On Friday night, it was discovered by PreCentral.net that the 16 gigabyte version had been marked down to $99 and the 32GB version was down to $149, representing a deep price cut of $300 or more.

By Saturday morning, bargain hunters had moved quickly to pick up the tablet at rock-bottom prices, while early adopters were left licking their full-priced wounds.

UPDATE: Best Buy has decided to resume sales of unused inventory, and HP has decided to offer refunds to customers who bought devices at full price. See the latest here.

The quick decision by HP to liquidate the TouchPad left retailers scrambling to decide whether to follow suit and discount the hardware or to pull it from store shelves. By early afternoon, HP listed the device as sold out; Best Buy had pulled TouchPads from its shelves and extended its return policy, and Amazon was still listing it at regular prices.

“I’m so BLISTERINGLY pissed about this … never … NEVER will I buy anything HP again,” complained one commenter on PreCentral.net, who said he paid 500 bucks plus tax on the first day the device came out.

A commenter on Amazon echoed that opinion: “I will never purchase another HP hardware product again. I realize that will be rather easy as HP has said they would like to divest themselves of their consumer computer lines. I now own a $600 clock/picture viewer as I have no hope of seeing any meaningful apps or updates to apps I have purchased.”

Meanwhile, bargain hunters quickly made up their minds that a picture frame/e-reader/Web browser was a deal at $99, even if no new apps were coming for the device. They flocked to stores and visited e-tailers to buy TouchPads, despite the uncertainty surrounding the future of its operating system. Who knows: Maybe they’ll find a way to put Android on it?

“I actually will probably pick a couple up myself — I already wanted to get a second one for work, and at that price, there’s no excuse not to. Then I’ll grab another as a backup for when one of them dies,” wrote one enthusiastic deal hunter.

But finding one might be a problem.

BestBuy.com is now redirecting visitors to its return and price match policy for the TouchPad, which kindly states that it is extending its 14-day return window to 60 days, for a complete refund for the device and accessories. It adds that it is no longer honoring its price match policy (meaning that if you can find listed for $99, it will not cut you a check for the difference).

On HP’s own site, the 16GB version is listed as $99, but it is sold out. It is likely the device could make a reappearance there, as retailers, including Best Buy, send their TouchPad stock back to HP. A selection of merchants on Amazon continue to sell the devices for $400 or more, and even on eBay, current bids are exceeding the $99 price point. Office Depot has picked a completely different path altogether and has marked down the devices — but not all the way. The smaller capacity version will cost you $130, while its larger sibling will set you back $150. However, when you try to add it to your cart, it suddenly becomes unavailable.

Related posts

• Hewlett-Packard Says Goodbye to PCs, webOS
• HP Pulls Plug on webOS Hardware, Leaves OS Future in Doubt
• HP And webOS: But They Seemed So Happy Together!
• Liveblogging HP’s “Everything Including the Kitchen Sink” Conference Call
• HP’s Apotheker: We Struck Out with WebOS, but Maybe Someone Else Wants a Swing?
• Viral Video: Like Palm’s Creepy Naked Lady, TouchPad’s Floating Celeb Heads Get the HP Boot
• Licensing webOS May Not Be Much of an Option for HP
• Hewlett-Packard’s PC Business: What Happens Next?
• Worth More Dead Than Alive: Could HP Turn a Profit on Palm’s Patents?
• With HP’s Raising of the World’s Biggest White Flag, Will Jon Rubinstein and Todd Bradley Surrender Too?

“The data shows PlayBook appealing to early adopters and power users, given its differentiation from iPad,” Abramsky told clients, noting that six percent of the survey group said they were “likely” to buy a PlayBook. Of those, one percent were “very likely” and the remaining five percent “somewhat likely.”

So six percent of respondents are very/somewhat likely to buy the PlayBook once it becomes available. That’s about half the level of interest expressed in a similar survey of iPad-buying intentions ahead of that device’s debut last year. And Apple ended up selling 14.8 million iPads in 2010, far beyond analyst consensus estimates of 3.3 million. So Abramsky four- to six-million forecast might not be that far off–assuming the PlayBook proves to be all that RIM claims.

