[dandbj13]

there's nothing to support your (somewhat insulting) notion that they're going to 'load up their pirated movies and music". You're basing this on what?? You think people looking to save money are automatically thieves?...Now please, disagree with the concept if you wish, but leave the insulting innuendo at the other side of the keyboard.

Pirating is getting to be mainstream, and is not even considered to be wrong by most people who do it. I intended no insult. Do accept my humblest apologies if you were insulted.

[hparsons]

I'm not sure how that makes it better. IMO, bundles are just loss-leaders in disguise. The only difference is you can't be sure which is being sold at a loss. Will their PCs get cheaper? The printers are already free in bundles. They need to make money on phones just as much as tablets.

I'll predicate my response to this by assuming that HP is going to release a tablet that works fine by itself, will even work well with other products, but will work best when coupled with other WebOS devices.

Buying a tablet by itself (assuming the tablet is quality) would show the user they have a good tablet. Buying it with a phone would show the advantage of an integrated system.

An example would be the ability to start a document on the tablet, and continue working on it on the phone. That's a nice feature, but might be hard to convince a new user without some "hands on".

[cardfan]

As a Prime member and Netflix subscriber, I can get behind that. But it still does not solve the fundamental issue. Prime memberships are for people who buy a lot of stuff from Amazon. They are big spenders who are rewarded for spending even more. The last thing Amazon wants is a bunch of people who got free prime memberships and ordering $2.00 items once every other month. Amazon loses on that deal.

No, if you are attracting the type of person who would make use of Amazon Prime, you don't need to price bait them in the first place. I think we should wait and see what they offer before we relegate them to the Blue Light special.

Amazon is rumored to be offering a netflix type service included with the membership. Amazon is giving these memberships away more and more these days. They need their services offered on mobile devices in a big way.

[hparsons]

You took personal offense because you felt that he insulted cheapskates?

I take no offense at beaing called a cheapskate. I am one (in some areas). I do take offense at the notion that because someone looks for bargains, that it makes them a theif. Sorry, I don't see the connection at all.

[Cantaffordit]

I'm not sure how that makes it better. IMO, bundles are just loss-leaders in disguise. The only difference is you can't be sure which is being sold at a loss. Will their PCs get cheaper? The printers are already free in bundles. They need to make money on phones just as much as tablets.

In the end, it is still a price-shopper they would be going after, and those are not the type who buy expensive enhancements. If HP is going to publicly go after the iPad by making an item that is as much like it as they can, they will have to go after the same market to be successful. If there is so much confidence that HP has the goods, and I hope they do, why all this talk of price baiting. If they want to compete toe-to-toe, let them stand up and compete.

Bundles help to increase "wallet share" by creating incentives for purchases the same person is likely to make. Just getting the user to make that second purchase at the same time as an initial purchase creates a radical increase in net value of the customer to the company selling the bundle. That's a regular strategy in most aspects of retail. Check out the ads in any sunday paper. Buy a PC, get a free printer. Buy TV, get a BluRay player, etc. By One - Get One (BOGO) is very common because it is usually effective.

The "double play" and "triple play" bundles from cable companies also demonstrate this. They have tons of data to back up the claim that bundles increase customer stickiness and total customer lifetime value. It is more than Brand loyalty, but it can help that too. The important thing is to increase total spend by a customer over their lifetime as a customer. The key to remember is that if HP can get you to make that second purchase as a bundle, they have zero costs in getting you to choose HP when you decide to make that second purchase, because you already have it. Zero marketing, zero inventory cost, etc.

It doesn't work in every scenario (New car sales comes to mind - Buy a new BMW and get a Kia of equal or lesser value... meh) but it works in many at the retail level, and even sometimes at the corporate level, as long as there is a strong likelihood that purchases of a product in "category A" are probably going to buy a product in "Category B" in the near future.

I hope that helps.

[cgk]

Well let's go with a practical example - who is currently selling their tablet as a loss leader?

