HP TouchPad Failure Could Benefit Apple, Microsoft

Hewlett-Packard has slashed prices for its TouchPad tablet, a possible sign of sales trouble. If the TouchPad fails, Apple and Microsoft stand to benefit.

Hewlett-Packard intended the TouchPad to battle toe-to-toe with Apple's iPad. The tablet offered solid hardware, paired with the webOS operating system inherited from the Palm acquisition in 2010. It had a multimillion-dollar marketing push, accompanied by any number of high-profile media reviews.

But now there are indications that the TouchPad is in trouble. A mere six weeks after its debut, HP has slashed the tablet's price by $100, to $399 and $499 for the 16GB and 32GB models, respectively. As the Wall Street Journal helpfully pointed out Aug. 11, that's a 20 percent cost reduction. In general, businesses don't make those sorts of cuts to a new product's sticker price unless they want to spur adoption, perhaps because of anemic sales.

HP needs its mobile initiatives (including tablets and smartphones) to succeed in a big way. PC sales are slowing-one of the reasons why Microsoft's Windows-related revenue declined 1 percent in the company's fiscal fourth quarter. Meanwhile, the mobility segment is gaining users and unit sales at an impressive rate. The tech world is undergoing a paradigm shift, one in which mobile devices are rapidly overtaking PCs as the center of people's everyday computing lives.

HP's takeover of Palm was supposed to be its ticket into the mobility arena. Despite its checkered history, Palm retains considerable brand equity. In addition to leveraging Palm's assets into the TouchPad and a new generation of smartphones, HP also intends to load webOS onto desktops and laptops-potentially creating a broad, multi-device ecosystem along the lines of what Apple's done with its iOS.

In many ways, though, the TouchPad needed to be the "spark" igniting that webOS ecosystem. And while it's far too early to declare the device a total success or failure, drastic price cuts at this stage of the game do not bode well for early adoption.

If the TouchPad fails, it will benefit any number of companies, particularly if it curbs webOS development on other form factors. Apple will have crossed out yet another iPad competitor. Microsoft will no longer face the potential headache of webOS as a competitor to Windows on traditional PCs and tablets. Google Android, Windows Phone and Research In Motion's BlackBerry OS will all enjoy a little more breathing room.

That being said, HP seems determined to make the TouchPad succeed. Earlier in August, the company pushed an over-the-air software update for the tablet, designed to tweak many of the issues cited by reviewers upon its initial release. But will that, combined with the price cuts, spur adoption among consumers and businesses-especially with the iPad continuing to dominate tablet sales?

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