The encyclopedia · Product & Design · Product decision · 2010–2011
HP's TouchPad: $1.2B Palm bet dead in 49 days
HP paid $1.2 billion for Palm, launched the TouchPad against the iPad at $499, and fire-sold it at $99 forty-nine days later.
HP · 2011-08
What happened
In April 2010 HP paid $1.2 billion for Palm — less than a third of what Palm had been worth six months earlier — to get webOS, the mobile operating system whose multitasking and gestures were half a decade ahead of its rivals. CEO Mark Hurd's pitch was webOS inside everything from printers to phones.
The TouchPad launched in July 2011 at $499 to compete with the iPad, which had a year-long head start and an app ecosystem webOS never had. Forty-nine days later HP's new CEO Léo Apotheker — who never believed in the product — announced the TouchPad and all webOS phones would be discontinued.
The clearance became a legend: $99.99 for the 16GB model and $149.99 for the 32GB — a $400 price cut that triggered a buying frenzy and sold out online and in stores within days. HP said it would replenish stock until it was gone; the webOS line was finished.
Why it happened
- HP bought Palm to put webOS in printers, then launched the one device that had to beat the iPad — with no apps, no conviction, and a new CEO who killed the product within months.
- webOS was ahead on multitasking, but the $499 TouchPad entered a market Apple had defined, where clever gestures could not compensate for an app store thinner than the iPad's.
- The $99 fire sale was HP paying customers to take inventory — and it worked so well it showed how fast a $1.2 billion acquisition could be turned into a clearance bin.
The lesson
HP spent $1.2 billion on Palm, launched one product, and killed the platform 49 days later at a $400 discount. Buying a technology is not a strategy; the strategy is what you build before you buy.
Aftermath
The TouchPad's $99 fire sale sold out within days and HP replenished until inventory was gone. webOS hardware ended entirely — Jon Rubinstein later said that if Palm had known HP would 'just shut it down and never really give it a chance to flourish,' selling the company would have made no sense. HP open-sourced webOS and eventually sold it to LG; the $1.2 billion acquisition became the textbook case of a platform bought and buried.
Sources
- LA Times — HP TouchPad sells out after price drops to $99, 23 August 2011 (fire-sale prices $99.99/$149.99 against $499.99; buying frenzy; sold out; HP halts TouchPad and webOS phones; $1.2B Palm purchase)
- Tedium — The TouchPad's Fire Sale, 31 March 2020 (49 days into its life; $499 to $99; $1.2B Palm acquisition 'less than a third of its worth'; Hurd's printer pitch; Apotheker 'giddy to kill off a product he didn't believe in'; Rubinstein regret quote; webOS open-sourced and sold to LG)
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