[cardfan]

I'm sure he'd buy an iphone/ipad bundle with a combo data plan at a hundred dollar discount :P That would change everything...again..right?

[hparsons]

Bundles help to increase "wallet share" by creating incentives for purchases the same person is likely to make...

Sounds like someone has been in the retail business

It doesn't work in every scenario (New car sales comes to mind - Buy a new BMW and get a Kia of equal or lesser value... meh) but it works in many at the retail level, and even sometimes at the corporate level, as long as there is a strong likelihood that purchases of a product in "category A" are probably going to buy a product in "Category B" in the near future.

I hope that helps.

Slightly off topic, but a few years back, Nissan offered "Buy a truck, get a car" for a while. I almost bit, but my Envoy was still too new.

I'm sort of on the fence on whether or not I think HP is going to offer bundles at the consumer level; however, I fully expect them to do so at the corporate level. Bundling there would get WebOS devices in the hands of a lot of users very quickly.

[hparsons]

Only if he didn't have an iPhone 4 already or an iPad already. Or he was willing to hold off on the new iPad until the iPhone5 was ready.

It pretty much goes without saying that bundles appeal most to those that don't already have one of the devices/products involved.

Even at that, in your scenario, what if he had an iPhone already, but wanted an iPad, and his 12 year old had been asking for an iPhone.

There are lots of scenarios where bundling works, and it is done frequently.

[vza33]

Indications are that this market is quite ripe for competition, as the iPad has slipped considerably to android tablets.

AppleInsider | Apple's share of tablet market slides to 77%, Android rises to 22%

[Cantaffordit]

[QUOTE=hparsons;2843738]Sounds like someone has been in the retail business

Aren't we all "in retail" to the extent that we buy stuff as retail consumers? Pretty easy to think like a consumer if I am a consumer.

Slightly off topic, but a few years back, Nissan offered "Buy a truck, get a car" for a while. I almost bit, but my Envoy was still too new.

Around here they did it with used SUV's when gas prices went crazy a few years ago. Buy a new hybrid, get a used gas guzzler... didn't work that well. But now they are all giving away iPads with car purchases (I saw one dealer do that for just a test drive), and that is workng pretty well. How about buy a webOS phone, get an iPad bundle...?

I'm sort of on the fence on whether or not I think HP is going to offer bundles at the consumer level; however, I fully expect them to do so at the corporate level. Bundling there would get WebOS devices in the hands of a lot of users very quickly.

The do it now with PCs, Printers, Phones, LCD dislays, etc. No reason to think they wont continue that. Buy a webOS phone on contract and get a web printer that you can control from that phone... etc.

More likely to work at retail because at the enterprise level there has to be a 1-1 correlation of purchases. If companies only use networked laser printers, they end up with a pile of free inkjet printers that they can't use. The enterprise bundle would be more like "give AT&T all your corporate cell phone lines and the phones will be free" or every smartphone added to a corporate contract comes wth a free MHS app at no cost...

The other technique that works well - and can almost be considered a loss leader" is to give away what people won't buy along with what they will buy. That's the premise behind carriers subsidizing phones. People will pay for monthly service, but have been less likely to pay many hundreds of dollars for a smartphone. But if it's free or almost free, they will gladly sign away the next year or two. Also works with stuff people don't want... Like buy an EVO and get up to 3 free feature phones for additional lines. Dad gets his smartphone, and they dump the crappy feature phones for him to give to the kids.

At lotus we often bundled less popular software with the titles that were popular. Buy 1-2-3 for Windows, get WordPro and Freelance included for free... etc. When done properly, it really works.

[Cantaffordit]

Well let's go with a practical example - who is currently selling their tablet as a loss leader?

No one. That's why most are disagreeing with the premise of the OP.

Even in cases such as apple where they can show a direct connection between products leading directly to additional purchases... apple sells every item at a huge margin. They make huge margins across the board, even on clearance and refurb units.

Loss leaders only make sense if they lead to reoccurring revenue. A free set-top-box was used to generate on-demand movie purchase. A free HD DVR leads to the customer to buy the HD package and HD-rich add on packages.

