The Psychological Buzz of Scarcity

Less than two months after releasing their Touchpad, HP decided to throw in the towel, cut losses, and discontinue their WebOS program. With poor performance reviews and even worse sales, the tech giant found a logical way to get rid of stagnant product on the shelves: a nation-wide fire sale. Stores all across America would offer $99 for the original Touchpad (originally priced at $499) and $149 (from $599) for the bigger model. A real steal – but who would want a discontinued tech product that wasn’t even cool? Nobody?

Well, think again.

Consumers went crazy and made runs for the Touchpad. Techies and hackers saw limitless possibility in the reduced-priced tablet, and eBay listings even offered the product at a raised price of $200. The fire sale was so successful that HP decided to do another production cycle, the funds of which could help the company sell their WebOS software to competitor HTC.

What happened here? Literally overnight, a product that couldn’t get any attention suddenly became the must-have item in tech, a complete turnaround in no time at all. Is it that consumers are revved up by the feel of scarcity? In this case, the fire sale caused a wave of desire that was impossible to ignore.

HP, down and out in the tablet market, has pulled out a winner, accidentally – by leveraging the energy of scarcity in a market looking to capitalize on a commodity.