business could be internally charged a large license fee for the use of the Apple brand.

also to deter competitors from undercutting at hoping to make it up on apps (just as we are discussing about HP here). If they see that even Apple supposedly couldn't make a profit from its app store, they might be deterred.

Probably licensing for all the ridiculous patents (see: Lodsys et al)

Sure, they'd only have to sell what? 500 apps per person?

Whoever made this decision should be fired.

"We took a $100m loss on the first batch of TouchPads, what's a couple million more?"

at the scale of HP's finances and bureaucracy it is just a drop in the bucket and any reasoning behind it isn't comprehensible by a single unit of human species.

I doubt it works like that. I imagine that they have a load of parts already purchased, and probably some spare labour time. Supply chains don't just stop when you click your fingers.

I suspect this is just HP clearing out the supply chain of already purchased parts and units still at the factory. HP's cost is probably just a few dollars per unit to ship and possibly assemble them.

I find it hard to believe anyone approved an entirely new order of parts at $300 BOM just to sell them for $99.

You may be right, but if it's not an ops guy getting fired, then it should be a PR guy. I mean, look at this:

"Before I share, let me first say thank you for enthusiasm for this product. Since we announced the price drop, the number of inquiries about the product and the speed at which it disappeared from inventory has been stunning. I think it’s safe to say we were pleasantly surprised by the response.

Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand."

They didn't decide to produce one last run to meet unfulfilled demand, they're producing one last run to get rid of unused parts. Just put the new devices up on the store and send out a tweet; don't spin this like some grand gesture to please your adoring fans.

You're expecting a PR person not to spin it like some grand gesture? Have you ever heard any company say anything to the effect of, "well, we already paid for a bunch of parts, so we might as well?"

A PR guy wrote this, what did you expect?

I don't understand all the down-votes. This seems like a valid and well-meant contribution to the discussion, being voted down because it presents something slightly contrarian. Why is martingordon's suggestion any more unworthy of HN than the earlier suggestion that the person responsible for this new run be fired? They're both looking at this news inquisitively, trying to understand the forces behind the public actions of HP following their recent mutation.

If you're voting it down, just be sure you're not doing so out of disagreement with the points raised.

A downvote on a contributor can be, and frequently is, a vote of disagreement, regardless of how well intentioned and expressed the contributor was.

If I cared enough about the space to make a karma-based threading system, I would attempt to come up with a way to differentiate disagreement with contribution score (aka karma).

Sometimes people feel the need to register disagreement but can't be bothered to write a specific reply as to why, and while it sucks that many people do that via downvoting the contribution score, it is understandable why they do it and there is probably a better fix for it than just telling them they shouldn't do it (they won't listen).

Hiding a valuable contribution because you disagree with it probably isn't the intended purpose of the system. Hiding something that lessens the quality of the conversation, independent of the skew it takes, makes more sense.

It doesn't matter what the common practice is. What matters is preserving the integrity of the discussion.

If it's heavily down-voted, then it's probably not conspicuously valuable. Indeed, that's exactly the point.

what's BOM? Bill of Materials. Got it. BoM. Just before reading your comment I had bought a 32 gb for $270. Guess that's not a bad deal. Hopefully I can at least skype on it.

Bill of Materials.

i guess it depends how you look at it ... for $100m they are certainly going to get huge mileage for their Brands - its like marketing drive for HP, WebOS, WebOS App catalog etc. + they will make some money by selling apps. Also one has to remember that this brand value creation will help them fetch more $$$ when they decide to sell their h/w business and WebOS business (either the whole OS or licensing it) - All in all $100m is worth loosing (spending) :-)

In fact they should turn this accidental success into super-success by creating HUGE WebOS ecosystem for at least a year and then decide what to do with it - they can get more money by selling or licensing the whole ecosystem with millions and millions of users worldwide than wrapping things up pre-maturely ... also can you imagine how much they could make if they start streaming & selling music, movies, ebooks etc. thru their ecosystem ...

No, it's whomever decided to set the price at $100 who should be fired. This excessive demand shows that they could easily have charged $150 or maybe even $200 for the 16GB version, and still gone through their supply, with less hassle for retailers, and less of a loss.

There is a such a thing as a demand curve. I bought the $100 one.

Here's how I'd think about

$100 -- I'd Bite $110 -- I'd Bite $120 -- Okay $130 -- Uh, maybe. I'll flip a coin. $140 -- It's an okay deal. I might pass. $150 -- I'd probably pass.

