HP Offers TouchPad Rebates to Attract Buyers

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In a bid to draw buyers away from Android and iPad tablets, Hewlett-Packard is offering US$50 off on its TouchPad tablets just under a month after the device went on sale.

HP is offering "instant rebates" on both TouchPad tablet models. HP's TouchPad model with a 9.7-inch screen, Wi-Fi and 16GB of storage is available for US$449, and a 32GB model for $549.

Online retailers have followed suit, with Amazon.com and Office Depot also reducing prices on the 16GB and 32GB TouchPad models.

The TouchPad tablet went on sale in the U.S. on July 1 and subsequently became available in other countries. The tablet is due to launch in Singapore, Australia, New Zealand and Hong Kong next month. HP in July also said it would release a 4G TouchPad tablet with a dual-core 1.5GHz processor for AT&T's wireless network. The original TouchPad had only Wi-Fi and a dual-core 1.2GHz Tegra processor.

The TouchPad is trying to compete in a market dominated by Apple's iPad, and which also includes Research In Motion's Playbook and tablets with Google's Android OS. The iPad had a 74 percent market share with 6 million tablets sold in the first quarter, Canalys Research said in a study last month. Most of the other tablets sold, such as the Samsung Galaxy Tab, run on Android.

A price drop indicates that the TouchPad is not selling well, said Bob O'Donnell, program vice president at research firm IDC. At around 1.6 pounds (725 grams) the device feels heavy, and application support is also poor, O'Donnell said.

"You can't sell a tablet at the same price as Apple and expect to sell it," O'Donnell said. "It feels more like an iPad 1 in the era of an iPad 2."

Users have expressed similar concerns about the device's weight, slow performance and underdeveloped software ecosystem. HP has said it is working to update the webOS operating system to fix performance issues, but has not provided a release date for the update.

But some buyers are happy with the purchase. Brent Woodruff, who bought the tablet on the day it was released, said he was able to connect his Pre+ webOS phone to the TouchPad and take calls on the tablet.

"Getting text messages on the tablet doesn't work yet, but I hear there is an update coming that will provide this," said Woodruff, a computer engineer in Tallahassee, Florida.

Woodruff said that the Flash also worked well in the TouchPad browser, and he was also able to run applications on the tablet smoothly.

HP was trying to define the TouchPad as a premium product that justified the price of the iPad, said Sarah Rotman Epps, senior analyst for consumer product strategy at Forrester Research.

"Like Motorola and others, HP failed to compete and hopes to increase its appeal by lowering the price," Rotman Epps said.

Tablets cannot compete with the iPad on features, so pricing is one way to attract buyers, analysts said.

HP's true competition could in fact be 10-inch Android tablets, whose prices are dropping precipitously and could reach under $300 by the holiday shopping season, IDC's O'Donnell said.

The price of the Acer Iconia Tab A500 with Android recently fell to under $400 at Staples and Amazon, and O'Donnell said prices of Android tablets may slip even further.

TouchPad prices could also drop later this year, but not to under $300, O'Donnell said. The company may also release new TouchPad models with smaller screen sizes, he said.

HP did not respond to requests for comment on the rebate pricing or delivery of software updates.

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