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Digitimes Insight: HP shows that tablet success can be had, at a price
DIGITIMES Research [Friday 2 September 2011]

Hewlett Packard's (HP) plan to launch "one last run" of TouchPad tablets comes only about a week after the vendor stated it would no longer be producing webOS devices. While the quick reversal can be explained by HP's need to clear out inventory in its manufacturing supply chain, the strong sales of the TouchPad once HP lowered the price to US$99 shows that HP is probably not too worried it will get stuck with product once it receives shipments from its suppliers.

According to Digitimes, HP originally released orders for 900,000-1.1 million 9.7-inch TouchPads to Inventec and has taken delivery of 800,000-900,000 units. The shipped TouchPads were nearly all sold out after the vendor slashed the tablet's price to US$99. In an effort to mend its relationship with component suppliers and channel operators, HP decided to help them clear out inventories, including touch panels, batteries and chassis, equivalent to 100,000-200,000 units of 9.7-inch TouchPads.

HP sold about 400,000 TouchPads in the two days after it slashed the price from US$499 to US$99, up from only 25,000 units in total at Bestbuy before August 17. Digitimes Research analyst James Wang pointed out that the lesson for the tablet market is that vendors can compete with Apple as long as product quality is good enough and the price is incredibly cheap.

While the future of webOS remains up in the air, Wang believes that among potential buyers of WebOS, a list which includes vendors as varied as Apple, Facebook, Google, HTC, Microsoft, RIM, Samsung, and Sony Ericsson, only Facebook has any incentive to use webOS to build a platform that has potential to expand its market share. The idea would be to basically give away webOS at no charge, like Google does with Android.

Other potential buyers would have more interest in the webOS patent portfolio rather than building a platform.

Wang is the author of the Digitimes Research Special Report, "Expectations for the 2H 2011 tablet market."

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