Best Buy upset with HP over selling just 25K TouchPads
Best Buy is reportedly unhappy with HP after having sold just 25,000 of the PC maker's TouchPad tablets and is unwilling to pay for the more than 240,000 unsold units, according to a new report.
Multiple sources who have seen internal HP reports have told Arik Hesseldahl of AllThingsD that big-box retailer Best Buy took delivery of 270,000 TouchPads and has only managed to sell less than 10 percent of its inventory. One source suggested that the 25,000-unit sales number may even be "charitable" because it doesn't take returns into account.
According to the report, Best Buy has refused to pay for the remaining tablets and has asked that HP take them back. But, HP has reportedly pleaded with the retailer to be patient. One tipster claimed that a senior HP executive will soon travel to Minneapolis to smooth things over with Best Buy executives.
The world's largest PC maker is scheduled to report its quarterly earnings on Wednesday. Should the company choose to report TouchPad sales, it may call out the tablet's "channel sales," which would include the full 270,000 devices shipped to Best Buy, rather than the lower "sell through" figure, which would likely spook investors.
Best Buy and HP declined to comment on the report.
Envisioneering Group analyst Rich Doherty said other retailers such as Wal-Mart, Microcenter and Fry's are seeing spotty sales of the TouchPad as well. He added that HP's recent $100 price cut has actually backfired by prompting customers to wait for further discounts.
?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 said.
HP released the TouchPad in July to middling reviews, which called it a "mediocre tablet." Former Palm chief John Rubinstein jumped to defend the device and webOS, comparing the platform's shaky start to the early days of Apple's Mac OS X.
Just one month after the tablet's release, HP slashed the price of the device by $100. Days later, a company executive announced that the sale price would remain permanent.
Muted interest in the TouchPad stands in stark contrast to Apple's success with the iPad 2, which went on sale in March. In April, the company reported experiencing the "mother of all backlogs" with the second-generation iPad, adding that it was selling every unit it could make. Tight supply of Apple's touchscreen tablet continued through July, when ship times for the device finally improved to estimates of 1-3 days, down from as long as 4-5 weeks. In the June quarter, Apple sold 9.25 million iPads.
Multiple sources who have seen internal HP reports have told Arik Hesseldahl of AllThingsD that big-box retailer Best Buy took delivery of 270,000 TouchPads and has only managed to sell less than 10 percent of its inventory. One source suggested that the 25,000-unit sales number may even be "charitable" because it doesn't take returns into account.
According to the report, Best Buy has refused to pay for the remaining tablets and has asked that HP take them back. But, HP has reportedly pleaded with the retailer to be patient. One tipster claimed that a senior HP executive will soon travel to Minneapolis to smooth things over with Best Buy executives.
The world's largest PC maker is scheduled to report its quarterly earnings on Wednesday. Should the company choose to report TouchPad sales, it may call out the tablet's "channel sales," which would include the full 270,000 devices shipped to Best Buy, rather than the lower "sell through" figure, which would likely spook investors.
Best Buy and HP declined to comment on the report.
Envisioneering Group analyst Rich Doherty said other retailers such as Wal-Mart, Microcenter and Fry's are seeing spotty sales of the TouchPad as well. He added that HP's recent $100 price cut has actually backfired by prompting customers to wait for further discounts.
?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 said.
HP released the TouchPad in July to middling reviews, which called it a "mediocre tablet." Former Palm chief John Rubinstein jumped to defend the device and webOS, comparing the platform's shaky start to the early days of Apple's Mac OS X.
Just one month after the tablet's release, HP slashed the price of the device by $100. Days later, a company executive announced that the sale price would remain permanent.
Muted interest in the TouchPad stands in stark contrast to Apple's success with the iPad 2, which went on sale in March. In April, the company reported experiencing the "mother of all backlogs" with the second-generation iPad, adding that it was selling every unit it could make. Tight supply of Apple's touchscreen tablet continued through July, when ship times for the device finally improved to estimates of 1-3 days, down from as long as 4-5 weeks. In the June quarter, Apple sold 9.25 million iPads.
Comments
They have to pay for nearly TEN TIMES the number of units they sold???
I'd be unhappy. Also bankrupt.
"HP has reportedly pleaded with the retailer to be patient."
