Memo to Hewlett-Packard

Before you go, we thought you'd like these...
Before you go close icon

Ever wake up in the morning, roused from a pleasant slumber by the grating buzz of an alarm clock's incessant nagging? Ever respond to the annoyance not by waking up, but by instead slapping the "snooze" button ... repeatedly?

If so, then congratulations: There may be a job waiting for you at Hewlett-Packard (NYS: HPQ) .

Sleeping toward Armageddon
As you may recall, HP made some headlines last month when in one swell foop it decided to:

  • Withdraw from the tablet-computer wars and allow Apple (NAS: AAPL) and Google (NAS: GOOG) to slug it out on their own.
  • Pass on the opportunity to flank a vulnerable Research In Motion (NAS: RIMM) and Nokia (NYS: NOK) on smartphones, and abandon that market as well -- after having only just bought into it.
  • And, most astounding of all, get out of the PC biz entirely, spin off its computer division, and basically hand the market over to Dell (Nasaq: DELL) and Lenovo wholesale.

Beep! Beep! Beep!
Incidental to all these moves, HP also held a midnight fire sale of its remaining TouchPad tablet PCs. The idea was simply to clear out now-stale inventory, but in pricing its computers as low as $99, HP inadvertently ignited a firestorm of consumer interest. By some accounts, the company sold 350,000 TouchPads in a single day. Considering that this was more TouchPads than HP actually had built, however, the company then had to restart the production line to fulfill the unanticipated demand.

Now, you might think this incredible response would have awakened some interest at HP. Instead, though, HP hit ...

Snooze
And slept right through it. A few weeks back, I received my own personal note from the company, confirming that it was building TouchPads just as fast as its foremen could crack their whips and force the HP elves to work. It would take "6-8 weeks" to get me my TouchPads (yes, I bought in bulk), but get them to me they would. However, aside from an ambiguous wish welcoming me to "the exciting community of webOS," HP gave no indication that after fulfilling its unprecedented demand for TouchPads, the company intended to keep building more.

Perhaps HP figured the demand for its product was temporary only. A one-day phenomenon, impressive but finite. Yet ...

Beep! Beep! Beep!
Just yesterday, the alarm went off again. In a posting on slickdeals.net, the site that originally broke the "$99 TouchPad" story, one TouchPad fan announced the discovery of a "great deal on a touchpad that you can not find anywhere." Apparently, Office Depot (NYS: ODP) had stumbled across a small cache of the machines and was offering them for $150 a pop -- this being the bigger, 32 GB version of the tablet.

Within just a few hours, some 235 people chimed in with posts describing (at first) their successful purchases, then cries of distress at being unable to access the site or snag a comp, and finally a one-word epitaph to this latest round of TouchPad-buying. The deal was now officially "Dead." Sold out. Cleaned out. Every single machine available, claimed for the asking price.

Snooze?
Judging from its past actions, I won't be surprised if HP is forced to enter upon another round of TouchPad-building to satisfy demand from its distributor. The real question, though, is whether having the alarm go off twice in as many months will suffice to wake HP from its slumber.

I mean, clearly there's demand for this product -- at least at the right price point. Whether that's $99, or $150, or the $200-and-up "flipped" TouchPads are said to be fetching on eBay, I don't know. But the demand is there. (As, too, is the potential to profit from it.) But what's really interesting here are two other things. I call these things, with apologies to Dr. Seuss:

Thing 1 ...
First, when HP sold 350,000 TouchPads in 24 hours, this spoke volumes about consumers' faith in the HP brand and their desire to buy HP products. Say what you will about HP's quality -- and you don't have to look far to find negative reviews on the Web these days -- the fact that TouchPads sold so quickly is proof that a lot of folks still like HP quite a bit. Selling the PC division because its margins aren't quite as fat as Leo Apotheker thinks he can get from slinging software seems to me an incredible waste of that goodwill.

... and Thing 2
The other takeaway here is that this goodwill extends even to the TouchPad. Think about it, Fools. When 350,000 consumers lined up to buy the TouchPad sight unseen, that was a leap of faith. People were buying the tablet because they believed HP probably made a decent computer. Now, several weeks later, a lot of these buyers have already received their TouchPads, had a chance to try them out, and show them to their friends. And guess what? They still want them.

Memo to HP: The demand is there. People are ready, willing, and eager to buy your product. If you ignore us, though, kill the TouchPad, and sell your PC division, you have only yourself to blame.

At the time this article was published Fool contributorRich Smithowns shares of Google. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 356 out of more than 180,000 members.The Motley Fool owns shares of Research In Motion, Apple, and Google.Motley Fool newsletter serviceshave recommended buying shares of Dell, Google, and Apple and creating a bull call spread position in Apple.We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners