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The Death March of HP TouchPad – The case-study of a thousand screw-ups

When Leo Apotheker announced that HP would discontinue TouchPad, a tablet that was released with much fanfare just 49 days back, it was met with a general sympathy for the OS that had so much potential and a general sarcasm about one of the most screwed up product executions of all time. General agreement was that the tablet and its unlucky OS will fade away into oblivion much like the other doomed DOA products (Kin, I am looking at you). TouchPad, it seemed, was set for a path of slow and silent death. Someone up in HP though (with a terribly evil sense of humor), had other plans. They chose a path of mayhem and destruction, a 21-st century equivalent of setting fire to a hundred thousand TouchPads. The crash and burn was gloriously spectacular to watch and in the process, it also threw up a few noteworthy lessons.

The build-up

It all started with a seemingly harmless Mashable post about HP TouchPads suddenly being put out on sale in BestBuy Canada. A SlickDeals thread began discussing this early friday and that kick-started a weekend madness that is still continuing to take down retailer after online retailer in a tablet buying mania like no other. Since Canada already started the sale, it was but obvious that it was only a matter of time. But the smart SlickDealers did not want to wait until that time. Someone called up HP and some poor rep let out that they can start placing orders online or through phone and that HP would price-match once the sale went out the next day, refunding the difference. This was probably the mistake that triggered the avalanche.

Hundreds of SlickDealers started pumping in orders and the news spread like wildfire. It also gave out an important message: that HP was ready to price-match. This was enough to trigger sales into all the other online retailers in the hope that HP would somehow help them price-match later if they bought the tablets at full price. Soon enough, people started placing orders with Amazon, BestBuy, WalMart.com etc while none of these retailers were in any position to make any informed decision.

Saturday morning saw more havoc. As soon as the brick-and-mortar stores opened, eager customers started lining up for TouchPads. BestBuy refused flat-out. Being the rogues they always are, they openly lied that they had discontinued TouchPad sales and shipped back all the inventory back to HP already. This was the second mistake. This sent out a clear message that HP would end up with a mega load of TouchPad inventory. After all, BestBuy claimed just a week back that they had more than two hundred thousand unsold TouchPads. News duly spread and people started pounding HP.com web site assuming all the two hundred thousand were for the taking. Was HP web site equipped to handle this?

Hey, this is HP we are talking about: the multi-billion dollar organization which recently made a strong commitment that they would be all about software hereafter. So, they would set a clear example by demonstrating how efficiently they would handle this mega online sale, right? Wrong!

Inventory screw-up

As it turned out, there was no integrated point-of-sale or inventory count within the HP web sites. They had a ‘Home and Home Office‘ site that worked independently from a ‘Small and Medium Business‘ site, both selling identical TouchPads and, get a load of this, anyone can order these tablets in any of these sites, irrespective of whether they were individuals or businesses. There were other online channels too: they had an Employee Purchase Program for HP employees and retirees and an Academic Purchase Program for students and alumnis of US colleges each having their own site. People could even quote a company code in a separate page to purchase these. Heck, there were scores of SlickDealers quoting the code 2727, which was reserved for the US Army, to place orders! Long story short, they had many entry points and each of them had their own notion of inventory counts, sales and support teams, ordering interfaces and even business hours. It was an inventory-tracking nightmare! The end result was that the web sites kept showing items in stock, when they had ran out of stock long time back. HP is still trying to recover from this as they try to sort out the orders that have piled up.

Software disaster

If inventory was a mess up, their ordering software was a complete disaster. It was obviously not built to scale to any more than a trickle of customers. So, when this mob started pillaging the web sites, they completely buckled down with VB Script out-of-memory errors, 404s, internal server errors and what not. Their product page showed $99 and the shopping cart showed $399, once added. A rep acknowledged these errors but said they might not be able to fix it until following monday. Why HP could not have arranged for a fire-fighting IT team or prepared scalable cloud-based systems for an event of this scale is anybody’s guess. Also, many of these errors happened in their Small and Medium Business (SMB) web site – nice hint to any small/medium business looking to HP for software and hardware solutions.

Clueless customer service

While all this was happening, no one in HP customer service was well-informed of the plans for the fire sale. They could not confirm orders, availability, price-match guarantees etc. Also, due to the myriad entry points, people mostly ended up reaching out to the wrong customer support team. The SMB support team functioned for a while and then was off the rest of the weekend. During a fire sale like this! Combined with super-cryptic order status indications and lack of any confirmation emails, no one was sure of their orders. This led to the next major goof-up.

