HP TouchPad Starting Tablet Price Wars?

Two price drops last week on HP's tablet, plus the impending arrival of Amazon's tablet, point to falling price tags. But much more mobile disruption lies ahead in the next few months.

Fritz Nelson, Vice President, Editorial Director InformationWeek Business Technology Network

August 8, 2011

5 Min Read

InformationWeek Now--What's Hot Right Now

InformationWeek Now--What's Hot Right Now

Summer is regenerative. Do you remember coming back to school from the summer's vacation, and everyone had changed? Hair was longer or shorter, muscles and facial hair emerged, people got taller, slimmer, voices changed. By the end of this summer, the mobile industry will have seen substantial price drops on tablets, a new race for the number three spot in mobile, an invigorated focus on mobile device management, yet another Apple iPhone home run, and a push for mobile 3-D.

Last week, HP announced a fairly dramatic price drop for its TouchPad tablet. Twice. The first price drop was $50; the second, available only through last weekend, was another $50. Tally: $399 for the 16-GB WiFi version. And if you bought it from Woot.com last Friday, it was $379. Note that some experts believe the HP TouchPad costs $328 to make.

During the past couple of weeks, and especially this weekend, HP started to unveil a slew of new TouchPad ads, featuring actor Russell Brand and boxer Manny Pacquiao. (HP showed me a couple of the Russell Brand ads back in June, telling me Brand ad-libbed many of his lines.) HP also updated its WebOS operating system, which was, unfortunately, a noticeable downfall when the TouchPad first shipped.

Let's review: Updated OS, big-time price drop, lots of ads. One way to look at that is HP wants to move the TouchPad during a bit of a lull in the tablet announcement circus. Another way to look at it is just the beginning of price wars. For the past year, $499 was the low-end entry mark, but Lenovo hit $479 in a last-minute move. Now HP hits $450. No word yet from HP on how these promotions did.

For now, we're unlikely to see any tablet competitors dropping prices just because HP did. But the next round of tablets may just see some price jostling.

We're also likely to continue to see HP, Microsoft and, yes, even RIM jostling for third place behind Google and Apple in mobile generally. HP is clearly renewing the efforts of Palm through an infusion of capital and the full weight of HP. The Palm Pre 3 phones, when they hit the U.S., will be a hit with old Palm lovers, and may entice new customers; the slide-out keyboard is much improved, and the phone, based on some limited time I had with it last month, seems like a serious step in the right direction.

Microsoft, despite the struggles so far with Windows Phone 7 (Microsoft's share of the phone market is down 38% since the launch, InformationWeek's Paul McDougall reported), has a compelling new update coming in Mango, which is likely to also provide a boost. Windows 8, to be demonstrated in more detail next month at Microsoft's Build event, seems to be a very interesting hybrid OS--one that can power laptops and tablets alike. It's too early to take any guesses about its success, but it sure is intriguing.

And poor RIM, the beleaguered and battered dominator of the enterprise and BBM-ing teenagers alike, whose PlayBook tablet was used in a recent episode of USA Network's "White Collar" (not "Entourage" or "Modern Family", but "White Collar"), came out with three new phones and a new OS last week, only to have its entire existence put into question by Ironfire Capital analyst Eric Jackson. InformationWeek's Robert Strohmeyer noted that RIM's decline would be bad for businesses.

But many businesses are largely resigned to RIM's slow demise. Two prominent mobile device management companies told me last week that customers were actually using their products to start preparing a shift away from BlackBerry deployments. One of the big changes, then, will start to revolve not only around trying to mimic the device management and security inherent in RIM's BES, but also incorporating things like curated and corporate approved app markets. Strohmeyer delves into curated Android app markets more today. And last week, on BYTE, David Berlind provided a demonstration of security guru Moxie Marlinspike's WhisperCore Android device management solution. Expect this market to continue to explode.

Let's not forget that little company called Apple, which quietly sent developers yet another beta version of the forthcoming iOS 5 this past weekend. There are a few bug fixes, but, notably, hints about voice commands. The much-improved OS, along with the uncomfirmed, but inevitable iPhone 5, will undoubtedly mean yet another boost for the high-flying market maker.

Times are indeed changing. By summer's end we will see quad-core mobile devices, according to NVIDIA, and LG's Thrill will ship on AT&T's so-called 4G network, where it will go head-to-head with HTC's EVO 3D on Sprint's WiMax network, and with consumers' tepid response to 3-D technology. As I argue on BYTE today, if anything will drive 3-D adoption, it will be cost-effective phones like these, and the ubiquity of YouTube, which is busily beefing up its 3-D content strategy. And then along with come Amazon with a tablet of its own, and perhaps, as rumors suggest, a pricing model that will disrupt the entire market yet again.

Fritz Nelson is the editorial director for InformationWeek and the Executive Producer of TechWebTV. Fritz writes about startups and established companies alike, but likes to exploit multiple forms of media into his writing.

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About the Author(s)

Fritz Nelson

Vice President, Editorial Director InformationWeek Business Technology Network

Fritz Nelson is a former senior VP and editorial director of the InformationWeek Business Technology Network.

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