This has been forwarded before and I agree with detractors to this kind of thinking.
First, HP is a big company that has much better ways to turn money into more money than making something people are unwilling to buy at a reasonable price.
Second, growing the webOS ecosystem in this way founds it on false principles. Everything that seems to work when you're selling for a loss, might not work at all when you're selling for a profit. Just imagine if HP started off selling a $99 TouchPad, blowing out the doors, piling up billions in debt, and then found out everyone wanted an iPad when the price went up to $500. Oops.
The best modern example of this I think is Groupon. Groupon has been growing like crazy by taking a huge loss. For every dollar it takes, two dollars go out the door in the form of advertising and client acquisition.
Groupon is already of questionable value to some businesses. When the time comes for Groupon to fix its profitability the value proposition may be lost entirely.
Exactly. The sort of people that are buying a Touchpad right now aren't the same type that will buy a $500 device and spend several hundred more on apps.
Heck, I'd like to buy a Touchpad at $99, but only because I'm interested in getting Android to run on it, which is probably the last thing HP wants.
I was going to disagree but then I worked out the numbers and it doesn't fly.
Suppose they invested $1b more. At a loss of $150 / device that would let them put ~6 million devices into the ecosystem, not counting phones. 6m devices would get it off to a start but it is still not enough to get it within an order of magnitude of the iPad and probably won't even get you ahead of the plethora of Android makers who will most likely sell more than that combined.
If you can't pole vault at least into a solid second place then you've essentially made no strategic gain at all - you're just in a slightly better third place.
First, HP is a big company that has much better ways to turn money into more money than making something people are unwilling to buy at a reasonable price.
Second, growing the webOS ecosystem in this way founds it on false principles. Everything that seems to work when you're selling for a loss, might not work at all when you're selling for a profit. Just imagine if HP started off selling a $99 TouchPad, blowing out the doors, piling up billions in debt, and then found out everyone wanted an iPad when the price went up to $500. Oops.
The best modern example of this I think is Groupon. Groupon has been growing like crazy by taking a huge loss. For every dollar it takes, two dollars go out the door in the form of advertising and client acquisition.
Groupon is already of questionable value to some businesses. When the time comes for Groupon to fix its profitability the value proposition may be lost entirely.