That's my curve. Others have their own curve. If everyone is like me, which they're not, $125 is probably the right price point. I can't imagine spending $200 or even $150 for webOS.

Here's to there being an Android release in the next month or so!

I think the fact that 32GB models at $150 sold out just as fast supports the idea that your "demand curve" is the one that is different from the average consumer.

Also in support of this are the crazy prices people are paying on eBay for them right now, upwards of $250 for a 16GB model. It's pretty clear they could have sold them off quite briskly at $150/$200, possibly even just as fast. It seems the resellers nabbed most of them anyways.

Also, the $99 pricing got them a lot of good press because it was a very good deal. An average deal would have no press so no sales, the sales are not a linear correlation of the pricing.

When a cheap tablet is $300-$350, a $150/$200 price point would have netted them just as much press. Frankly, they could have done with a little less exposure.

I live in Canada, I ran out of my house and hopped on the subway the moment I heard the news and I posted the first comment on the TIMN article about the fire sale from my phone on the way. I checked the Best Buy, Future Shop & The Source. I also ordered two online, one from Best Buy and another from Dynamism.

I didn't get a single one, or even see one being purchased. They were all gone in the first 20 minutes from retail, employees bought up any remaining retail stock at smaller or less urban stores that night. Online stores sold out while I was on the subway.

That wasn't just high demand, that was completely insane demand. There is just not a snowball's chance in hell that a $50 bump would have a serious effect, other than possibly dragging the sell out process from minutes to hours. It may have also saved a little money in CSR wages, considering a bunch of businesses had to cancel hundreds and thousands of orders that Monday.

> the sales are not a linear correlation of the pricing.

This is true, likewise it's not this extremely clear line where $100 is absolute Black Friday-esque insanity and $150 is gathering dust on the shelf.

Not just that, on eBay and various Amazon retailers the prices seem to have stabilized at around 250 USD or even up to € 250 in Europe. If HP chooses this price point most of the current demand will still be there, especially if I could just walk up to an electronics store and get one!

Here in NYC there are many stores which advertise 'Going out of business sale' throughout the year to target innocent tourists. Wonder if someone in HP marketing thought that this would be the best way to jumpstart an initial pool of users.

Looks to me like HP is fattening up WebOS for a resell.

I share your thoughts. It makes a lot of sense from this perspective as WebOS could be worth a billion or more so what is a loss of a few million on ensuring a good sale.

Same. Not sure they want the resale though, I think they rather get some manufacturers on board, license the OS and sell support. Seems to jive better with their current stated focus of software.

HP should do what they should've done a while ago: promise to make WebOS well-supported and well-stocked with apps, and bring the TouchPad into production at $200 or $250 to still undercut the competition but not bleed cash so profusely. I'd buy into it as a user and a developer.

Given that the tablets are still fetching that price on eBay right now, over a week after the firesale started, I think that's exactly the price they need to hit. The tablet simply had no demand at $500+, but at $250, people are willing to buy in.

$250 for what is essentially a handy, high-tech toy is about right. Plus, HP wouldn't be senselessly bleeding so much cash. Ebay sales show up people are clearly willing to drop $200-250 on the things, there's really no reason they should have or should keep selling them at $100-150.

Based on some TouchPad teardowns, manufacturing a TouchPad costs about $318 in parts plus $10 in labor. If HP sold TouchPads for $250, they would "only" lose $68.

http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...

Right, but recouping a $68-118 loss is more feasible than recouping a $168-218 loss. There's a decent markup on their accessories and the potential for app sales. If it drives enough demand and gets companies licensing their OS and selling hardware running it, they have a chance to make it work, and it's probably money better spent than any advertising they do. Look at it this way; before the fire sale, how often did you see stories written about the Touchpad and how many people did you know that bought or wanted to buy one? And how many stories and interested consumers did you see after the fire sale? Food for thought.

Time will tell if they can pull it off though.

I agree that this firesale is a valuable lesson in pricing, and HP clearly cut the price by more than they needed to to achieve their goal of unloading existing inventory, but there are more factors at play here than price alone. I'd bet that if HP had just lowered the price to $250 they would have sold far less units than are now selling on ebay for $250.

