Tag: clearance
An Open Letter to HP
by Timothy Kline on Aug.21, 2011, under Technology
Yesterday, word broke across numerous news sites featuring tech news that HP’s Touchpad™ tablet was being clearanced out at $99 for the 16GB model of the market failure for HP. The resulting “fire storm” sale of the Touchpad™ has demonstrated to every other company what most of us have known for a long time: Sell your tablets for $150 and under, and people will grab them. Then, make sure you have the apps available through your online store that will help you earn the losses you incurred on the initial sale. Even if that person sells the device later, the next owner will want to come through that market as well, and you’re repeating sales on down the road.
How long would it really take to pay for the loss incurred on each initial sale (tablet) through a properly envisioned app store and cloud storage service where your share is something any developer would jump at, while still earning the money to pay off the tablet?
Take it a bit further. You expect to release the next model right around the time that the first model is paid for through residual sales through the sale of apps and cloud storage. The person upgrades to tablet v2 and the cycle begins again. Better apps for the v2, enhancements of the cloud storage feature, and the v1′s pass to others to now earn you profits (the loss is now paid for, remember) and you’ve increased your revenue source by as much as your sales of the v2 fared.
Apple has used built-in obsolescence for years, and there’s no reason why the same principle cannot be applied to tablet PCs. By the time that you’ve brought tablet v3 onto the market, owners of v1 should be making the hard decision about whether to be stuck with their v1, which will no longer see updates or enhancements, or upgrade to a new model—ideally, the new v3, because the v2 group will also be looking to upgrade, and will themselves be looking for buyers among the v1 owners, and therefore you will be competing more for the v1 owners’ dollars than for the v2 owners’ dollars.
By the third year, you’re in the black and just in time for the next evolution in computing and technology.
That’s how it’s done. And any competing manufacturer of a tablet could do the same.
