By slashing the TouchPad's price, HP hopes to work off unsold inventory and cut its losses. Here's a look at what the company loses on each unit.
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.
To see a list of the components inside the HP TouchPad, check out my 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".
Update 12/19/2011: This post originally appeared in our TR Dojo blog.