HP's TouchPad Fire Sale: Many Losers in the Tablet Flameout

HP's promised hot new tablet product, the TouchPad, has turned in an instant into an embarrassing fire sale flop. The company's TouchPad liquidation sale, selling 16GB units for $99 and 32GB for $149 is attracting buyers, but hurting the brand and leaving many questions unanswered.

HP has said it will discontinue support of the TouchPad and its WebOS system, potentially impacting many who buy the fire sale product at a loss for service and updates in the future. Already on Saturday, with so many units sold in a flurry as retailers across the world slashed prices, the company's call center blew up.

They got TouchPad's at a discount, but what price will they really pay?

Demand of callers with questions and service needs was more than the unit could hand and its online database spun with errors as at the IT company's server designated to handle TouchPad sales and service was overwhelmed.

Here are the losers in the HP TouchPad fiasco:

--HP's brand image. The company is the largest PC company in the U.S. HP says it is considering spinning off its PC unit, but that spinoff consideration was dealt a big blow as HP's brand has been tarnished by the quick-decision TouchPad bailout only weeks after the tablet was launched as a competitor to Apple's best-selling iPad tablet. HP has long been a respected brand, but almost overnight, the company put a big stain on years of earned value.

--Major Retailers. Consumers like a deal, but they still expect service with that deal. Retailers are gaining traffic from the fire sale, which they like. But fire sale customers are also known to be the most difficult to manage. They want a deal, but they want premium service as well, and the demand is more than many retailers can keep up with.

At leading big box electronics retailers like Best Buy that also provide service, the lines could be long for some time to come -- not exactly a winning proposition. The margins are low, and the headaches are high.

--Initial TouchPad buyers. A fire sale buyer who gets a TouchPad for $99 when the product is being discontinued understands the risks. Someone who bought a TouchPad for $499 three weeks ago understands they've been had -- and they have. HP just trashed their trust and its reputation with those buyers.

They bought a dog with no legs, and they expected it to be able to run fast. They got burned, and they are angry -- and rightfully so.

--Apple. Apple is taking a hit on this even though it is losing what some called a competitor. But at $499, the TouchPad actually helped the iPad; nobody wanted the TouchPad, and Apple was able to maintain the pricing structure.

Apple has been the tablet industry leader, but now HP is crushing the price standard in the space. HP came out of the gate with the right ambition, pricing its tablet similar to Apple's iPad. But now, the tablet market is seeing a glut of low-priced products, and it's not like the TouchPad doesn't work okay. It does.

Now, keeping the pricing standard will be hard for Apple.