Best Buy sitting on a pile of unsold HP tablets

The consumer retailer has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, a source tells AllThingsD.

Arik Hesseldahl
3 min read

There have been plenty of hints that Hewlett-Packard's TouchPad isn't selling well. First there was a $50 discount. Then there were spot discounts of $100 at outlets like Costco. Then the $100 discount became permanent. Adding insult to apparent injury, a deal on Woot for $120 off an entry-level 16-GB TouchPad netted all of 612 takers.

With HP set to report quarterly earnings tomorrow, sources familiar with the matter tell AllThingsD that TouchPad sales are failing yet another critical test: sales at big box consumer electronics retailer Best Buy.

According to one source who's seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory.

A second person who has seen Best Buy's TouchPad sales figures confirmed the results as "consistent with what I've seen," and went so far as to say that 25,000 sold might be "charitable." This source suggested that the 25,000-unit sales number may not account for units that consumers return to stores for a refund.

Best Buy, sources tell us, is so unhappy that it has told HP it's unwilling to pay for all the TouchPads it has taking up expensive space in its stores and warehouses and wants HP to take them back. HP, for its part, is pleading with Best Buy to be patient. We're also told a senior HP executive, possibly executive VP Todd Bradley, is slated to travel to Minneapolis soon to discuss the matter with Best Buy executives.

These numbers are emerging just one day before HP is set to report quarterly earnings. While it's possible that HP will chose not to disclose any unit sales results for the TouchPad, because as yet they're unlikely to be large enough to be material, if it does report anything on the subject it will probably report a figure known in industry circles known as "channel sales," which are the number of units sold to stores like Best Buy and Costco. Channel sales don't reflect sales to end customers, known as "sell through."

HP declined to comment, as did Best Buy.

There's more. TouchPad sales aren't only failing to catch on at Best Buy, but at other retailers including Wal-Mart, Microcenter and Fry's, says analyst Rich Doherty, head of the Envisioneering Group. Doherty says that spot interviews at stores on both coasts show that HP's "wildcat pricing moves" on the TouchPad have prompted consumers to wait and see what happens in the next few months.

"After the initial surge of interest after the July release, all those price promotions have caused consumers interested in buying a TouchPad to pause because they think the price is going to fall further," Doherty told me.

For the record, the TouchPad costs $399.99 for the 16-gigabyte model and $499.99 for the 32-gigabyte version. Both started at prices exactly $100 higher when first announced in June.

So what's HP's next move? Doherty says that with the back-to-school PC buying season under way, HP will likely use its leverage as one of Best Buy's top suppliers--the other is Samsung--to offer bundle deals. Buy an HP computer, get the TouchPad for a special price.