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HP Closing Tablet Business With Production Ramp Up

Hewlett-Packard Co. plans to manufacture more tablets in the coming weeks despite announcing that it is ceasing production of its TouchPad devices.

The company announced ramped-up production on Monday after all of its TouchPad inventory sold out. HP slashed the price to $99 for existing TouchPad stock, and the sharp price drop apparently led to increased demand.

By selling more TouchPads, however, HP gains an installed base of users for the webOS platform. HP hasn't decided what it will do with webOS, although it said it is committed to keeping the platform alive, perhaps by selling it or spinning it off, or through some other form of divestiture. Alternatively, HP may decide to keep webOS.

"Despite announcing an end to manufacturing webOS hardware, we have decided to produce one last run of TouchPads to meet unfulfilled demand," said HP spokesperson Mark Budgell in a blog post on Monday. "We don't know exactly when these units will be available or how many we'll get, and we can't promise we'll have enough for everyone."

HP said it intends to wind down operations for its TouchPad business at the end of its fiscal quarter on Oct. 31. However, Todd Bradley, executive vice president of HP's Personal Systems Group (PSG), didn't rule out a possible resurrection of the TouchPad. "Tablet computing is a segment of the market that's relevant, absolutely," Bradley told Reuters.

Meanwhile, in a separate Reuters report, a spokesperson said HP would prefer to spin off PSG rather than sell it. In addition to announcing it is discontinuing the TouchPad, HP said it was exploring options for PSG, including selling it, spinning it off or perhaps keeping it.

"We prefer a spin-off as a separate company and the working hypotheses [sic] is that a spin-off will be in the best interests of HP's shareholders, customers and employees," the HP spokesperson said. "However, we have to complete the diligence process and validate this assumption, including fully understanding the dis-synergies in separating the PSG business from HP."

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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