The $99 price point set off a feeding frenzy on this sale, and once that frenzy started people who were trying to buy the unit for $99 and failing (due to all the retailers overselling stock and then cancelling orders) were able to rationalize themselves progressively higher until they were okay with the $250 price.

I'm not convinced there would have been nearly as big an uptick if this started out with a price drop to $250. Certainly sales would have jumped, but I don't think it would have been nearly as drastic as what actually happened.

Perhaps HP should covertly sell the new TouchPads through eBay for $250. :)

Yeah, you're probably right here. At $200-250 though, they would still be priced lower than any big brand names making tablets, regardless of OS. That alone would have sparked demand. Would it have been as explosive as it was? No, but they also wouldn't have lost as much money and might have avoided the potential doom to the platform.

Consider this as well:

http://www.zdnet.com/blog/hardware/hp-single-handedly-destro...

HP has set the bar pretty low for tablet pricing. All these new Touchpad owners now have $99 in their head, and when it comes time to upgrade, they will probably walk away from the more expensive options.

Personally, I don't think there is a tablet market, just an iPad market, and a big part of that has been price. Only Apple is Apple, and nobody else can demand that kind of money for what is essentially a toy and get away with it on the scale they can, for various reasons. Had HP set the bar at $200-250, they could have made the sales they were hoping to make, lost less money and still potentially make money on future, cheaper to produce hardware; or at least left that door open for another company to license their OS and do so. Nobody can make money at $99 without some huge profit margins from something else, and I don't think the tablet market has that something else (yet). Now, a lot of tablet consumers have that $99 price in their head, and it's going to be a hard sell getting them to spend more in the future.

It's pretty clear to me that they underpriced it.

They should lower the price to the point where the clear out inventory. But not lower.

Considering how much unmet demand there is at 99$ it's obvious that have not even come close to optimizing the price/demand curve.

The current lowest Buy it Now price at Ebay is $230-240. That means that's the price at which people will buy them -- but not so much that people will snap them up instantly, or the price you could see them available at would by higher.

That suggests that they could probably move units pretty well at $199 -- it's below another psychological barrier from $230, and definitely still seems extremely affordable compared with the iPad or even the Asus Transformer.

I'm not sure if they had a reason for marking the units down to $99 (e.g. "we need to get these things off the books as soon as humanly possible to get a clean slate") or if they just made a huge mistake.

Forget about HP for a minute. Are there any devs out there that are considering creating a WebOS app because of this new influx of users? I'm genuinely interested...perhaps it would be worth it.

Ok, I’ll pretend to be a VC. So you make a WebOS game/app. What kind of users do you expect to have? A whole bunch of cheapos who bought the tablet because it was $99. And how much do you think those people will pay for your app?

Next question. Word of mouth. If those people like your app, they’ll tell friends. Will those friends have WebOS tablets?

Let’s talk about the lifetime value of your code base. How long can we expect to make sales of your app? After we have saturated the market of existing Touchpads, will there ever be another piece of hardware running WebOS to sell to new customers who might buy your app?

  =====

Right now, I’d say this is a cherry-picking exercise. If you can port an existing app to WebOS and make money on a short-term basis over and above your porting costs, fine. Otherwise... Android and iOS are the two front-runners with Windows-Phone-whatchamacallit a distant third.

IMHO.

You're right, but I don't think OP is alone in thinking they way he does. Creating an app in pure HTML/CSS/JS and having it actaully run quickly is an interesting idea, and one that makes WebOS unique. The problem before was that there was almost nobody using the OS, but that's changed a bit now. Is it worth doing? Time will tell, but if you can bang out something quickly and not spend a lot of time/money getting it done, it might be worth a shot now.

Yeah that's pretty much what I was thinking. I'm one of the cheapos that have the TP now and would definitely pay for apps if there was something worth paying for.

Anecdotally, webOS devs, given the low threshold of competition and influx of new Touchpad owners, are doing pretty fantastic sales right now. Good for a quick return at least. Since HP's also being charitable and giving away 6-packs of apps for free (and paying the dev for each one at full regular 70% share), a couple of those devs picked found themselves 5-figures richer overnight. No idea how long they intend to keep doing it, but it seems ongoing for now.

Good platform for quick wins. Mid-term and longer, it'll largely depend on whether webOS finds new hardware with which to keep it alive.

