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8/23/2011
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Bad News About $99 HP TouchPad Mania

Everyone loves a bargain, but remember: A good tablet display costs about $70. Dreams of a $99 iPad-killer remain fantasy.

InformationWeek Now--What's Hot Right Now
During its approximately 50-day life, the HP TouchPad never created a buzz that drove people to line up at retail stores or overwhelm online store servers. Upon its death, however, the HP TouchPad has done just that. Once HP announced late last week that it would make no more TouchPads or smartphones, a buying frenzy ensued. Starting on Saturday, consumers clamored for $99 firesale prices on TouchPads. Across the pond, U.K. retail demand for the closeout TouchPads has been so great that reporters note that it's tough to find a single TouchPad as of Tuesday morning.

I understand the human delight in finding a bargain. I understand the appeal of a $99 device, too. But let's not jump to any conclusions about what this $99 tablet stampede means for today's tablet market.

Unfortunately, this $99 TouchPad stampede means very little for those rivals trying to dethrone the ruling tablet king, Apple.

The reason boils down to very simple math: You can't build anything like an iPad for anywhere near $99, even if you're using Android. Consider this: In July, an iSuppli teardown of HP's TouchPad estimated the cost to HP for the display alone was $69. As InformationWeek.com's Eric Zeman reported, for the16-gigabyte TouchPad that HP originally priced at $499 at retail, iSuppli estimated the total cost to HP for materials and labor was $328.The 32-GB Wi-Fi Apple iPad costs about $325 to make, and sells for $599, Zeman noted.

Lenovo's interesting new tablets, which my colleague Fritz Nelson gave you a look in July, are now on sale online, at prices starting at $499. These tablets (see our visual tour) include two Android models.

Android tablets will continue to put healthy price pressure on Apple, but that display cost is a hurdle that will be hard to jump for anyone with dreams of $99 tablet greatness.

Cost may be the biggest factor holding consumers back from buying tablets, but CIOs have bigger tablet worries. Mobile device management (MDM) and security concerns related to tablets only grow as more users walk in the door with tablets--and as more CEOs ask why the company's mobile strategy isn’t making faster progress.

Who will supply the best suite of tools to manage all those enterprise phones and tablets? Here's one of the very few mobile opportunities that Apple is not poised to win.

However, as my colleague Chris Murphy reports, beleaguered BlackBerry maker Research In Motion promises to soon deliver MDM tools to manage multiple devices, including tablets. Of course, RIM will have to truly support other vendors' devices, not just use this software as a way to push BlackBerry phones and PlayBook tablets, Murphy notes.

"Is MDM software enough to revive RIM as a growth company? Not on its own," Murphy says. "But it’s a huge opportunity, and a critical way for RIM to differentiate itself from Apple and Google, which have a history of putting enterprises far down their priority lists."

In other words, if RIM can build on its own mobile management and security expertise, it has a good chance of getting enterprise IT to line up--without firesale pricing.

Laurianne McLaughlin is editor-in-chief for InformationWeek.com. Follow her on Twitter at @lmclaughlin.

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