There have been plenty of hints that Hewlett-Packard’s TouchPad isn’t selling well. First there was a $50 discount. Then there were spot discounts of $100 at outlets like Costco. Then the $100 discount became permanent. Adding insult to apparent injury, a deal on Woot for $120 off an entry-level 16 gigabyte TouchPad netted all of 612 takers.
With HP set to report quarterly earnings tomorrow, sources familiar with the matter tell AllThingsD that TouchPad sales are failing yet another critical test: Sales at big-box consumer electronics retailer Best Buy.
According to one source who has seen internal HP
reports, Best Buy has taken delivery of 270,000 TouchPads and has so
far managed to sell only 25,000, or less than 10 percent of the units in
its inventory.
A second person who has seen Best Buy’s TouchPad sales figures
confirmed the results as “consistent with what I’ve seen,” and went so
far as to say that 25,000 sold might be “charitable.” This source
suggested that the 25,000-unit sales number may not account for units
that consumers return to stores for a refund.
Best Buy, sources tell us, is so unhappy that it has told HP it is
unwilling to pay for all the TouchPads taking up expensive space in its
stores and warehouses, and wants HP to take them back. HP, for its part,
is pleading with Best Buy to be patient. We’re also told that a senior
HP executive, possibly executive VP Todd Bradley, is slated to travel to
Minneapolis soon to discuss the matter with Best Buy executives.
These numbers are emerging just one day before HP is set to report
quarterly earnings. While it’s possible that HP will choose not to
disclose any unit-sales results for the TouchPad — because as yet
they’re unlikely to be large enough to be material — if it does report
anything on the subject, that will probably be a figure known in
industry circles as “channel sales,” which are the number of units sold
to stores like Best Buy and Costco. Channel sales don’t reflect sales to
end customers, known as “sell-through.”
HP declined to comment, as did Best Buy.
There’s more. TouchPad sales aren’t only failing to catch on at Best
Buy, but also at other retailers, including Wal-Mart, Micro Center and
Fry’s, says analyst Rich Doherty, head of the Envisioneering Group.
Doherty says that spot interviews at stores on both coasts show that
HP’s “wildcat pricing moves” on the TouchPad have prompted consumers to
wait and see what happens in the next few months.
“After the initial surge of interest after the July release, all
those price promotions have caused consumers interested in buying a
TouchPad to pause, because they think the price is going to fall
further,” Doherty told me.
For the record, the TouchPad costs $399.99 for the 16GB model and
$499.99 for the 32GB version. Both started at prices exactly $100 higher
when first announced in June.
So what’s HP’s next move? Doherty says that with the back-to-school
PC buying season underway, HP will likely use its leverage as one of
Best Buy’s top suppliers — the other is Samsung — to offer bundle deals:
Buy an HP computer, get the TouchPad for a special price.
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