Why Hewlett-Packard's TouchPad Tablet Strategy Has Value

By Michael Comeau Hewlett-Packard (HPQ) just cracked the code on getting a tablet noticed in a crowded market -- you take it away! On August 18, HP announced a major restructuring initiative, including the elimination of its poorly selling TouchPad tablet (see Unable to Beat Apple, HP Takes on IBM With Major Restructuring Plan). This move followed three weeks of steadily increasing price cuts that took the TouchPad from $499 all the way down to $99.

(To read Justin Rohrlich's piece on why there are more thefts during a recession, click here.)

The result: mass sellouts across the board. Now HP kinda sorta has a hit on its hands, and the TouchPad is about to rise like a phoenix as the company's learned that playing hard to get grabs attention. PR manager Mark Budgell posted a statement on the company's “The Next Bench Blog” announcing that HP has “decided to produce one last run of TouchPads to meet unfulfilled demand.” But this paragraph is what got my wheels turning:

(To see Daniel Englander's guide to a better America, click here.)

“Before I share, let me first say thank you for enthusiasm for this product. Since we announced the price drop, the number of inquiries about the product and the speed at which it disappeared from inventory has been stunning. I think it's safe to say we were pleasantly surprised by the response.”

Obviously, this statement is just plain silly. These people didn't care about the TouchPad until hit the bargain bin. They're the worst kind of customers. There's nothing stunning about a product that sells well at an 80% discount.

(To view Lloyd Khaner's piece on stocks making gains, despite investor worries click here.

Nonetheless, HP found a way to make some news and move some product, and it's worth pursuing. Look at it this way. HP has no stake in the mobile-device boom, which is by far the important electronics trend of the young millennium. Apple (AAPL) and Google (GOOG) are dominating this brave new world, pushing aside the likes of Nokia (NOK), Research In Motion (RIMM), and Microsoft (MSFT) without the slightest hint of trouble.

(To read the rest, head over to Minyanville