Someday google could make so much on selling marketplace apps that they could give away the android OS.. oh, never mind.

I think after all these zillions of posts, we can all agree that offering a product as a loss leader doesn't make sense for HP or this particular market space.

Resolved: Tablets from HP and other iPad competitors will not be sold at a loss by the manufacturers.

[dandbj13]

Of course Apple could bundle, and of course people would accept the free stuff. What has that to do with this discussion? Apple doesn't do that because they don't have to. People want their products at full price without the need for baiting.

Why is everyone so convinced that no one would want an hPad unless it came with a bunch of free stuff? If HP is convinced of that before it is even announced, then it has probably already failed. Even I am willing to give them the benefit of the doubt, whatever benefit there is in doubt.

[Cantaffordit]

Yep. and their competition does it all the time because they can and because it helps them . Apple doesn't need to, and probably wouldn't anyway. That's the way of the premium brand.

[hparsons]

...
Why is everyone so convinced that no one would want an hPad unless it came with a bunch of free stuff? If HP is convinced of that before it is even announced, then it has probably already failed. Even I am willing to give them the benefit of the doubt, whatever benefit there is in doubt.

?? I guess I missed where "everyone" is convinved of that. I saw it posed as a possibility, and then discussed. It seems that most were saying it would be a mistake. Even the small advocacy I've offered for a loss leader was in the phone space (I still think there's something to be said for that).

[hparsons]

Yep. and their competition does it all the time because they can and because it helps them . Apple doesn't need to, and probably wouldn't anyway. That's the way of the premium brand.

It's probably worth noting - that "premium" stance doesn't always work. I haven't seen any LaserWriters in a long time. More currently, seems that Apple's losing a little market share to upstart Android, not only on the phone front, but in tablet sales as well.

As I keep saying, it's going to be an interesting few months...

[cardfan]

It's probably worth noting - that "premium" stance doesn't always work. I haven't seen any LaserWriters in a long time. More currently, seems that Apple's losing a little market share to upstart Android, not only on the phone front, but in tablet sales as well.

As I keep saying, it's going to be an interesting few months...

Well, except that premium brands don't usually dominate marketshare. Profit margin fuels the whole concept of a premium brand. I wouldn't expect the ipad's marketshare to hold up well over the next few years.

[hparsons]

Well, except that premium brands don't usually dominate marketshare. Profit margin fuels the whole concept of a premium brand. I wouldn't expect the ipad's marketshare to hold up well over the next few years.

I agree, with the possible exception of the iPhone, and the iPod. In the case of that latter, I don't really know what their profit margin was, and I did notice that a steady stream of new models with new features seemed to drive old device prices down. To be fair though, I wasn't watching that market closely; it had no real interest for me. iPhones seem to be still holding their own, for the most part; however, Apple seems to be beginning to adopt the same "new feature" process, but in this case, they're beginning to lose marketshare.

[cgk]

I agree, with the possible exception of the iPhone, and the iPod. In the case of that latter, I don't really know what their profit margin was, and I did notice that a steady stream of new models with new features seemed to drive old device prices down. To be fair though, I wasn't watching that market closely; it had no real interest for me. iPhones seem to be still holding their own, for the most part; however, Apple seems to be beginning to adopt the same "new feature" process, but in this case, they're beginning to lose marketshare.

What really amazing is that Apple actually increased profit margins on Macs in their last Q4 results - as pointed out above, their pricing strategy does not allow them to dominate the marketplace, so the android gains are predictable and understandable and nothing unexpected, that's why I don't understand the fixation some people have here with Apple, their model is different from everyone in the market.

If we want to talk about competition for HP, we'd be better off talking about ZTE or any number of other bottom-feeders as their model is nearer.

[cgk]

Yep. and their competition does it all the time because they can and because it helps them . Apple doesn't need to, and probably wouldn't anyway. That's the way of the premium brand.

Yeah, it's not going to happen, Apple is not going to get sucked into the margins game to maintain share.