HP should reconsider dumping TouchPad: research firm

HELSINKI Thu Sep 15, 2011 6:05am EDT

An HP TouchPad is shown on a screen during a media presentation at the Herbst Pavilion at the Fort Mason Center in San Francisco in this February 9, 2011 file photo. REUTERS/Beck Deifenbach

An HP TouchPad is shown on a screen during a media presentation at the Herbst Pavilion at the Fort Mason Center in San Francisco in this February 9, 2011 file photo.

Credit: Reuters/Beck Deifenbach

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HELSINKI (Reuters) - Hewlett-Packard Co (HP) should reconsider its decision to dump its TouchPad tablet since the device could double the value of the PC division HP plans to spin off, technology research firm Canalys said in a note to clients.

HP stunned markets in August by saying it may shed its PC business -- the world's largest after the $25 billion acquisition of Compaq in 2002 -- while at the same time killing webOS-based phones and the TouchPad tablet which was launched only six weeks earlier.

HP slashed the price of its tablet to $99 the weekend after announcing the TouchPad's demise, igniting an online frenzy and prompting long lines to form at retailers as bargain-hunters chased down a gadget that had hitherto failed to excite consumers.

"The TouchPad was overpriced at launch and did not sell. This led HP to draw a premature conclusion that the product category had failed," Canalys analysts said in a research note.

Canalys said the price cut had helped make TouchPad the hottest brand in HP's entire portfolio, gathering more interest than anything from HP in more than 10 years.

"The TouchPad has become the 'must-have' technology product of 2011. Perhaps no other technology vendor, apart from Apple, has ever created such hype for a technology product," the research note said.

Apple Inc created the tablet or pad market with its iPad only last year and still dominates the segment. It has sold some 30 million of the devices, which are priced from about $500.

"HP has established a lead in the race to be the number two behind Apple in the pad business but the window of opportunity will begin to close if delays occur," Canalys said.

Helped by aggressive pricing and hype around the TouchPad, HP could achieve and maintain 10 percent share of the global market for media tablets, the research group said.

Canalys said a 10 percent market share of tablets could double or triple the PC unit's estimated value of between $8 billion and $10 billion.

(Reporting By Tarmo Virki; Editing by David Holmes)

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