Unexpected shutdown within weeks of a trigger · Fatal mistake: Launched against iPad at same price with inferior app ecosystem — zero differentiation for consumer
Evaluating only HP TouchPad’s profile at its peak — without knowing the outcome — the model ranked Unit economics as the #1 likely cause. Documented cause: No market fit.
Key Events Timeline
FOUNDING
HP officially announces the TouchPad tablet running webOS, positioning it as a direct iPad competitor at a $499 starting price
PRODUCT LAUNCH
HP TouchPad goes on sale nationwide; reviewers criticize sluggish performance, app ecosystem gaps, and lack of differentiation from the iPad
SHUTDOWN
HP announces discontinuation of the TouchPad just 49 days after launch due to catastrophically slow sales, exiting the tablet hardware market entirely
PIVOT
HP slashes TouchPad price from $499 to $99 to liquidate remaining inventory; the fire sale sells out within hours, moving more units in days than in the prior 7 weeks of normal retail
SHUTDOWN
HP formally exits the tablet market and winds down webOS hardware operations; the TouchPad becomes a case study in failed product-market fit and misaligned competitive strategy
Full Analysis
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Documented cause
HP launched the TouchPad running webOS on July 1, 2011 to compete with the iPad. Sales were catastrophically slow. HP discontinued it on August 18, 2011 — 49 days later. HP then dropped the price to $99 (from $499) to clear inventory. The fire sale sold out instantly and sold more units in days than in the prior 7 weeks. HP exited the tablet market entirely.
Lesson
“Competing with an entrenched category leader at equal price requires differentiation that consumers can articulate.”
Failure anatomy
Collapse type
Sudden Collapse
⚡ HIGH
Hype cycle
trough of disillusionment
Moat type
None
Fatal mistake
Launched against iPad at same price with inferior app ecosystem — zero differentiation for consumer
FAQ
Why did the $99 fire sale work if $499 did not?
At $99, TouchPad was a good value proposition — decent hardware, functional OS, half the price of competitors. At $499, it offered no advantage over iPad and had fewer apps. Price is part of the product; the TouchPad at $99 was a different product than at $499.
Did HP actually lose money on the $99 fire sale?
Yes — HP took a $755M write-down on TouchPad inventory and exit costs. The $99 units were likely sold below cost. But clearing inventory quickly was worth more to HP than continuing to hold assets in a market they were exiting.