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HP Cuts TouchPad Price A Month After Launch

Will deep discounts spur sales, or do they signal doom for the relatively new tablet?
HP TouchPad: A Visual Tour
HP TouchPad: A Visual Tour
(click image for larger view and forslideshow)
Earlier this week, HP dropped the price of its webOS-based TouchPad tablet from $499.99 and $599.99 to $449.99 and $549.99 for the 16 GB and 32 GB models, respectively. The "instant rebate" was set to last through early September. The $50 price drop was notable, given that the device launched on July 1, and has only been in the market for one month.

On Thursday, HP announced a special TouchPad sale scheduled for this weekend, dropping the price another $50 to $399.99 and $499.99. The sale ends on August 7.

These price cuts are worrisome, considering the TouchPad's short time in the market. Dropping the price by 17-20% has to cut deeply into HP's margins on the device. They are obviously meant to spur sales, especially now that the webOS 3.0.2 update is available, which stabilizes the TouchPad's performance and adds a host of new features.

"HP launched the TouchPad prematurely--it was exceptionally buggy--and paid dearly for that with terrible reviews," said Current Analysis analyst Avi Greengart in an email to InformationWeek. "The price drop is a smart way to bring attention back to the TouchPad now that HP has fixed many of the most egregious problems in a software update."

But if you're a real bargain hunter, you won't buy the TouchPad from HP this weekend. Instead, you'll buy it from Woot, which is offering the TouchPad for $20 less than even HP is charging. Friday only, you can buy the Touchpad for $379.99 from Woot. Shipping from Woot costs $5. The Woot deal is available as long as supplies last.

These are pretty extensive price cuts. Motorola discounted the cost of its Xoom Android tablet, but not this quickly. Samsung has not yet discounted the price of its Galaxy Tab 10.1, though the prices of the original Galaxy Tab 7 dropped rather quickly in late 2010 and early 2011. RIM has not discounted the price of the PlayBook, nor has Apple discounted the price of the iPad.

"The price drop appears to be temporary, [but] the damage from a negative reception at launch has been done," said Greengart. "The new software makes the TouchPad a good choice for consumers who value personal productivity but are limited mainly to Web browsing, email, and calendar--webOS has just a few hundred tablet-specific apps compared to 100,000 for the iPad. The TouchPad is also thicker and heavier than the iPad 2, and no software update or price drop is going to change that."

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