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mikeknoop

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.

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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.

> 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.

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.

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.

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.

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

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

not when standalone players were also $300+

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.

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)

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.

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)

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.

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.

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

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.

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