I too have been questioning what other strategies HP could have considered.<p>They must have known that at the time of the release the touchpad as is wasn't going to compete with the iPad or many Andriod pads at the release price.
They also should have realized that a premium product already existed in the marketplace, and their hardware didn't measure up. They should have looked at their strengths (webOS) and considered a Micrsoft x-box like strategy to sell their strengths on a cheaper device, and go upscale as they had more traction with the OS and were able to create a better hardware solution and had worked the bugs out.<p>It is my understanding that the hardware of the touchpad is very competitive with the iPad and top-end androids, but the feel of it was weak, and the device definitely had problems.<p>An initially sub-$200 selling price on 2-million units would have resulted in a 2 billion dollar loss, but also would have put HP and webOS as a strong presence in the tablet space. They would get more apps built, making the ecosystem even stronger. They could have learned from their inexpensive entry, and come out with higher-end devices. Of course, the hardware in the original touchpad will get cheaper over time, so theoretically, they could keep producing the original for a few years, and end up recovering lost $$ on early sales in two years or so.