HP TouchPad: The Risks of Buying Discontinued Products

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NEW YORK (MainStreet) – Apparently all a company needs to do to get a new tablet to catch on with consumers is stop producing it and slash the price by 75%.

HP (Stock Quote: HPQ) announced Thursday that it would discontinue the HP TouchPad (along with the pre3 smartphone) due to lackluster sales and proceeded to drop the price on the cheapest version of the tablet by $400 to just $99. Sure enough, the TouchPad rocketed to the top of Amazon’s bestseller list for computers and accessories as the price tag proved too good for consumers to resist.

But there are drawbacks to purchasing a discontinued product, particularly a tech product.

“Today’s consumers (rightfully) have come to expect that when they buy a device, they've bought at least one update to the device's operating system,” said Adam Pash, editor-in-chief of consumer tech site Lifehacker. “When a product is discontinued, that goes out the window. The device you have now is the best it'll get—at least in terms of what the manufacturer is going to provide you with.”

For a product like the TouchPad, that might mean no major software updates to enhance the way the tablet functions, few if any new apps to enjoy on the device and presumably fewer accessories as HP focuses its resources on other product areas.

Even so, purchasing a TouchPad now isn’t quite as risky as purchasing other discontinued products in part because of the low cost and the fact that consumers are likely to replace tablets relatively quickly anyway.

“Tablets are essentially a two-year product and will certainly change a lot in the next 24 months,” said Rob Enderle, principal analyst for tech consulting firm Enderle Group. So the fact that the discontinued TouchPad might be out of date in a year’s time may not seem like a large value loss, especially given the major price reduction. “If it were something like an automobile that requires a lot of service and you plan to keep it for a long time, then the risk is pretty high.”

The risk would be greater still if it were revealed that HP were not only discontinuing the product but going out of business altogether since HP is the manufacturer. According to Enderle, if the company were no longer in business, it would stop providing maintenance for the product and there is the potential that it would cease honoring the warranties of its customers.

These latter two risks wouldn’t be a concern if HP merely sold the product rather than produced it, as was the case when consumers purchased discounted e-readers from Borders during the company’s bankruptcy that were manufactured by another company.

“If only a seller goes under, the manufacturer is still there, and still has an interest in making their devices attractive to consumers,” Pash said. “That includes providing support and updates.”

Given the risks that come with these purchases though, one might wonder why consumers flock to discontinued items like the TouchPad. Ultimately, it all comes down to the price tag.

“The primary benefit for most consumers is the drop in price,” Pash said. “Most tablets will set you back at least $300 or $500. With the TouchPad, you're buying a lot tech for $99. The catch is that the operating system that's running on that hardware is frozen in time, and it really could be better.”

If, however, your goal in buying the TouchPad in particular is to resell it later or give it to someone as a gift for the holidays, you might want to rethink your plan. Unless you’re able to sell it right now for a profit, Enderle argues the device will quickly become obsolete as other tablets on the market evolve. As for the gift idea, don’t even get Enderle started.

“You shouldn’t get these as gifts unless someone has specifically asked for it,” Enderle said. “The whole point for giving a gift is that someone feels gratitude for you giving it to them, but giving someone a discontinued product may just end up being a hassle for them.”

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