Yeah, 'cause electronics only get better with age. Like wine.
Well, I'm off to buy a VCR.
"Best Buy is reportedly unhappy... having sold just 25,000... TouchPad tablets and is unwilling to pay for the more than 240,000 unsold units"
They have to pay for nearly TEN TIMES the number of units they sold???
I'd be unhappy. Also bankrupt.
Best Buy buys the tablets from HP at cost, then marks them up a bit and sells them to consumers to make the money back.
Best Buy buys the tablets from HP at cost, then marks them up a bit and sells them to consumers to make the money back.
As someone who used to work there and had access to cost, I can tell you that there is very little margin in computers (if any). At times, there are ever computers (or other products) being sold below cost to bring in the customer. That's why it's their goal to attach accessories and services to every product. HP is screwing them with this deal.
An iPad makes sense as it is the best tablet available and I can understand buying Android tablets if you already have an Android phone (as many people do). But a WebOS tablet?
As someone who used to work there and had access to cost, I can tell you that there is very little margin in computers (if any). At times, there are ever computers (or other products) being sold below cost to bring in the customer. That's why it's their goal to attach accessories and services to every product. HP is screwing them with this deal.
Was using it more as an example of why Best Buy has paid for more tablets than it sold.
Basically it sound like someone at Best Buy thought they would sell better (or HP convinced them they would sell better). Probably trying to capitalize on the long wait times the iPad 2 had at launch..."Hey, I came in for an iPad. It seems you don't have any in stock, so I guess I'll just buy what you have...Look the HP Tablet!"
Be patient... soon HP will find a reasonable price point... $9.99.
As someone who used to work there and had access to cost, I can tell you that there is very little margin in computers (if any). At times, there are ever computers (or other products) being sold below cost to bring in the customer. That's why it's their goal to attach accessories and services to every product. HP is screwing them with this deal.
I was kind of thinking the same thing. For an authorized reseller in the United States the profit margin on most computer products is 3-6% (desktops, laptops, PDA's, MP3 players, Tablets, etc ...). This means that Best Buy is probably making somewhere between $15-$20 profit on each $400 TouchPad. You don't make a lot of money of each sale individually ... you make money by selling a lot of them.
If a product just sits there you're losing money ...
HP stands for Hugely Puny, right?
I'm fairly certain the H stands for Hubris...
I don't get why anyone would buy an HP tablet.
Well, therein lies the problem.
They aren't.
they'll make a deal. HP will do a big Holiday ad campaign featuring the "improved" TouchPad with some purported major OS update, the price will drop to $300 after an additional $100 HP "instant" rebate, and HP will take back whatever stock is left unsold after Xmas. all the other big chains will get the same deal.
that's my bet. just watch.
hey, by the way, whatever happened to all the unsold 7" Samsung Galaxy tabs? out of the 2.1 million "shipped" late last year. you know, that can't be upgraded even to Honeycomb (but oops Samsung forget tell buyers that). oh i see you can still buy one at J&R for just ... $350!! oh yeah, i bet they are selling zillions of those. (ok, one 16G wifi-only is listed now on eBay. with less than 2 days to go it is up to $155 after 29 bids. i'll put it on my watch list and see where it winds up.)
He added that HP's recent $100 price cut has actually backfired by prompting customers to wait for further discounts.
. . . which is exactly why policy wonks are deathly afraid of deflation.
The world's largest PC maker is scheduled to report its quarterly earnings on Wednesday. Should the company choose to report TouchPad sales, it may call out the tablet's "channel sales," which would include the full 270,000 devices shipped to Best Buy, rather than the lower "sell through" figure, which would likely spook investors.
They could pull that "channel sales" stunt once.
Eventually HP would have to fess up to poor sell through. If it's really bad, they would have to do like Logitech just did when the latter wrote off a bunch of Google TV units, took a one-time charge that torpedoed the company's quarterly earnings and handed the CEO his hat.
You can't bury such ineptitude very long these days.
If TouchPad sales are a complete train wreck, we will know within months, if not weeks or days.
Oh yeah, Apple haters.
I think we can put a fork in WebOS.
Kind of a shame. Its better than Android.
Not surprised. I work at Best Buy and my store has sold maybe 6 of the 100 that we initially got in. I would take one of them over an Android tablet though....
Thats not hard to do.