Suppliers left with components for unannounced 7-inch version as HP says its lossmaking tablet will have one last hurrah at cut price
If you missed out on the low-cost HP TouchPad - with its price slashed from £400 to around £100 - but still want one, there's some good news. Hewlett Packard Co plans to crank out "one last run" of TouchPads, just over a week after declaring it will kill off its tablet line after apparently deciding they had failed to challenge Apple Inc's command of the booming market.
HP has announced a temporary about-face on the gadget after being "pleasantly surprised" by the outsized demand generated by the low cost version - even though the writedowns, believed to be at least $200 per tablet compared to the cost of manufacture, are losing it millions. According to IHS iSuppli's preliminary estimates, the 32GB version costs $318 for the parts alone.
"The speed at which [the TouchPad] disappeared from inventory has been stunning," Mark Budgell, of HP's PR team, said in a blogpost. "We have decided to produce one last run of TouchPads to meet unfulfilled demand. We don't know exactly when these units will be available or how many we'll get, and we can't promise we'll have enough for everyone. We do know that it will be at least a few weeks before you can purchase."
Budgell said though that there will be none available for small or medium-sized businesses through HP's sales channels, possibly indicating that the company will sell only to consumers through retailers in the final batch.
HP has not explained why it is continuing to make the tablet to sell at lossmaking prices. Some have speculated that it is trying to clear out parts inventory from factories which had geared up for a more successful run, and that the parts constitute a sunk cost which has to be written off somehow.
Digitimes in Taiwan reports that upstream suppliers have been left with a components surplus including parts for a 7-inch model, which HP has never announced. Digitimes says that the companies had been geared up to make as many as 100,000 per quarter, with production expected to start at the end of September.
Even if HP isn't making money on sales of the TouchPad, some enterprising eBay sellers appear to be: a large number are available on the auction site, being resold for prices of more than $200.
Critics have blasted HP's management for wavering on pivotal decisions, having stated in , such as its original stated intention to integrate its webOS software into every device it makes, followed by a decision to stop making webOS gadgets, including the TouchPad.
The Silicon Valley giant is struggling to shore up margins as smartphones and tablets eat away at its core PC business, which is the world's largest but is also its least profitable division on paper. On 18 August, chief executive Leo Apotheker said the company was also considering spinning off the PC division - although other managers have since emphasised that that is a strategic review and that other alternatives, including keeping it, are still on the table.
CEO Leo Apotheker is under immense pressure from investors unhappy with HP's back-and-forth on strategy. The former SAP chief has also been forced to slash HP's sales estimates three times since he took over last November.
In a resounding rejection of his grand vision, shareholders sent HP shares down almost 20% the day it announced its sweeping moves, which included a pricey acquisition of the British software company Autonomy. That wiped out $16bn of value from HP in the stock's worst single-day fall since the Black Monday stock market crash of October 1987.
Since the beginning of January, the shares are down by almost 40%, while the stock market overall has remained flat.
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Source: http://www.guardian.co.uk/technology/2011/aug/31/hp-touchpad-one-last-batch
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