Comment by ndiddy
I remember reading an article about the development of the Touchpad. Apotheker wanted the Palm division to be cash neutral. This meant that when they were speccing out the Touchpad, they weren't able to get any of the parts they wanted because Apple kept buying out supplier capacity for the iPad 2 and HP wasn't willing to cough up the money for the suppliers to expand their capacity. I think the engineer described the final Touchpad as being made of "leftover iPad parts". Once it was clear that HP wouldn't be able to compete with Apple on device build quality, the Palm division wanted to subsidize the device and price it at $200 to buy market share, but again HP management refused so they had to price it at HP's usual margin. It's no surprise it didn't sell at $499.
The build quality wasn't the issue (as far as I can tell). I bought a unit on the secondary market more than a year after the "Fire Sale", it was flawless. It's hardware spec, particularly those obvious to end-users, like weight and thickness matched however the original iPad, not the iPad 2 (promoted for being "thinner") already released by the time of the launch of the TouchPad. That combined with the lack in available software, it's quite clear that whoever set the $499 price didn't want the product (or rather the team behind it) to succeed.
Shame really, as WebOs had potential, the TouchPad's sound was pretty good and it's port of Angry Birds (one of the few pre-installed apps) was awesome.