HP TouchPad (webOS) Available in June Starting at $499? May Be Too Expensive to Compete

The common wisdom is that dominant products eventually are replaced by a better competing product. Wordstar eventually gave way to WordPerfect and Microsoft Word. VisiCalc was replaced by Lotus 1-2-3 which itself was eventually replaced by Microsoft Excel. Nokia, RIM, and Microsoft based smartphones have been surpassed by iPhone and Android phones. There are, however, some apparent exceptions to the rule. Microsoft Word and Excel gained dominance in the mid-1990s and are still at the top of their categories. Apple’s iPod appeared in late 2001 and has only recently been challenged by Apple’s own touch screen devices (iPod touch and iPhone).

I once believed that Android and other mobile platforms would give Apple’s iPad a run for its money (literally). But, the only two serious tablet competitors to enter the market so far, Samsung’s Galaxy Tab and Motorola’s Xoom, have not appeared to threaten the iPad or, more importantly, the iPad 2 which was released this past weekend. So, HP’s release date and pricing for their webOS based TouchPad is quite interesting.

TouchPad set for a June release, priced from $499; 7-inch coming in September? (pre|central)

HP’s June release date not only gives the iPad 2 to build up its already considerable head of steam, it also gives the Motorola Xoom (Android) lots of time to establish itself as the main iPad alternative. RIM’s PlayBook still looks like a niche player appealing mostly to BlackBerry users. The $499 pricing for the TouchPad’s 16GB WiFi-only model squares it off directly with Apple’s low-end iPad 2 offering in terms of both price and storage. HP needs to rethink its pricing strategy if it wants to take away some iPad 2 marketshare. It needs to drop its entry level model to $399 or, even better, $299 to make people ask themselves if they would like to save $200 to get a product with fewer apps and no siginificant peripheral ecosystem.