Hewlett Packard's decision to produce one last line of its TouchPad sends out a message that the company has no idea what to do next.
This is the view of Arthur Goldstuck, World Wide Worx MD, who warns that little good can come of producing a device the company plans to discontinue and also expected to sell at a loss.
Earlier this month, the company cut the price of its TouchPad, originally billed at $499, to $99. “You don't need an accountant to work out that people would be delighted to pay $99 for a $400 device,” says Goldstuck.
However, he says this should not be the basis for “flip-flopping” on strategic decisions. “Ironically, it will be good for the brand in the short term, as it will demonstrate HP products flying out of stores,” Goldstuck adds. However, he points out, the long-term result will be “nostalgia for a brand and device that could have competed but would not brave the storm”.
Goldstuck argues that the TouchPad will challenge the iPad on a one-to-one basis based on its low price. Yet, he argues, HP's tablet will be unable to compete with the iPad on any other level, including quality, performance and design.
He says the TouchPad will fall short particularly on long-term strategy because it has no chance of competing for market share. Goldstuck also emphasises that this was the reason HP decided to discontinue the TouchPad in the first place.
Steven Ambrose, Strategy Worx MD, suggests that HP may have been committed to parts and production runs on the TouchPad. He says that in this case, it would make more sense to manufacture the devices, even if they are sold at a loss.
blog, the TouchPad has experienced high demand since its price was dropped. The company did not confirm when the units would be available, or how many would be produced. “We do know that it will be at least a few weeks before you can purchase,” the company adds.
Going soft?
Goldstuck believes HP has the ability to build a major software and services company focused on the enterprise. However, he points out that this will be “at the cost of the innovation DNA at the heart of the business”.
He argues that while the company's decision to shift its focus to services is similar to an earlier decision taken by IBM, HP is not in the same position that IBM was. “The PSG unit at HP is the heart of the company and its identity,” says Goldstuck. In contrast, he says, PCs were a distraction to IBM.
HP's success in the future will depend on strategy and leadership, Goldstuck says.
According to reports, the company has cut sales estimates three times under the leadership of Leo Apotheker, who took over the helm in November. Goldstuck says that a change in leadership at HP would not be surprising.
HP SA says the TouchPad will not be sold locally because the entire support structure and warranty engine to sustain the product has not yet been established. and HP feels it would be unfair to sell a product if there was no support planned.
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