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Seven lessons from the HP Touchpad fire sale

The tablet effect is real. Really

The unfolding saga surrounding the HP Touchpad contains a goldmine of salutary tales. So, just what can we learn from the last few days?

Anyone who says they expected the fire sale of HP touchpads to turn into a global gadget grab is a liar. Fortunately nobody has yet, not publicly anyway – indeed, apart from a few bits of coverage complaining about website crashes and HP’s risky strategy , there hasn’t been that much written about it at all.

Which is a shame, because the overall effect was pretty profound. Think about it. Here was a tablet computer that nobody wanted, apparently: not the customers in Best Buy, and certainly not the company that had spent $1.2bn to buy the technology just over a year before.

HP announced the Touchpad sell-off with very little additional information apart from vague statements about continued support, an over-the-air operating system update and general remarks to the effect of, “We’re not going to let WebOS die.” In theory, buying an HP Touchpad was – and still is, if you manage to get your hands on one – a huge risk.

But surely people aren’t so dumb as to buy a device when they don’t know what the future holds for it? Either yes they are – or just perhaps, the strategists and pundits got it wrong and there’s more to this whole tablet thing than a one-horse race with a few stragglers.

So, what lessons can we take away? First off, and to give the poor multi-billion company some credit …

1. The Tablet Effect is real. Really.

HP’s CEO, Leo Apotheker was not the first to coin the term ‘tablet effect’. While it is barely a year old however, we should be in no doubt about the impact the forearm-top devices are having on the low-end PC and netbook markets.

However, the take-away lesson from the past week is that we’re talking about a tablet effect, not an iPad effect. Whatever fan boys may like to think, Apple didn’t invent the form factor; however (and unlike Microsoft) it did make the device usable, embracing simplicity and the user experience just as it did for smartphones.

We should all be grateful for the relentless pursuit of great design exhibited by Steve Jobs’s Apple. But let’s not think that the only tablets in the world in a few years’ time will be iPads, any more than we should think the tablet itself will become the dominant form factor. We’re too fickle a race for that, and no doubt there exist form factors we haven’t even thought of yet.

Indeed, as the events of the past few days have illustrated, a massive pent-up demand exists for tablet form-factor devices from any manufacturer, if only …

2. A price point can be identified for mass tablet adoption

Apple may have been first to market with a workable design, application and content delivery model for the iPad, but it remains a premium product. Cue massive mistake from just about every other manufacturer – that Apple’s pricing structures should be adopted by everyone else.

What a bad idea, for so many reasons – not least that Apple purchasers are prepared to pay a premium because it’s Apple. The rest of the world’s customers are not prepared to do so, or indeed, simply haven’t been able to afford them. In other words (hope you’re listening Google), get the pricing right and customers will follow.

It could be argued that HP went in too cheap, moving the price point well within the $99 justify-to-wife territory, as (the uncondonably sexist) Linksys used to say. Linksys’s other, tried and tested price point for commodity tech items was the $199 justify-to-self: recent events quite clearly illustrate the existence of a latent opportunity for commodity end-point devices that are both simple to use and affordable to buy.

Given that cheap Android devices from unknown manufacturers are already available, it’s worth noting a third factor – that people buy from people and companies they trust. Even, apparently, if the companies are trying to divest themselves of the stuff in question. At least the quality won’t be in doubt.

Less relevant (sorry, geeks) is what’s happening under the bonnet, for example which OS is running. Which suggests, despite what the commentators might have you think, that …

3. WebOS has – or had – a market, as do other operating systems

A long time ago, the first Palm Pilot devices became very popular very quickly, on two counts: device usability and developer platform. That was it. With WebOS, the (supposedly rejuvenated, but cash-strapped) company strove for similar goals, achieving the first in spades but struggling to grow the second.

While things like mass market adoption don’t happen overnight, the fact is that the two factors work together. People build apps for Android devices because of the now-present user base, and people buy such devices because they have the apps. It’s a lesson that in-for-the-long-haul Microsoft knows very well, which is why the company continues to chip away with Windows Mobile 7 despite it being a seemingly thankless task.

HP knew it too – as HP’s CFO noted, the potential for ROI just wasn’t in a timescale which made sense for the company. That still offers an opportunity for others, and it would be folly to write off WebOS too quickly, particularly given that up to 2 million devices have just entered the market.

