Thundering Herd Update

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    Posted: 17 August 2011 02:34 AM #61

    Marcel - 17 August 2011 04:15 AM

    I think Verizon is skewing its sales pitch toward non-Apple product.  I pop in my Verizon store fairly regularly and invariably sales reps can be overheard to be pushing Android handsets over iPhones.  I don’t know why.  My experience with ATT reps is that they’re more even-handed.

    Force of habit? They were working the “Apple-stinks-Blackberry/WM/Android-is-better” line for nearly 4 yrs. and it’s hard to change gears.

         
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    Posted: 17 August 2011 02:37 AM #62

    It could be just the one store.  iPhone 5 should have a way of keeping store employees in line, whether it be the hordes of Verizon customers asking for it by name, or managers simply doing their job in the face of sales statistics.

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  • Posted: 17 August 2011 09:15 AM #63

    Drew Bear - 17 August 2011 05:34 AM
    Marcel - 17 August 2011 04:15 AM

    I think Verizon is skewing its sales pitch toward non-Apple product.  I pop in my Verizon store fairly regularly and invariably sales reps can be overheard to be pushing Android handsets over iPhones.  I don’t know why.  My experience with ATT reps is that they’re more even-handed.

    Force of habit? They were working the “Apple-stinks-Blackberry/WM/Android-is-better” line for nearly 4 yrs. and it’s hard to change gears.

    Possibly.  Too, the sales reps are more apt to be geeks and the fact they were likely teethed on Android before iOS landed on the Verizon menu.

    Geek turnover at Verizon should help, along with iPhone 5 as Mav suggests.

         
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    Posted: 17 August 2011 09:26 AM #64

    A bit more detail on the HP Touchpad thing from this link

    Best Buy doesn’t want all that unsold inventory (250K+ TouchPads) taking up shelf space, and is asking HP to take them back. Todd Bradley or another HP exec is reportedly going to fly to Minneapolis to try and persuade Best Buy otherwise.

    Apparently the problem isn’t limited to Best Buy—Fry’s, Wal-Mart, and other chains are also reporting terrible sales, and HP’s quick price cuts may have had the exact wrong effect, convincing consumers to wait to see if the price drops more.

    Wow.  That’s at least $100M in inventory, quickly losing value.  I don’t think that’s in stores either, most of it is probably hidden away in BestBuy warehouses. 

    I wonder what’s the inflection price point, at which TouchPads would fly off the shelves.  I mean, if they were selling for $199, instead of $399, would you buy one?  How about $149?  Personally… I’d rather just save up and wait to get the cheapest iPad I can get my hands on.

         
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    Posted: 17 August 2011 09:59 AM #65

    mjuarez - 17 August 2011 12:26 PM

    A bit more detail on the HP Touchpad thing from this link

    Best Buy doesn’t want all that unsold inventory (250K+ TouchPads) taking up shelf space, and is asking HP to take them back. Todd Bradley or another HP exec is reportedly going to fly to Minneapolis to try and persuade Best Buy otherwise.

    Apparently the problem isn’t limited to Best Buy—Fry’s, Wal-Mart, and other chains are also reporting terrible sales, and HP’s quick price cuts may have had the exact wrong effect, convincing consumers to wait to see if the price drops more.

    Wow.  That’s at least $100M in inventory, quickly losing value.  I don’t think that’s in stores either, most of it is probably hidden away in BestBuy warehouses. 

    I wonder what’s the inflection price point, at which TouchPads would fly off the shelves.  I mean, if they were selling for $199, instead of $399, would you buy one?  How about $149?  Personally… I’d rather just save up and wait to get the cheapest iPad I can get my hands on.

    At this point lowering the price more just means your exiting the market.  You pick your price based on the BOM and margin.  A larger issue for HP is the retailers will not carry version 2.  Who wants to carry 100M of inventory on a product.  Even if HP gives Best Buy a lower wholesale price with Christmas season rapidly approaching HP has fallen flat on their face.  Perception is important in the CE business, looks like HP has built their Zune, a good product technically, but against the Apple ecosystem, just doesn’t cut it.

         
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    Posted: 17 August 2011 12:21 PM #66

    mjuarez - 17 August 2011 12:26 PM

    I wonder what’s the inflection price point, at which TouchPads would fly off the shelves.  I mean, if they were selling for $199, instead of $399, would you buy one?  How about $149?  Personally… I’d rather just save up and wait to get the cheapest iPad I can get my hands on.

    Anyone who can afford the iPad will buy it instead of anything else. Most who can’t afford it will buy a used one or save up money to buy one.

    I don’t think HP can afford to let the price drop this far, but at $249 I think they’d start seeing people buy it (not “fly off the shelves”) simply for web browsing and email. These consumers inexperienced with what iPad apps can do probably think that’s all they’d use a tablet for.

    But again, HP can’t let the price drop that far. As someone already said, they’d be exiting the market. Who would buy a TouchPad 2 for more than $249? They’re already in a tough spot by setting a $399 base price.

         
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    Posted: 17 August 2011 12:33 PM #67

    Drew Bear - 17 August 2011 03:21 PM

    But again, HP can’t let the price drop that far. As someone already said, they’d be exiting the market. Who would buy a TouchPad 2 for more than $249? They’re already in a tough spot by setting a $399 base price.

    Let us say there are 3 options in the tablet market (= not laptop, not phone, not iPod, mobile market). 

    Two established players:  Apple and iPad, Amazon and Kindle.