I think that's the key; new hardware. If HP relies on the TouchPad for any more than 6 months, a year tops, they'll completely lose out on all their efforts. They need someone else to make better and still cheap hardware to keep people interested and buying. There are simply too many Android devices coming out, each one better than the last (forcing a price reduction of the last), to ride their current wave for any longer than that.

It's still very curious why they called an end to the hardware production BEFORE they had someone lined up to make new devices though.

Having just bought one of these, I'd say that I'm more likely to pay for apps as there is a short selection. For instance, on Android I wouldn't pay for Tweetdeck or similar, but on the touch pad I would, as there isn't many options.

I have a developer device and have been following the threads in the WebOS developer forums and developers are pretty frustrated. Lots of people have purchased developer devices in the past 1-2 months and paid much more than the current fire sale prices.

Also, registered developers are having to hunt to find retailers with existing $99 TouchPads, instead of HP giving WebOS developers early access to buying a device. If developers can't even get a development device when they want one, there isn't much hope for a diverse App Store

They'll make it up on volume, eh?

The offer they mention:

We are grateful for your patience and loyalty and to show our gratitude, we are offering you an exclusive one-time opportunity to save an additional amount on all of our products, valid through the end of the day tomorrow, Wednesday, August 31, 2011. You'll save 25% off all printers, ink, HP accessories, and PCs starting at or above $599.

Not bad, if there's something specific you want.

Tangential: I think HP's stock might be selling for less than the company's liquidation value at this point, depending on what you think of their patents. That's ignoring the fact that they also have some profitable high margin businesses.

Sure, they're doing some boneheaded stuff lately, but I couldn't resist buying some. Buying $1 for 88 cents is usually a good move. I sold some TIPS bonds to buy shares.

Disclaimer: Obviously I just bought some of the stock. I'm not sure if they're selling for below their liquidation price. Check the financials yourself and do your own research. Etc, etc.

Dump the TIPS man.

> Dump the TIPS man.

I had some USD, didn't see any good buys, and wanted to stay liquid in USD. I figured inflation was definitely coming, so even if interest rates rose (unlikely anyways, but the only real risk) it'd likely be cancelled by the inflation premium.

The bonds appreciated around 7% in four months, so it worked out okay.

The big problem with TIPS is that the government gooses the CPI formula to understate inflation, so they're really providing an (inflation - n%) return, not an (inflation + n%) return. That being said, I also own a small amount of them.

I would rather buy bitcoins.

I find this really annoying. I already wasted too much time trying to get one in the first round. Now I am supposed to waste time again?

I actually considered setting up a web service for companies doing such a thing. I think the proper way would be to create a lottery where everybody could register in peace and there would be a couple of lucky winners.

A similar thing happened with sparkfun electronics when they offered shopping up to 100$ (or something) for free - except it was impossible to get the order form to load, resulting in lots of wasted time.

In the end I tend to be angry at the company for wasting my time. So companies, if you want to be generous, at least do it in the right way.

Woot.com has a "woot off" every few weeks, and one of the items that goes on sale at a random time during the day is a "bag of crap". For $8, you're promised they'll send you 3 leftover products from their warehouse. Some people have gotten really expensive products, like large LCD TVs and laptop computers, so everyone's willing to give it a try for $8.

Every few weeks, without fail, before and after Amazon acquired the company, the site goes down as a hundred thousand people refresh the page trying to get the order form to load when that item is for sale. It's very frustrating and there are thousands of posts in their forums every time it happens from people that were there and tried to buy but couldn't get the order form to load before it sold out.

A lottery would be better.

Woot knows exactly what they're doing. They lose money on every bag of crap, the fact that the site goes down adds to the fun. They could rent more servers for the day (or hour) that the BOC is available for sale, but why lose even more money? They're selling out of them in seconds, and they're driving insane amounts of traffic to their site for the entire day as people hit refresh on a leakfrog looking for the BOC. That said, they have taken steps to make it a little more randomized, but only because people figured out how to game the system, and most people getting BOCs were running scripts to do it.

Why would they start another production run for a discontinued product sold at a loss? Am I missing something or will HP come out next week and say "Surprise! Here is a great new update for the Touchpad" and start selling them for $200?

they've probably bought the parts or some such.

It's possible that HP could sell the parts alone for over $100. But if they view the parts as a sunk cost (worth $0), it's possible that assembling TouchPads and selling them for $100 is rational.

It may be that it's worthwhile to produce and sell them at $100-$150 given the sunk cost of their leftover unassembled bulk componentry.

