Thanks, I appreciate it. It makes much more sense to just speak plainly rather than try and cloak ones words in mystery. Now, if you'd only clarify whether this is pure conjecture on your part rather than actual inside information, I think we might be getting somewhere...
Originally Posted by Maverickz
I think (hope?) we both know that assembly is not the only additional cost involved. Shipping? Order processing? Fulfillment? When one takes those into account as well as the fact that those parts were unlikely to be sitting in an HP warehouse, but in one belonging to Compal, that explanation becomes shakier.
If the parts cost $8, and the assembly cost $2, that makes the total real cost $10. Now that means for every unit that sits assembled hp loses $8. If they then sell the units at a loss for $6 each their loss per unit is now only $4. In fact, with the real cost of $10 every dollar they can sell it over $2 reduces their loss per unit, over just scrapping the parts.
"Let me sum up" - Inigo Montoya
Basically, my 'position' is that HP sprung the WebOS hardware discontinuation on everyone. Stock price tanked 20% the next day. Anyone who could cancel orders since they were not shipped (AT&T), did so. Retailers who already had loads of stock on hand (Best Buy et al) tried to return that stock. HP in an effort to not take those returns back and eat the whole cost, came up with the fire sale idea so they could only eat the difference between the $316+ average real cost and whatever price they agreed with retailers on the existing stock at those retailers. Those retailers then sold all available inventory they had at those prices, and HP sold any inventory that it had remaining through its various direct channels (EPP, HO website, SMB website, etc.). Then Compal called and said, "What about us? You wanted 1 million of these things, and we only made 800,000 so far. We've got parts for between one and two hundred thousand sitting in our supply chain." HP said, "Crap, we can't do that to these guys if we still want them to build laptops. OK, we'll say we're going to do one last run and update people via email and Twitter." Then Meg took over, they had that one last run, and realized that if they sold them directly to consumers, they'd have to incur shipping costs to an HP distribution facility, handle order taking and fulfillment, and then shipping costs to individual consumers. HP: "Why not just ship them to a few select retailers who can handle the volume and then bundle them with other items? We'll still lose $150+ per unit, but we'll make a small margin on the PCs and notebooks at Best Buy et al and not incur additional order processing and fulfillment costs. Tell Mark and Bryna to just say we're out of stock forever, but select retailers will have limited stock." Pretty standard business there. I say, "Bravo, Meg."
Your position seems to me to be: HP had parts sitting around, so they decided to put them together and sell them directly to their employees. The retailers didn't sell all their stock for the fire sale, so they held some back incurring storage and opportunity costs, so they could bundle them with notebooks and PCs a few weeks before Black Friday conveniently timed for the HP update about that last run. If I'm misunderstanding you, please clarify.