That said, the tablet market today is very different than it was prior to the iPad’s debut. And with the legion of new tablets headed to market, including the iPad 2, Abramsky’s forecast could prove optimistic. Remember, despite the leverage of RIM’s installed base and the promise of the BlackBerry’s security and manageability, the PlayBook is still missing some of the platform elements that have made the iPad so successful–a thriving apps ecosystem, a vertically integrated platform and iTunes.

*Barbara Stymiest, chief operating officer at RBC Financial Group, sits on RIM’s board of directors. RBC also makes a market in RIM Securities.

We’ll likely see a similar drop when it begins trading on the Nasdaq again tomorrow, though the company is expected to post another quarterly blowout when it reports earnings after market close. Atlantic Equities analyst James Cordwell suggests investors prepare themselves for a drop similar to the one Apple shares suffered after the announcement of Jobs’s first medical leave. “We’ve been here before at the start of 2009, so it’s probably going to be similar to that,” he told Reuters. “Operationally the company coped very well last time, but there’s a certain Jobs premium in the stock, and that will be the concern.”

And while that’s understandable, that concern is overblown. As I wrote back in January 2009, for investors to sell on news like this is just silly:

“Because if Jobs were to leave Apple–willingly or otherwise–people won’t suddenly stop buying Macs. The iPod won’t suddenly go the way of the Walkman and early adopters won’t suddenly lose interest in the next-gen iPhone. Nor will the Houdini-meets-Edison magic that Jobs has brought to Apple suddenly dissipate.

“Yes, Jobs’s sensibility pervades Apple’s culture and its products, but that culture and those products are not tethered to his health or day-to-day presence at the company. And Apple’s deep executive bench is more than capable of running it–and running it well–in his absence.

“iPhones worldwide will not stop working if something should happen to Steve–although apparently there are quite a few investors who believe this is indeed the case.

“Apple will endure–with or without Steve Jobs. There will be a post-Jobs era, and whether it begins this year or 20 years from now is of little consequence.”

PREVIOUSLY

• Steve Jobs Asked for Privacy–and He Deserves It This Time
• Apple Shares Down Nearly 8 Percent in Frankfurt on News of Jobs’s Medical Leave
• Citing Health, Steve Jobs Steps Away From Apple, Again
• Apple Opposes Proposal on CEO Succession Planning
• Deutsche Bank Joins the Running of the Apple Bulls
• Jobs: “I’m Vertical, Back at Apple and Loving Every Day of It”
• Apple Investors Are Wusses
• When Steve Jobs Said “Stay Hungry. Stay Foolish,” He Did Not Mean This Foolish
• AAPL Sauce
• Apple’s Steve Jobs: “I Have Decided to Take a Medical Leave of Absence”
• The Entire Letter: Steve Jobs Explains His Health Problem: “Hormone Imbalance”–Predicts Recovery by Spring and Will Stay On as CEO
• Ain’t Nobody’s Business If Jobs Is or Isn’t

Sites like Gilt are supposedly exclusive discount fashion communities, but the reality is they will take anyone who will pay. Groupon, which just got Google to say it was worth as much as $6 billion and is on the verge of an investor valuation of $4.75 billion, is a glorified email list. Sure, users must swarm a deal to activate it, but that always happens. And users can share deals with their friends on Facebook and Twitter, earning referral rewards if they buy a deal.

Hitwise researcher Bill Tancer told me via email that only 8.3 percent of Groupon traffic comes from social media referrals. That’s compared to 24 percent of Groupon traffic coming from shopping and classifieds Web pages (as in, ads) and 13 percent from email sites.

Upstream traffic from social networks as a portion of total Groupon traffic declined 83 percent from Nov. 9 to Nov. 10. Tancer said the move from social networks to email reflects the shift of Groupon visitors from early adopters to mainstream users.

The thing is, as seen particularly in the gaming business, social may have the capacity to be an incredible multiplier for any industry. Facebook CEO Mark Zuckerberg has said more than once that he thinks e-commerce will be one of the next big sectors to be disrupted by companies that are built to be social from the ground up.

Linking social with commerce is tricky. Besides user reviews and accounts, which have been around forever, much of social commerce is very basic.

