Those Who Want to Run Government Like a Business – Take a Look at Hewlett Packard

 And then Look Elsewhere - Not Exactly a Role Model Here

Several months ago technology giant Hewlett Packard introduced a product to compete with Apple’s extremely popular and market domineering iPad.  The product, the HP TouchPad promptly bombed, gaining immediate access to the Dumb Business Ideas Hall of Fame.

In order to get rid of the TouchPad inventory HP decided to cut the price from $400.00 to $99.00.  At $99.00 the item became a big seller, so big that HP sold all of the stock of these lemons to people who apparently hope to make some lemonade.  So that was a fitting end to the saga, and a somewhat successful end in that HP did get some money from its inventory.

Well the sale program was such a success that now HP has decided to start making some more units. 

"We don't know exactly when these units will be available or how many we'll get," H-P spokesman Mark Budgell wrote on a company blog. "We can't promise we'll have enough for everyone." The company said it is pleased by the response it has gotten so far.

So what’s the problem?  Well there is this

The decision to manufacture a second run, however, left analysts scratching their heads. The introductory model of the TouchPad costs $306 to manufacture, according to an estimate from research firm IHS iSuppli, suggesting a loss of roughly two-thirds if it is sold for $99.


 

Note to HP Executives: The statement “we’re losing money on every unit, but plan to make it up on volume” is an old business joke.  Get that, a joke.  It is not a policy prescription. You need to know that.