It seems clear (in hindsight), that HP, in particular, CEO Leo Apotheker, made a strategic blunder in the announcement of the cancellation of their webOS devices. No one can know what was the rationale for the sudden, almost unscripted announcement, which even HP associates in the Palm/PC GBS unit were surprised by. What is clear is the reaction: the “fire sale” on Touchpads, at $99 and $149 respectively for the 16 GB and 32 GB models, led to a rush on inventory across the world which has not been seen in any product since…ever.
The clear conclusion, both from sales, and customer reviews, is that the HP Touchpad with webOS is a great device, more than competitive with the mighty iPad. So one has to ask the question: why did HP cancel it?
The obvious answer is sales were not what the company expected. I think they’re response showed a pretty significant gap in their understanding of the market for commodity smart devices (smartphones, tablets, GPSs, etc.). At no point did it occur to HP, that the correct way to build buzz on a new product, with zero market presence, might involve higlighting the parallels with the market leader (iPad), and then undercutting price for a fixed time? A $150 price tag on the 16 GB Touchpad for the first two weeks after introduction, would have moved inventory at a rate unprecedented, built up retailer confidence in the device, and especially, grown mindshare with the public.
At this point, the smart thing for HP to do is retract the Touchpad cancellation, identify an alternate income path around residuals from the device, e.g., app sales, hi-def messaging, document and/or media sharing, and GET THE DEVICES INTO MARKET! The key is to move them fast and furious while Twitter, CNN and the blogosphere are still resounding with the screams of those who “missed the fire sale”. Set the price at $200 for the 16 GB, $250 for the 32 GB, and if Best Buy won’t sell them at that price, push them through online retailers and eBay. The key is to build a robust, resurgent residual ecology around Touchpads and webOS, and that requires selling devices – at almost any price.
Get back in the game, HP, this is a no-brainer.

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