The state may enter into a contract to purchase HP’s now defunct Touchpad, an iPad competitor.

According to the Stamford Advocate’s Brian Lockhart, the Department of Administrative Services may soon have a contract with HP to purchase the devices that are now being sold at a deep discount. 

How deep?  Likely only $99 for a 16 gigabyte model.  Compare that to the $499 pricetag of a new iPad 2. 

HP lowered pricing on the Touchpads shortly after the company did a puzzling about-face and canceled the product only a few weeks into its launch.  The once $499 device was reduced to a firesale price of $99 in late August.  Suddenly millions of geeks who didn’t give the device a second thought suddenly had to have one at the new low price. 

Retailers throughout Connecticut were swarmed with bargain hunters hoping to pick up one of the dead tablets, catching many by surprise.  Some were still selling the devices at full price even as HP’s own online store liquidated them for hundreds less.  A salesperson at a Staples store in Old Saybrook said that buyers were paying full price for the device in hopes that HP would reimburse the difference (they eventually did). 

HP sold 500,000 of the reduced price Touchpad units in a matter of days, an amount that any manufacturer would welcome in trying to compete with Apple.  Of course while Apple rakes in profits with stronger sales figures, HP reported the liquidation would cost their company approximately $400 million.  The decision to cancel the device happened so quickly that TV commercials promoting the device with Russell Brand and Glee’s Lea Michele were still running days after the product was declared dead.  HP’s CEO Leo Apotheker met a fate very similar to the device he so abruptly canceled.  He was fired a month later and replaced by former Ebay CEO Meg Whitman. 

HP’s Chinese manufacturers were also taken by surprise.  Factories had ordered parts ahead of an expected re-order later this year and were now at risk of a substantial financial loss.  Given the computer maker’s dependence on these factories for other products, HP decided to order a second run of approximately 200,000 Touchpad units in order to maintain goodwill.  HP will be selling the additional units at the same firesale price. 

The tablets are powered by WebOS, the same operating system that powers the Palm Pre and Pixi phones.  HP purchased Palm last year for a staggering $1.2 billion only to completely abandon the platform and its devices.  The company has yet to announce its plans for WebOS, although rumors are that HP may be looking for a buyer for the division.