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iPad met its match in the TouchPad

The TouchPad, quite by accident, came close to matching the consumer enthusiasm for Apple's iPad. So maybe tablets are just too expensive. Amazon could change that, though.

On Friday, August 19, Apple's iPad finally met its marketing match. That's when Hewlett-Packard's TouchPad went on sale for as little as $99 and triggered the kind of buying frenzy that had been reserved exclusively for products from Apple.

Over the last year and a half, no other tablet had been able to come as close as the TouchPad to eclipsing the fixation that consumers have had on the iPad.

Roger Kay, principal analyst at Endpoint Technologies, believes the TouchPad's demise should give Apple pause. Especially if such a product were repeated by another major tablet vendor in the future. (Did I hear someone say Amazon?)

Kay explained. "If you were a big company like HP and you were doing a new category product launch, it would not be weird to have a marketing budget in the hundreds of millions," he said in a phone interview. "So, you could have used that money to subsidize the price of the TouchPad and you can flood the market with these devices that are worth way more than you have to pay for them. And get them in everybody's hands. Get everybody talking about it. That could have been the loss leader entry into the market," he said.

"So, it wasn't really a product failure, it was a pricing failure."

And the ingredients for making a good run at Apple were there. Platform: the TouchPad was a self-contained "vertical" platform, in which HP controlled both the hardware and software. (Like Apple.) Resources: HP's size and resources are enormous. (Like Apple.)

Of course, aggressive pricing would have had to continue along with significant design and software improvements. (Would more apps have followed? We'll never know.)

Though inventory sold out online and at stores in less than 12 hours, the TouchPad is still listed for $99.99 on HP's site. The product was a success, says analyst Roger Kay.
Though inventory sold out online and at stores in less than 12 hours, the TouchPad is still listed for $99.99 on HP's site. The product was a success, says analyst Roger Kay. Hewlett-Packard

It's hard to disagree with Kay's reasoning, because the consumer response bears this out. In addition to the lines that formed at Best Buy stores in the U.S. on Sunday (and remember this happened with only about 12 hours warning, not the months of hype that precedes an Apple product rollout), there was equally frenzied buying of the TouchPad online.

I found plenty of anecdotal evidence at stores. Best Buy was getting so many calls over the weekend that some stores had prerecorded messages about the TouchPad's availability. And in a visit to a suburban Los Angeles Best Buy this week, a sales associate told me he was still trying to get his hands on one. He was speaking simply as a consumer who wanted a TouchPad, not as a Best Buy sales associate.

And HP keeps the interest stoked via a Twitter feed dedicated to updating the TouchPad's availability.

Of course the argument can be made that this was simply a pricing issue--the same visceral response seen when hordes stampede to a half-off, all-you-can-eat day at Souplantation (hey, it's a California thing).

Maybe. But it also means tablets are too expensive. Motorola and Samsung are not going to generate big sales numbers in the U.S. with $499-and-up tablets. There are just too many more useful alternatives at $499 or even $429. They're called laptops.

(Apple gets a pass because it's Apple: probably the only consumer device company that can get millions of people--include me in that crowd--to pay $1,299 for a MacBook Air instead of $799 for an HP Pavilion or other Windows laptop equivalent.)

Which brings us to Amazon. Rumor has it that the Amazon tablet will be cheap and possibly subsidized. If true, that could spell success.

The moral of the story? The only way to combat the iPad--for the time being at least--is with cut-throat pricing. HP proved this, however accidentally.