The logic of producing more HP Touchpads at a loss

An article in CNN Money (August 31, 2011)  describes a possible reason HP would produce Touchpads and sell them at a loss (for $ 99, from a list price of $ 499) even though the division is being shut down.  Upstream suppliers were claimed to have components to build over 100,000 HP Touchpads.   Rather than leave suppliers out in the cold based on pre-committed orders,  producing and satisfying demand may well be the profitable option that repairs relations with suppliers and permits customers to feel loved.  Does this logic explain the decision by HP to continue to produce and sell at a loss ? Should suppliers have been paid instead to find alternate channels for their components ? Given that the Touchpads will probably have to be jailbroken to install another operating system such as Android, will HP’s decision hurt other Android based tablet manufacturers ?

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About aviyer2010

Professor
This entry was posted in Collaboration, Global Contexts, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

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