Categorized | Hewlett Packard, Tablet News

What do cheap HP TouchPads tell us about tablets?

The UK and US saw strange scenes last week when people who hadn't previously given a monkey's about the HP TouchPad suddenly besieged retailers in - mostly, vain - attempts to get their hands on HP's tablet. The reason, of course, was price: having decided it didn't want to make tablets any more, HP decided to cut prices below £100. Tablets that seemed a bit "meh" at £400 suddenly became must-haves.

Can other firms learn lessons from HP's experience? For Apple, the answer is almost certainly no: its iPad 2s continue to fly off the shelves, and for now at least the firm still has the edge in everything that counts: price, apps and sheer desirability. However, HP's crazed discounting could teach rival firms a lesson or two.

The big lesson here is that no matter how flawed a tablet is, you can shift loads if you make the price low enough. The problem is that what the market considers low enough - £90, in the case of the TouchPad - isn't much help when your tablet costs the best part of £200 just to make, and you've got distribution, retailers' cuts, tax and various other costs on top of that. While margins on tablets are better than the single-digit margins manufacturers make from most desktop and laptop PCs, they're not big enough for firms to massively undercut Apple.

That leaves tablet manufacturers with two choices: lose money, or do something that Apple doesn't. The first option is unlikely to work unless you're Amazon, subsidising hardware prices in the hope of making your money back from selling music, movies and ebooks; the second means doing something more than making just another tablet. Asus gets it: love or hate them, the Eee Pad Slider and Eee Pad Transformer are unlike anything else on the market, and as a result Asus is more likely to carve out a tablet niche than rivals making me-too devices.

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