Monday, August 22, 2011


HP announced they are getting out of the consumer hardware business last week. The surprising move came just 2 years after HP paid $2.4 billion for Palm and its WebOS software and just 10 years after buying competitor Compaq for around $25 billion. The purchase of Compaq made HP, at the time, the largest computer company in the world. After just 10 short years they managed to squander that title and their consumer hardware market has slid into oblivion.

What is amazing is that HP has inadvertently shed light on post-PC era and the problem many companies are having as they take on the current hardware leader Apple and its ubiquitous iPad. A lot of critics and tech pundits have lamented that lack of apps leading to HP’s decision to pull the plug on its Touchpad, however what has happened in the last 3 days has proved that to be inaccurate. HP has a vibrant WebOS App Catalog suite for both the Pre series of smartphones but also the Touchpad. The WebOS had a loyal following and dedicated community as well. So what did HP show the rest of the companies chasing Apple? Price point!

Since Apple introduced the iPad, other companies have been trying to duplicate its success most notably with Google’s Android OS. Android has done a good job of creating a number of apps for its App Marketplace and all the tablets combined still trail the iPad. So why are Android tablets trailing Apple’s? There are a few reasons such as marketing, fanboydom, etc., however there is one that is most telling and has come to light with the HP announcement, price point!

All tablet manufacturers have priced their products at the same price point, or close to it, as Apple’s in the misunderstanding that is the “sweet” spot for tablets. It is….for Apple! HP was only in the tablet market for about month and upon entering did what every other company did, priced the Touchpad around the iPad price point. Within a few weeks they dropped the price $100 to help boost sales, which it did, but not enough for HP to continue. When the word got out that HP Touchpads could now be purchased for as little as $99 they flew off the shelves and it is almost impossible to find one. What drove this sell off? Price point!

While it would not be good business to sell quality tablets for less than it costs to manufacturer them, companies need to understand that simply blindly following another company does a number of things, or doesn’t do them as the case may be. One, it just makes the following company a perpetual number 2 since all they are doing is following. Second, it decreases innovation since all future products are really coming from one company with all others just replicating the same thing. Other tablet manufacturers need to understand that in order to effectively compete with Apple’s iPad they need to give consumers a reason to pick their product over the hype of the iPad AND aggressively price their offerings to entice consumers to purchase their products.

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