Can $100 Buy a Hit on Apple?

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Early adopters have never felt this stupid.

Hewlett-Packard's (NYSE: HPQ  ) TouchPad -- the tech giant's bold attempt at monetizing its $1 billion Palm acquisition by putting out a webOS-flavored tablet -- hit the market last month at $499 for the entry-level 16-gig model.

All you need now is a cool $399 to kick the funky stylings of the market's first webOS tablet. The 32-gigabyte unit is also receiving a $100 haircut to retail for $499.

Let's not confuse this with this past weekend's promotional sale across several sites and retail partners that dropped the TouchPad's price to as little as $385. That was temporary. This is the real deal. This is a permanent price cut -- well, at least until the next price cut comes around.

Why would HP do this? Why did it introduce a gutsy tablet last month at the exact same price point as Apple's (Nasdaq: AAPL  ) entry-level iPad? Just as the manufacturers that have struggled with their Android-fueled tablets, it's hard to stand out on specs when your tablet doesn't have access to Apple's iconic App Store. If HP had hit the market at $399 last month, instead of simply upsetting its first five weeks of buyers at a higher price point, it would have been able to draw a bigger crowd than this week's quiet price cut.

Tablet makers outside of Cupertino have been too cocky. Did Motorola Mobility (NYSE: MMI  ) really think it could move Xoom gadgetry for as much as $800 a pop when it was introduced earlier this year? Despite being the first tablet running Google's (Nasdaq: GOOG  ) tablet-centric Honeycomb update for Android -- and with a killer spec sheet to boot -- the Xoom failed to dent the market. Motorola succumbed to a $200 price cut last month.

These price cuts don't make headlines because they come long after tech geeks have moved on to something else.

Remember Logitech's (Nasdaq: LOGI  ) Google TV Revue? The gadget that turns dumb TVs into smart ones hit the market nearly a year ago at $299. There were some Google-related stumbles in getting studios to embrace the platform, but did you know that Logitech's Revue boxes are now readily available for $99? You probably don't know this, because nobody cares once a product stumbles. Applying this same logic to tablets, why are so many companies kidding themselves with price points that they will slash in a matter of months if not weeks?

The TouchPad at $399 is unlikely to make a difference now. The only upcoming tablet that has a shot at being a worthy iPad challenger will be's (Nasdaq: AMZN  ) inevitable release.

When you do come, Amazon -- make sure you price your tablet aggressively from the start. There's no point in repeating everyone else's mistakes when you can simply learn from them instead. 

Will you be buying an Amazon tablet or a $399 TouchPad? Share your thoughts in the comment box below.

The Motley Fool owns shares of Google, Logitech International, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Google, Logitech International, and Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a written covered call position in Logitech International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz is starting to see more Apple products creep into his home lately. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 11, 2011, at 2:54 PM, chadhenage13 wrote:

    I agree with your premise, but what a lot of articles seem to miss where tablets are concerned is there has to be an ecosystem to support the tablet. The average consumer wants not only a cool looking functional tablet, but they want something they can hook up to their computer and get something more. In other words Apps and some type of store or single program that allows them to have their tablet talk to their computer without frustrating them. There is one tablet that does this....the iPad. Price is relevant only to a certain extent let's face it a tablet is not a "need" for anyone. It's the iTunes ecosystem and the upcoming iCloud that drives buyers to the iPad, hardware, available connections (USB, card readers, etc.) nothing else is as important.

  • Report this Comment On August 11, 2011, at 4:22 PM, deemery wrote:

    The real question is whether HP can make any money selling their tablets at that price-point.

    I don't think you can win a price war with Apple for either of 2 reasons: (1) they have more cash than just about anyone but a bank :-); (2) they don't care to play that game; they'd rather keep a higher margin niche than sell a lot of cheap stuff.

    So at best this is a struggle against all the other wanna-be's for second place. But I wish HP well, I was a big fan of my Palm Pilots back in the day, and would like to see some competition to Apple (as opposed to what we mostly see, which is just imitation of Apple.)

  • Report this Comment On August 13, 2011, at 12:33 AM, jacobandersen72 wrote:

    Logitech Revue is great. Hope people check it out.

    Watch your films on your TV not your PC screen.

    Music thru your stereo.

    Web right on your tv.

    its a dream.

    sales will come.

  • Report this Comment On August 13, 2011, at 1:37 AM, ayaghsizian wrote:

    I have a big portion of my net worth invested in AAPL so I would never go against them in any way. But the touchpad does look interesting, is only $399 and has great commercials. Still, last week, I bought an Ipad as a gift for my sister.

  • Report this Comment On August 13, 2011, at 1:54 AM, Clint35 wrote:

    What the hell does Xoom mean anyway? Who's the idiot that came up with that? If I was going to spend money on any of them I would just get the real thing and pay up for an ipad. Why buy a copy that isn't as good just to save a little money and end up being disappointed.

  • Report this Comment On August 15, 2011, at 7:14 PM, Natolx wrote:

    The problem with most Android tablets is that they try and compete with the IPad. That's the wrong thing to do. They need to differentiate themselves from the IPad in some way. The Toshiba Thrive did this very well. I wasn't even interested in an Android tablet until I found out about the flexibility(full-size USB, full size SDcard, rugged replaceable back) of the Thrive which plays on the flexibility of Android. The complete opposite of the IPad!

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