Analyst: HP Had to Cut Price of the Touchpad

Hewlett-Packard has decided to extend a back-to-school promotion and cut the price of its Touchpad tablet permanently.

The Palo Alto, Calif. based electronics manufacturer cut the cost of its 16GB and 32GB touchpad tablets -- originally priced at $499 and $599 respectively - by $100 this past weekend for a back to school promotion. It then decided to continue the promotion permanently and make the prices official.

A spokesperson for HP didn't give a specific reason for the change. He said the company is continually evaluating pricing for its products.

Analysts and reviewers have given the company flack for the high price of the Touchpad. Having the Touchpad cost the same as the more entrenched iPad 2 and more than the iPad was a big mistake said observers like Avi Greengart, analyst at Current Analysis.

"I do think the price drop was necessary, as HP clearly wasn't getting the volume sales it needed at $499. HP's webOS offers superior multitasking, but user interface simply is not a pain point for iPad users, and the TouchPad lacks the iPad's apps, content, and slimmer, lighter form factor," Greengart said in an email.

For early adopters and people who paid the $499 and $599 price, HP is offering a $50 app credit. In addition to the price cut, the company has offered several deals. For students, there is a coupon for $50 off the asking price. For all other consumers, there is a $40 coupon. In both cases, the code is Save30HP.

HP hasn't released early sales numbers but if its anything like its iPad competition brethren, it's probably not good. A recent report from Motorola indicates the company has SHIPPED 440,000 Xoom tablets over the past three months. That's shipped...who knows how many it has sold. Samsung has only sold a couple million Tabs. Meanwhile, with 35.61 million units shipped out this year, Apple has 85 percent of the market share according to Needham analyst Charlie Wolf.

Some, like Wolf, don't hold out much hope for iPad competitors. Wolf says by 2020, the iPad will still have a whopping 60 percent of the tablet market share. Greengart says the company could attract some consumers looking for a simpler device.

"Even with the price drop, I expect that consumers who want an iPad will be willing to spend more to get one. But consumers primarily looking for a tablet for email, web browsing, and calendar will find that the TouchPad to be an elegant and more affordable alternative," he said.

One reason for the early struggles may be a lack of apps. The WebOS operating system only has 9,000 total apps according to HP. By contrast, Apple's iOS has a more than 100,000 apps for the iPad alone, a half a million total and Android has 250,000 total.

To fix this, HP recently unveiled the webOS certified developer's program, which will try and get more developers interested in the platform.