HP resurrects TouchPad for one last go at the iPad

LOS ANGELES Tue Aug 30, 2011 8:56pm EDT

A logo of HP is seen outside Hewlett-Packard Belgian headquarters in Diegem, near Brussels, January 12, 2010. REUTERS/Thierry Roge

A logo of HP is seen outside Hewlett-Packard Belgian headquarters in Diegem, near Brussels, January 12, 2010.

Credit: Reuters/Thierry Roge

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LOS ANGELES (Reuters) - Hewlett Packard Co plans to crank out "one last run" of TouchPads, days after declaring it will kill off a line of tablets that failed to challenge Apple Inc's command of the booming market.

A day after the chief of HP's personal devices division told Reuters the TouchPad might get a second lease on life, HP announced a temporary about-face on the gadget after being "pleasantly surprised" by the outsized demand generated by a weekend fire-sale.

HP slashed the price of its tablet to $99 from $399 and $499 the weekend after announcing the TouchPad's demise on August 18, part of a raft of decisions intended to move HP away from the consumer and focus on enterprise clientele.

That ignited an online frenzy and long lines at retailers as bargain-hunters chased down a gadget that had been on store shelves just six weeks.

"The speed at which it disappeared from inventory has been stunning," the company said. "We have decided to produce one last run of TouchPads to meet unfulfilled demand."

HP may lose money on every TouchPad in its final production run. According to IHS iSuppli's preliminary estimates, the 32GB version carries a bill of materials of $318.

"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," HP said in a blogpost.

Critics have blasted HP for wavering on pivotal decisions, 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 storied Silicon Valley giant is struggling to shore up margins as smartphones and tablets eat away at its core PC business, the world's largest. On August 18, HP said it was also considering spinning off the PC division.

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 percent the day it announced its sweeping moves, which included a pricey acquisition of software player Autonomy. That wiped out $16 billion of value from HP in the stock's worst single-day fall since the Black Monday stock market crash of October 1987.

HP declined to comment beyond the blogpost. Shares in the company were down marginally in after-hours trade on Tuesday.

(Reporting by Poornima Gupta, Bill Rigby and Edwin Chan; Editing by Richard Chang)

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Comments (4)
dbinternet wrote:
TouchPad resurrection is once more hint that Leo Apotheker is the wrong man for the job. How can HP board higher a French to lead the world number one company in PCs. I have nothing against the French but each time Leo opens his mouth HP shares takes a hit. A CEO job is to inspire confidence when I hear Leo I want to cry!

David Brown
Infinity Capital Management

Aug 30, 2011 10:19pm EDT  --  Report as abuse
Mott wrote:
There is merit to keep the OS and the device alive, as HP can engineer much needed enterprise security beyond the pack natively.

Aug 31, 2011 9:56am EDT  --  Report as abuse
Geoot wrote:
My guess is that they are going to assemble the rest of the parts that they have. Their earlier expectation would have been to dump them on the surplus parts market but they discovered it was worth the labor and shipping to put the rest of them into the distribution system just from an advertising/exposure/good will point of view.

Aug 31, 2011 1:32pm EDT  --  Report as abuse
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