    The wannabees.    At this point, the only thing that would interest me in a wannabee is a fire sale.  $ 249 is not a fire sale when used iPads are in the same neighborhood and the wannabees are found wanting in features.

         
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    Posted: 17 August 2011 12:47 PM #68

    We have another great case study in the making.  Compare and contrast the HP touchpad vs iPad 1 launch.  At this point in the timeline Apple was being crucified by the pundits for inadequate supply and saying they were doing everything in their power to bring on additional manufacturing capability.  HP on the other hand is most likely canceling there subcomponent orders and figuring out how they will survive thru Christmas with their retail partners threatening them with returns 10 times the size of sales.  Once the reputation is damaged it snowballs.  They will be selling Touchpads at Odd Lots in time for Christmas.

         
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    Posted: 17 August 2011 01:02 PM #69

    Marcel - 17 August 2011 04:15 AM

    I think Verizon is skewing its sales pitch toward non-Apple product.  I pop in my Verizon store fairly regularly and invariably sales reps can be overheard to be pushing Android handsets over iPhones.  I don’t know why.  My experience with ATT reps is that they’re more even-handed.

    Also, it may be a coincidence, but Samsung’s Galaxy Tab feels lighter because the security cord isn’t as spring loaded to the degree the same cable secures the iPad. When you lift the iPad you’re pulling harder, leaving the impression it’s heavier.  It’s noticeable more than subtle.

    I talked to someone I met with a carier up here (in Canada). They do the same thing. His comment was that they make more money on the Android phones and that the iPhones sell them selves. He added that they sell way more iPhones than Android phones anyways.

         
  • Posted: 17 August 2011 01:50 PM #70

    I spent some time with Verizon at the beginning of year, working with them on the LTE launch.  Shortly after the Apple announcement, I was with them at a major trade show.  The entire booth was populated with Android devices, and you would never have known that they had the iPhone.  Now, this was an LTE event, so it made sense given that there are no known plans for the iPhone to support LTE.

    Until the iPhone supports LTE, I expect that Verizon are going to push Android, especially given the long period of time where they had no choice.  Their sales people got very comfortable with Android during that time.  It was very clear from conversations, that Apple and the iPhone was considered the enemy up until the time they were able to sell it.

         
  • Posted: 17 August 2011 01:55 PM #71

    First, I have read in several places that it was a mistake for HP to drop their price so quickly. No hard evidence, but this is in keeping with my understanding of human nature. A rapid price decrease both devalues the worth of the product in the consumers’ eyes and also makes one wary of purchasing a product that may again have another price drop. The only thing working against this theory to my way of thinking is that I wonder how many people are actually paying attention to the HP TouchPad at all. Which brings me to my second point.

    Second, I just read an article this morning (lost the cite) that said that they were going to list of “5 reasons not to buy the the HP Touchpad”. But after researching the matter, they decided to scrap the article because there was really only one reason. There’s nothing too terribly wrong with the HP TouchPad except for this: It’s not an iPad.

    People don’t want imitations. They want an iPad.

         
  • Posted: 17 August 2011 02:24 PM #72

    Speaking of the iPad, Baird?s survey, like many others before it, found the device to be dominating the tablet market. Approximately 93 percent of the current tablet owners Baird surveyed use iPads, and 94.5 percent of potential tablet buyers say they?d like to. Finally, 98 percent of current iPad owners said their next tablet will be another iPad.

    http://allthingsd.com/20110817/tablets-a-minor-threat-to-pcs-for-now/?reflink=ATD_yahoo_ticker

    Let’s read those numbers again:

    93.0% of current tablet owners own an iPad.
    94.5% of potential tablet buyers want to own an iPad.
    98.0% of current iPad owners said their next tablet would be an iPad.

    Bloodbath.

         
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    Posted: 17 August 2011 02:27 PM #73

    I think HP’s mistake was releasing the TouchPad at all. The price drop was a secondary mistake forced by the primary mistake.

    Consider what would happen if they just sat on the stockpile of already manufactured devices? Isn’t that what RIM, Motorola & Samsung (7” Tab) have done? If they don’t cut some sort of deal with the retailers that bought the various tablets, what hope do any of them have of selling any future tablets into those channels? So they’re damned either way…drop prices and move some or hold and product sits for months until they go on fire sale.

    There was an article not long ago saying that there will be a flood of cheap non-iPads hitting the market fairly soon. The flood will crest during the holiday season with prices hitting such low points that non-iPad buyers will expect such prices from future non-iPads.

    Apple was brilliant in pricing the iPad. They have once again forced the competition to fight for the profit crumbs on cheap devices. If iPad 3 arrives next year with a Retina display starting at $499….I was going to say “game over”, but the game might already be over.

         
  • Posted: 17 August 2011 02:29 PM #74

    FalKirk - 17 August 2011 04:55 PM

    First, I have read in several places that it was a mistake for HP to drop their price so quickly.

    You’ll never see Apple do it that way. There would be a subtle config change for the shipping product, and the unsold product would be sold through the online refurb store at the discounted price. Meantime Apple would accept the inventory pain.

         
  • Posted: 17 August 2011 03:50 PM #75

    This may seem obvious, but a couple of ASYMCO tweets brought this issue back into focus for me.

    It now appears that Google is going down the integrated path. But integrated requires three things: Software, Hardware and Services (ecosystem). Google only ever wanted to provide the software. I don’t think they ever wanted to provide the services and to create and sustain the ecosystem. Why should we believe that they’re going to turn the page (no pun intended) and suddenly be good at providing a complete mobile device ecosystem now?