Chaotic channel partners

Obviously, HP had distributed TouchPads to a wide array of retail channel partners, including BestBuy, WalMart, Staples, Office Depot, KMart / Sears, Amazon, CostCo, Radio Shack and so on. Apparently none of them got any clear direction about what to do with the sale. While some like Office Depot started selling at reduced prices from the get go, others like WalMart simply had no idea. Combine that with the number of WalMarts across the nation, you get the problem. Some WalMarts got a memo to sell at reduced price, while the others simply refused. Many ended up buying at full price hoping for a later price-match and some of those poor folks are still fighting with WalMart to get the refunds.

With HP web sites and customer support unhelpful, the mob turned to the other retailers. Almost every online retailer web site was pounded to death by the mob. Almost every one of them miscounted their inventory and took in much more orders than they should have. Many of their customer support were also obviously clueless.

Special mention to BestBuy here: They have always been untruthful and unethical in their transactions, but this time around, they surpassed themselves. After their first lie about sending back inventory, obviously HP cut some sort of deal with BestBuy. Late saturday evening, BestBuy decided to take part in the fire sale. Magically, the said TouchPads suddenly began to appear in BestBuy shelves. Were they for sales? Sure! But, you know what? BestBuy employees first! After all, who wouldn’t want a hundred dollar tablet? So, the employees began to call family members and relatives to come and hoard as many tablets as they could, before the customers came. Many customers reported that the employees refused to disclose inventory with a shady smile.

Silver Lining

Amidst all these chaos, there was a single retailer who was steady, professional and efficient. No points for guessing it right – it was Amazon. Amazon decided not to get involved in the mess until they sorted out what they wanted to do. But their customer support was always available and they did not send any wrong signals. They did not promise a price-match. Still, many customers went ahead and bought from Amazon hoping for a price-match. These were the people who got lucky first. Saturday afternoon, Amazon made a decision that they will price-match for all customers who bought through Amazon, and they promptly processed the refunds too. All orders were honored. Obviously, they took stock of their inventory and promptly went out-of-stock. Sunday afternoon, they figured out their remaining inventory and put out two lightning deals – first one lasted 25 minutes and second one for 4 minutes! Again, no inventory goof-ups, excellent customer support and to top it all, the site did not go down even once.

Current State

Through Sunday and Monday, many other retailers dumped their stock in the sale and almost every one of them went through the same problems as above, including Barnes and Noble, CompUsa etc. There are currently hundreds, probably thousands of customers who are unclear of their orders, who do not know whether they will get a TouchPad or not and who are struggling to get through customer support channels of all these retailers. And it all started with a sale of a tablet which, just 3 days back nobody cared for.

As this train wreck unraveled, I believe we have seen a demonstration of every mistake that could be possibly committed on marketing decisions, inventory stocking and tracking, online retailing, channel partner communications, customer relationship, infrastructure scaling, grievance addressing, sales ethics and what not. We have seen reputations bite the dust and we have also seen a stalwart of online retailing setting a clear example of how things should be handled in such hysteric times.

HP’s decision to roll out the sale during a weekend was either a completely moronic ploy or a supremely genius move. Moronic, because not only was HP not ready to handle what was about to happen, but also it took all its channel partners by complete surprise. It was genius because it brought all the wallets and cars out on a weekend and set a whole nation running around like the characters in a mad, mad, mad, mad world.

It also showcases how useless our online retailing ecosystem really is. None of the players had any clear notion of their inventory and their web site scaling was a joke. Interestingly, the only company that managed to do well had a proven cloud infrastructure and a customer support framework.

It is ironic that HP TouchPad is currently the best-selling product in ‘Electronics’ category at both Amazon and BestBuy. But, it tells a thing or two about the tablet market. It does feel like the whole notion of an iPad killer is completely misplaced. In the current climate, there seems to be only two types of tablet customers. Those who can afford (or save up) go buy an iPad, because it doesn’t make sense to buy an iPad-killer-wannabe when an iPad can be bought for the same price. Those who can’t afford (or don’t want to pay up) are not buying any tablet. They are waiting for the prices to fall down so that they can get a reasonably good quality tablet for an attractive price. Until then, only iPads and the china-tablets will rule the roost. Even HP couldn’t have seen this sale if they priced it at $199 instead of $99. There is something attractive about a sub-100 price point – the china-tablet price point.

When the dust settles, this fire sale (a.k.a. bloodbath) will be remembered by many people for many things. But, I would like to remember it as the time when HP decided to show its middle finger to all the other tablet vendors, saying loudly and clearly “Fark you all!”, before jumping down a deep deep cliff.