The fact that HP may have lost $400m in the process, on top of the acquisition costs, proves beyond reasonable doubt that the company is in a serious strategic mess. It proved itself tactically moronic as well in how it approached the announcements and subsequent sale, reinforcing the ancient adage of …

4. Fail to plan, and plan to fail

The old ones are the best, eh? In this case, HP – that self-proclaimed biggest computer company in the world – demonstrated how to get something very wrong by not thinking through the ramifications. This happened not once – with the plan to ditch the PC and mobile hardware divisions, announced without warning even to senior executives in those divisions – but then a second time by flooding the market with low-cost hardware without informing its resellers how to deal with the consequences.

The result was not only that multiple online sites were faced with a massive, though not unprecedented demand for technology. They then sent out mixed messages of their own, based one would imagine on the information they had received about stock availability, whether or not a discount was to be applied, whether indeed each reseller was eligible for HP’s discounted pricing.

You don’t have to be a specialist in the field to guess that confidence in HP’s channel operations has been undermined, as the company did the equivalent of pulling out the rug from under the feet of the its resellers and partners.

And even as this was happening, tablet-hungry geeks were whipping themselves into a frenzy of excitement. A problem exacerbated by the fact that …

5. We are not individuals, particularly where the web is concerned

Anyone who followed the HP Tablet thread on – now with 22,000 posts, the longest thread the bargain hunters’ forum has seen – would know that just the potential to join in was enough to entice some people. To paraphrase, “I didn’t even want one until I started reading this!”

While lessons 2 and 3 are undeniable, we must also take into account the propensity of the human race to want to participate. Sometimes for better, sometimes for worse, the net effect is that people can follow the crowd, even when it’s not in their interests. Indeed, this factor is central to new technology adoption.

Not only was it demonstrated by the desire to own a device some may not even have heard of prior to the fire sale, but also the repeated behaviours that emerged once people had the bit between their teeth. Simply put, every time an online retailer mentioned the Touchpad, hordes of people would rush the site concerned, just about every time causing it to collapse under the load. Which led to the inevitable proof that …

6. Scalable deployment is even harder than clever people think

Call it what you like – adaptive IT, dynamic infrastructure, agile, whatever. If you believe the computer manufacturers, the whole point is that we can now build IT systems that can scale to meet unexpected spikes in demand. E-Commerce has been around for over ten years now, and site owners have had plenty of time to architect their systems in the right way to meet demand.

But site after site collapsed under the strain. Okay, the retailers exhibited some pretty daft behaviour of their own. You’d think you’d learn, if you were Misco or Staples say, and you’d just watched and brought down, to keep schtum, or to invite people to a microsite by email, or indeed, to do absolutely anything other than say , “If you're looking for reduced prices on the HP TouchPad, stay tuned! We'll have some news soon, watch this space!” Come on guys, what were you thinking?

Worst culprit of all perhaps was HP itself, whose US website and employee shop collapsed under the demand. This is not a great advert for a company that sells world-class infrastructure, and who’s banged on about it for longer than anyone cares to remember.

From which we can draw the only conclusion that …

7. Information technology still has a long way to go

So, to summarise: we continue to be hungry for easier to use, cheaper end-point device form factors; Apple’s great designs and monopolistic stance may grant it short term success but it’s probably not going to take over the world; technology infrastructure is as big and prone to failure as it ever was; and as both companies and individuals we are, in the words of a Matrix agent, “only human”.

Disappointing perhaps – after all, if you’ve worked in IT for more than a couple of decades, you might have hoped we’d have learned some of these lessons and moved on by now. On the upside, the market churn, continued problems and countless mistakes will keep most of us in jobs for the foreseeable future, so it’s not all bad.

The HP Touchpad saga has still to play out: perhaps the level of market interest will spur activity around WebOS, and if not, Android; perhaps the flood of tablets into the market will spur other manufacturers on to produce lower-cost devices; perhaps the impact will be felt more around other industry areas such as publishing or HTML5 adoption; who can say.

The final lesson of all should be around making assumptions about which way this business is going, based on media hype or hearsay. However smart people make themselves out to be, however much research we ingest or advice we take, nobody has a monopoly on the future. ®

Jon Collins, director of Inter Orbis, researches the impact of technology on business, society and culture.

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