Killing webOS Cost HP HOW MUCH?!? Also, HP Nabs #2 Tablet Spot for 2011!

Killing webOS Cost HP HOW MUCH?!? Also, HP Nabs #2 Tablet Spot for 2011!

Two interesting pieces of contrasting TouchPad news: one about failure and the other success.

From AllThingsD, we get a snip from the recent HP earnings report specific to Palm, webOS and the impact of folding up that business on their results. Here is their quote from the earnings report:

Non-GAAP earnings and operating profit information excludes after-tax costs of $3.3 billion, or $1.56 per diluted share, related to the wind down of HP’s webOS device business, impairment of goodwill and purchased intangible assets, amortization of purchased intangible assets, restructuring charges and acquisition-related charges.

Those numbers are not completely broken out or transparent so we don’t know exactly what costs were associated with which parts of the Palm and webOS wind down. But it is fairly amazing to think in 2010 HP paid $1.2 billion for Palm, only to turn around and spend $3.3 billion writing it off barely a year and a half later!

On to the ‘good news’ …which is really also bad news for the non-iPad crowd. The NPD is reporting that based on an analysis of the year through October reported at CNET:

the U.S. tablet market–excluding Apple–saw sales of more than 1.2 million units and retail revenue of $415 million from January through October, according to a new study from NPD. HP stood on top of that non-iPad hill, closely followed by Samsung Electronics.

Joe Wilcox at BetaNews reported the news and spoke to Stephen Baker, NPD’s vice president of industry analysis, who said:

“I think the biggest takeaway is how weak the non-iPad tablet market really is” , Baker told me today. “The HP Touchpad was on the market for what 6 weeks and was still the best-selling tablet for the whole year, even with the crazy pricing. That is still a pretty damning statement”.

Wilcox cast the reality of the situation in stark terms, saying “Apple sold in about 10 days as many iPads as all other tablets combined at US retail for the first 10 months of the year.”

There are some interesting things from the NPD numbers. First off, the main players – HP (17%), Samsung (16%), ASUS (10%), Motorola (9%), and Acer (9%) – account for ~61% of non-iPad sales, with HTC, RIM and others accounting for the other 39%.

Next, in spite of all the speculation about just how many TouchPads were sold, it looks like all of us were over-estimating: based on these numbers HP sold ~204,000. Not even close to a million. Yes these are just U.S. numbers, but it is still amazing.

Third, and I know I have beaten this one to death, but this also puts the Samsung puffery in harsh light – less than 200,000 TOTAL tablets sold. Yeah, NOT millions or even a million.

And finally, do a quick calculation of $415 million divided by 1.2 million and you see that these sold for a mean price of under $400, actually closer to $350. Even if we say that HP sold every TouchPad for an average of $150, that only brings the average to $385. Why does this matter? It means that while Apple is selling as many 16GB iPads as they can make for $499, Samsung and others have had to rely on huge sales to generate any interest.

Again, why does THAT matter? Because it undercuts the inherent value of the product. Many of us said that HP cutting price to $99 for the 16GB TouchPad would hurt the entire non-iPad market. I still think that is true – and the release of the $199 Kindle Fire only cements it. Android tablets have started a race to the bottom – it will impact the iPad to be sure, but it also means that any non-iPad is inherently cheapened.

How does that impact things? When we see something new – even something like the awesome looking ASUS EEE Transformer Prime with the Tegra 3 Quad Core system and Android 4.0 ‘Ice Cream Sandwich’, we see a $400-500 price along with an estimate of a major price drop within six months and know that the sales for the Prime will be ‘soft’, and to wait for the huge sale in the spring.

How has all of the turmoil with HP, webOS and the TouchPad impacted the tablet market in your opinion?

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About the Author

Michael Anderson
I have loved technology for as long as I can remember - and have been a computer gamer since the PDP-10! Mobile Technology has played a major role in my life - I have used an electronic companion since the HP95LX more than 20 years ago, and have been a 'Laptop First' person since my Compaq LTE Lite 3/20 and Powerbook 170 back in 1991! As an avid gamer and gadget-junkie I was constantly asked for my opinions on new technology, which led to writing small blurbs ... and eventually becoming a reviewer many years ago. My family is my biggest priority in life, and they alternate between loving and tolerating my gaming and gadget hobbies ... but ultimately benefits from the addition of technology to our lives!