Liquidation, valuation, evaluation: on HP’s TouchPad, stock and its CEO

Irony times three: The TouchPad touching off a shopping frenzy over the weekend. HP announcing a new PC this morning. And in my inbox today, an email screaming “It’s HP week at Office Depot!” (At least the main images are of HP printers and ink, a Hewlett-Packard business that isn’t being killed or spun off.)

A few days after HP announced a seismic shift in its thinking — TouchPad tablets and PCs, no, and a multibillion-dollar purchase of software company Autonomy, yes, here’s a look at some repercussions so far, with a focus on the impact on the tablet market.

Gadget shoppers either got a major deal by scooping up those $99 (and $149) TouchPads as handy Web-browsing gadgets, or they bought doomed devices with no guarantee of updates or support. That’s the conflicting buzz on the blogosphere. The TouchPad, which was killed off less than two months after its July 1 launch, appeared to be sold out at many electronics stores and online over the weekend. You can’t even buy one from HP, whose website says it saw “overwhelming demand” and is now temporarily out of the tablets.

One of the more popular questions surrounding the fire sale: Has it screwed up the market for tablet makers, especially those that sell lower-priced Android ones? Will consumers expect tablets at rock-bottom prices from now on?

Lawrence Tran, a Northwestern University student, was not previously interested in a TouchPad, but the bargain-hunter in him thought a $99 tablet was too good to pass up. So he bought the 16 GB model from HP’s website Friday night. The online transaction was “difficult,” he told GMSV by email, but in the end, he got a tablet for half of what he was planning to spend. Tran, whose other computing devices include a self-built Windows desktop PC and a BlackBerry, had been waiting for tablet prices to hit the $200 mark.

But the aforementioned tablet makers might breathe a sigh of relief when they hear about people like Anthony Garcia, who had planned to buy either an Apple iPad or an Android tablet later this year or early next year. The self-described early adopter, a San Francisco-based marketing consultant whose other gadgets include a Lenovo ThinkPad and an HTC Evo smartphone, scored the 32 GB TouchPad for $149 minus an HP discount on the company’s website. He told GMSV by email that he expects the TouchPad “will be a good ‘training’ experience for when [he] want[s] to invest in one of those high-end tablets.” He hopes the tablet will allow him to leave his laptop at home more often.

So does this belated and increased interest in the TouchPad brighten up the prospects for licensing webOS, which HP has said it will continue to support? Charles Arthur of the Guardian calls webOS a dead end: “If you were to license it, what guarantee would you, the user or licensee, have that updates to browsers — for security or just improvements — would come through in a timely fashion?”

The operating system’s dearth of apps also was a drawback for the TouchPad. Now there are reports that Microsoft, maker of Windows phones, is wooing webOS developers with free phones and training.

It will also be interesting to watch how the company’s PCs sell in the 12 to 18 months that HP says it will take for it to spin off or offload its personal-computer business. Granted, the PC it announced today is geared toward enterprise (it’s the Elite business model). But ZDNet’s Larry Dignan said the tablet liquidation over the weekend has hurt HP’s overall reputation. He said the problems buyers experienced when they tried to buy the TouchPads from HP’s website was “revealing. … If I couldn’t complete a TouchPad sale on how will the company run my infrastructure?” Dignan also predicts that retailers will be wary about HP product launches for a long time.

As for CEO Leo Apotheker, the former SAP chief who has been at the helm of the storied Silicon Valley company for less than a year, he’s taking plenty of heat after shares plunged 20 percent Friday, erasing $12 billion of HP’s market value. The company’s shares are up more than 4 percent to about $24.60 as of this post amid a broader market rise. Analysts are divided over whether Apotheker’s big moves will ultimately benefit HP. But Reuters points out that the company has lost nearly 44 percent of its value since Apotheker came on board. The Wall Street Journal’s Deal Journal blog says that former HP CEO Carly Fiorina, no stranger to criticism herself, said on CNBC this morning that the company really needs to “focus on the hows and whys” of its moves.


Share this Post

  • So the selloff of Touchpads will “Hurt HP’s overall reputation.” I doubt that. Ordinary consumers finally got some HP product that was worth almost as much as they paid for it. They even have Carly doing a song and dance on the soon-to-be HP PC gravesite. If Dave and Bill were alive, they’d start over again – they would never be able to work with such incompetent staff that’s trying to manage so many major tech projects at one time. Now here’s a heads-up Leo: Those little product details are important, and people have been lying to you. Whether it’s using tin-plated connectors on low-voltage PC boards that make every 110-plus computer fail (including Mr. Martin’s computer, remember?), or batteries that take only 30 recharges, it all adds up, Leo. Your predecessors, Carly being one of the more significant, built this mess, and I don’t think you have the will or the resources to fix it.

  • Thom Slouck

    The HP web site is a mess so how will they operate a cloud service? I know from past experience that there is little or no support for previous consumer products. Yet you still have the number one PC company and it makes profit. It seems like the new CEO is in a panic and had to create a problem to divert attention from the fact that he cannot manage a division properly.

  • dan

    Leo will be gone next year and remember I wrote it here.
    He could not run SAP so how the heck this guy can manage HP.

  • I won’t even pay $99 for a tablet if it’s running Web OS. Welcome to all those uninformed buyers! Those poor frugal suckers won’t even have 1/10000 of the Applications available from Apple or Google Android.

  • sd

    So if you bought a blowout-priced TouchPad and you get to use it only a year or two before it’s functionally obsolete or even just seriously out of date, you’ve spent less than you would on a couple of months of smartphone data coverage. OK, it’s not a mobile phone. But I know a number of people who bit at that price, and they mostly want to play. It matters not to them that they may end up giving it to their toddler or toss it in a couple of years.

  • An HP Touchpad that lasts two years? Now that should be a collector’s item.

  • Rommel Dumlao

    In my last ditch efforts to obtain an HP Touchpad online, I continue to come across article after article stating the two words that erases all hope and possiblities – “sold out”. However, my efforts were not a complete loss since it did lead me to this particular article which was written by the famous Levi Sumagaysay.
    Hi Lev! Glad to see you writing again. Looking forward to reading your articles.

  • Levi Sumagaysay

    Rommel: My old friend, hope is not lost. Check out another post of mine earlier this week:

  • Stu

    I don’t know of anyone who actually got a Touchpad at the firesale prices. I also hate to pay the higher price at some of these other stores when the possibility of one from the HP web site exists. What I have noticed is the Touchpad seems to be all over eBay at “what I call” gouging prices. So, I have to wonder if John Q Public actually was able to buy one or were they just gobbled up by resalers.