Along with its third-quarter earnings earlier this month, HP announced it will no longer build the hardware for any webOS devices, including the tablet, while it pondered what to do with its mobile devices unit, the Personal Systems Group (PSG). But, the company updated a blog post Tuesday saying it would produce one last run of TouchPads owing to unfilled demand, although it doesn't know when the units would be available or how many it would get. (See HP Shuts Down WebOS Device Biz and OS Watch: Who Wants WebOS?)
"The only “unfulfilled demand” was for a product that was being sold at unsustainably low, money-losing, fire-sale prices," jibes tech reporter Dan Frommer.
Frommer isn't the only industry observer not buying the consumer-demand theory. HP issued the update after the DigiTimes reported that upstream suppliers are suffering from a component inventory surplus following the company's decision to halt production. Rather than building more TouchPads, HP could just be using up the parts its suppliers have lying around for them.
Boy Genius Report blogger Zach Epstein suggested that it wouldn't make sense for HP to build, ship and sell TouchPads at a loss just to satisfy existing contracts when it could agree on a lump payment instead. But, InformationWeek reporter Eric Zeman points out that it could be cheaper for HP to do so, rather than renege on its contracts, not to mention risk hurting its supplier relationships.
Components issues aside, HP did see overwhelming demand for the TouchPad once it dropped prices. The company sold out of the device across retailers in record time. The fire sale couldn't save its margins, however, as the tablet will cost the company more than $100 million owing to a $0.05 charge per share. (See Lessons From the $99 HP Tablet Rush.)
HP doesn't seem to know what it wants to be when it grows up. Further clouding its strategy, its head of PSG, Todd Bradley, tells Reuters he prefers the company spins off PSG, leaving him as CEO, rather than sell the company to a competitor. He also claimed there may be a place for the TouchPad again in the future tablet market, which he says is still relevant to HP.
But the more apt question has already become, is HP even still relevant to the tablet market?
- Making Sense of HP's Mobile Mess
- HP: Tablet Effect Is Real
- HP TouchPad Adds Entertainment Apps
- OS Watch: RIM Rebounds in Emerging Markets
- HP TouchPad Success Hangs on Apps
— Sarah Reedy, Senior Reporter, Light Reading Mobile