This also assumes that their calculation of what's worthwhile includes less tangible stuff, like being seen as a company that is receiving and meeting a high demand for devices and growing in device market share.

If that's the case, just make them and restock the HP web store. Don't come out and say you're doing another run out of charity to not leave their dear customers disappointed.

Actually this is not as far fetched as it may seem. Here's a potential scenario, building on the above, HP may have entered into contracts with manufacturers for 'n' units. When they shut it down, they had only received 'm' units, where m < n. So, they would have had to cancel contracts and pay a penalty.

Here, they see a rather unusual demand and must have made some calculation that making the original 'n' units and earning good will by doing that, per the original contracts is better (even at a loss) than breaking contract and paying the penalty at a loss of goodwill.

Did anyone actually think this was far fetched? I thought this guy was being totally serious, and it is the most likely event, actually discussed in the article.

What are they thinking!? They are losing tons of cash on each unit and I can't believe that their app store is making up for it.

That said though, I bought one and never thought I'd love it as much as I do. Maybe I'll be able to get a 2nd.

Just a possibility: HP is a large company with deep pockets, it can likely afford to sell TouchPads at a loss for quite a while. That would give them time to work out bugs, recoup some in apps and find a less costly manufacturing process (or let time do that work for them). If all they lose on it is $100 million a year, it might be a worthwhile investment in positioning.

Unfortunately with the acquisition of Autonomy, their pockets arent so deep anymore. They spent about 80% of their cash on the deal, leaving them with not much money to push devices like the Touchpad at a loss.

When the announced this, I told my friends:

They will drop the price, and every person that owns an iPad will buy one, they might lose their ass on the hardware, but what happens when they release a really nice app store and they have a zillion people now with their product in hand?

I know it sounds far fetched, but.. its working, no? All they need now is the app store (is it already created?)

They'll also make a loss with this shipment even though they won't sell them at $99 again. I think this is just to build more Web OS customers so they can open source, licence or sell Web OS and say "we have this many customers".

they bought palm for $1.8billion and packaged up a few hundred million in a few product launches. If they want to sell palm at a profit or break even, it might be really important to add 1-5 million users even if there is a $100 loss per device.

Now HP is not just selling a platform, they're selling a platform with an installed base, developer support, enthusiasts and demonstrated demand. This makes their business a lot more interesting for potential buyers!

Can you also make one more batch of HP48's?

The moment my eyes fell on the title of this article, my face cracked into a wry grin. Here we go...

sometimes you have to lose money to make money. maybe they're trying to capture the long tail of ad/apps revenue? it's a very risky move nonetheless.

I think the first part of your post is correct, but I think it has less to do with ad/apps revenue, and more to do with engendering good will toward the WebOS brand to keep the resell value of the IP high.

The Touchpad sale thus far has tarnished the reputations of a few third party resellers who mishandled inventory management during the firesale, see:

http://www.amazon.com/gp/help/seller/at-a-glance.html?ie=UTF... (note 30 day negative percentage)

http://www.resellerratings.com/store/Onsale

http://www.resellerratings.com/store/Datavis

By making more units HP comes across as the 'good guy' here towards the (perhaps bargain-minded) early adopters and gives people an increased positive impression of the WebOS brand and I think they are hoping that'll help them get back something closer to what they paid for Palm when they attempt to resell it all (which I think they will do, though obviously this is just speculation on my part).

IT WAS SAID THAT ALL WHO SIGNED UP WOULD GET AN EMAIL TODAY AND THATS NOT TRUE.I CALLED AN SPOKE WITH A PERSON AND GAVE MY INFORMATION BUT DID NOT RECIEVE AN ALERT TODAY.

Did you yell at them on the phone? FYI that is why you got downvoted here. Caps lock is frowned upon and considered yelling in many online communities.

seriously?

If labor and shipping per unit costs $50 (totally made up), then $99 ain't lookin so bad

No need to make up wild guesses. iSuppli says the TouchPad bill of materials is $318. http://www.isuppli.com/Teardowns/News/Pages/HP-TouchPad-Carr...

Even if you think they're off by 10%, $99 would never work.

Right, but that's parts. If the parts are already bought, then only labor and shipping has to be paid on top.

yes this is what I meant. Obviously they're not going to make money on this fire sale, just hope to reduce their losses a tad and get some good PR (if they care about consumer PR anymore).

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