HP Q3 Conference Call: TouchPad Is “Not Gaining Traction” [Duh!]

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Reports about Best Buy and Walmart returning huge numbers of unsold TouchPad tablets to Hewlett Packard appear to be strikingly true.

Speaking on a conference call right after dropping the bombshell that HP is killing its webOS phones and tablets, HP CEO Leo Apotheker admitted that his company’s iPad competitor is not selling at all, despite hefty price cuts.

The company hoped the TouchPad would quickly establish itself as the number two to the iPad, Apotheker said, but it hasn’t made a dent at all.

“There is a clear movement on the consumer PC space… the tablet effect is real,” he said on an earnings call to Wall Street analysts. “The TouchPad is not gaining enough traction in the marketplace.”

As a result, HP is concentrating on enterprise, while splitting webOS and PC operations, he said.

“Our PC business needs the flexibility to make its own decisions,” Apotheker said.

He expects a spinoff of the PC business will take 12-18 months. In the meantime, it makes no sense to continue selling webOS devices.

“We have been tracking webOS… we were successful at launching the software, but we are exploring options to leverage the software in the future. However, our devices were not successful,” he said.

“About a year ago, we made a bet on webOS. At that time we set clear metrics and milestones to measure success. The sellthough of the TouchPad was not what we expected. Our expectation was to establish TouchPad as the clear number 2 platform in tablets.”

He continued: “It was clear that pricing parity would not generate demand, and we cut prices by $100.”

So HP is cutting its losses, Apotheker said.

“WebOS would require significant investments over the next five years, generating risk without clear rewards.”

A transcript of Apotheker’s comments is here on the This Is My Next liveblog.