Sales of Hewlett-Packard's TouchPad are flagging at Best Buy stores, according to a new report. If accurate, that's a potential sign of wider trouble for HP's tablet.
"According to one source who's seen internal HP reports," read an Aug. 16 piece by Arik Hesseldahl on AllThingsD, "Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000."
That's apparently causing tension between HP and Best Buy executives, he added. "HP, for its part, is pleading with Best Buy to be patient."
Six weeks after its debut, HP slashed the TouchPad's price by $100, to $399 and $499 for the 16GB and 32GB models, respectively. That's a 20 percent cost reduction, something businesses don't tend to make with new products unless they want to spur adoption, perhaps because of anemic sales.
HP needs its TouchPad and other mobile initiatives to succeed in a game-changing way. The company derives the substantial bulk of its revenues from PC sales, which have slowed in recent months (that's also one of the reasons why Microsoft's Windows-related revenue declined 1 percent in the company's fiscal fourth quarter). As devices such as tablets and smartphones become the center of people's everyday computing lives, the mobility segment has the potential to replace any revenue lost by soft PC sales-but in order to capitalize on that trend, a manufacturer needs to introduce a line of compelling devices that people will actually want to buy.
HP's acquisition of Palm in 2010 was supposed to provide the foundation for such a line. Despite some rough years and crash-and-burn products, the name "Palm" retails considerable brand equity. And HP certainly wasted no time leveraging its new asset, soon announcing that it would bake Palm's webOS into not only tablets and smartphones, but also desktops and notebooks.
On paper, it seemed a solid strategy, one that would give HP a broad, multi-device ecosystem along the lines of what Apple's done with its iOS. But the strategy also depends on devices such as the TouchPad succeeding with both consumers and businesses.
Certainly HP is determined to see the TouchPad succeed. In addition to the recent price cuts, the company has pushed an over-the-air software update for the tablet, designed to tweak many of the issues cited by reviewers upon the initial release. HP's quarterly earnings report is due Aug. 17, but it's an open question whether it'll contain unit sales for the device.