HP dropped two bombshells last week. The company will spin off its PC unit and discontinue production of WebOS devices, specifically the TouchPad and WebOS phones. You can read Jason Hiner's obituary of the TouchPad on his Tech Sanity Check blog.
In an effort to unload the existing TouchPad inventory, HP slashed the ill-fated tablet's price to fire-sale levels. A 16GB TouchPad (originally priced at $499.99) could be purchased for $99.99, and a 32GB model (originally priced at $599.99) was going for $149.99. At these rock-bottom prices, buyers rushed to snatch up the remaining TouchPads. Demand was so heavy, HP's Web site couldn't handle the traffic and most retailers sold out within a few days.
So just how much money is HP losing on each TouchPad? Market research firm iSuppli estimates that each 16GB HP TouchPad costs $306.15 ($296.15 components + $10.00 manufacturing). The more expensive 32GB model costs $328.15 ($318.15 components + $10.00 manufacturing). These prices don't included development or marketing costs.TouchPad teardown analysis blog post, video, and gallery.
If these numbers are accurate, HP stood to earn $193.84 on each 16GB TouchPad and $271.84 on each 32GB tablet. Sadly, those profits were not to be. HP is now losing $206.16 on each 16GB TouchPad and $178.16 of 32GB models.
During its quarterly earnings call last week, HP announced that it took a $.05 charge per share for the TouchPad. Given the company's 2.07 billion outstanding shares, Josh Ong, from AppleInsider, estimates the total cost at "just over $100 million".
Bill Detwiler has nothing to disclose. He doesn't hold investments in the technology companies he covers.
Bill Detwiler is Managing Editor of TechRepublic and Tech Pro Research and the host of Cracking Open, CNET and TechRepublic's popular online show. Prior to joining TechRepublic in 2000, Bill was an IT manager, database administrator, and desktop support specialist in the social research and energy industries. He has bachelor's and master's degrees from the University of Louisville, where he has also lectured on computer crime and crime prevention.