For example, Amazon recently launched the most minimal of minimal Facebook integrations, recommending products based on opted-in users’ public “Likes” and giving gift suggestions for friends with upcoming birthdays. The Web retailer could have gone much deeper, by, for instance, automatically connecting Amazon users to their Facebook accounts or helping users tell friends about new items they have bought.

But that would have raised privacy hackles, as with previous Facebook initiatives, such as the discontinued Facebook Beacon effort or the current Instant Personalization program.

Some retailers are trying to sell things directly on Facebook, such as Delta Air Lines tickets and JCPenney apparel. I see the point of trying to capture users on the sites where they spend all their time, but it seems a little awkward.

Not to say Facebook isn’t already developing a burgeoning business in virtual e-commerce through its gaming partners that could eventually extend to real-world goods (although the margins would be much worse).

And, yes, there are all sorts of real-world deals you can access by playing the “mayor game” on a local social service like Foursquare.

Also on the start-up front, the collage community Polyvore arranges deals and creates tools to help its two million users influence fashion designers, and indie retailer Moxsie asks its Twitter followers to help it choose what items to sell.

There are also start-ups, like Payvment and Milyoni, that provide tools for Facebook storefronts. And the purchase-sharing platforms Blippy and Swipely are social commerce taken to the extreme.

While none of those are Groupon-scale businesses, there are many playing around with the potentially explosive combination of social and commerce.

One cool example of social commerce I just saw today was in a post by E.B. Boyd at Fast Company.

Tea Collection, a boutique children’s clothing maker, used the Facebook Like button to decide which of its selection of discontinued girls’ dresses to deeply discount. When a $59 dress was chosen by user Likes, it was discounted to $10. It quickly sold out at a loss, but additional purchases by customers brought in by the sale gave the company one of its biggest overall sales days ever.

That, after all, is what it was built for.

But a looming challenge is how to tailor both the phones and their marketing to make them more appealing to all those mainstream users who are buying their first smartphone.

For Sprint, one step in this process has been the creation of Sprint ID–a system that lets phone buyers customize their device with one or more themed “packs,” which install a series of themes, widgets and applications with a single click.

Sprint launched the effort back at the CTIA show in October, but is now getting up to speed by both adding more devices compatible with Sprint ID and by lining up some brand-name content. This week, Sprint announced a new MTV-themed pack that combines news from MTV, music from Pandora and an app that helps highlight new artists based on social networking trends.

There’s clearly some room here for device makers and carriers. Even Google’s Andy Rubin, the father of Android, concedes that thus far Android has been best suited for techies.

“I would probably characterize Android as it is today as an early adopters’ platform,” Rubin said at last week’s D: Dive Into Mobile. “It’s for the tech enthusiast and people who are married to the tech enthusiast.”

That is quickly changing, though, with Android making up a greater and greater percentage of phone sales at Sprint and elsewhere.

“You are moving to the mass majority,” said David Owens, Sprint’s vice president of consumer marketing. “That’s not a group of people that are going to go in and customize their device.”

Sprint ID allows them to pick an interest and get all kinds of related content. From there, users can uninstall components or add other applications, but Owens said it gives users a starting point and Sprint a way to stand out from the competition.

Initially, Sprint ID packs were offered as options on two Android models, and more recently Sprint added the lower-end Optimus S to the mix. Owens said those who have one of the three phones have downloaded, on average, two of the themed packs. Sprint plans to eventually offer Sprint ID on all its Android devices.

Sprint ID opens the door to some alternative revenue possibilities for advertising or sales of premium content, but currently all the packs are free, and Sprint is not banking on much in the way of additional bucks for now.

So far, it has about 15 of the different packs, each geared to specific topics and identities, ranging from the MTV pack, to one for golf enthusiasts to several targeted specifically to Latinos. (Latino MTV watchers who love to play 18 holes needn’t worry–users can install up to six different packs and switch among them.)

What has been lacking until now is much in the way of brand power, though Owens said Sprint hopes to change this with MTV and other packs in the pipeline. He wouldn’t give any hints, but said there should be more announcements by CES.

Although Andy Rubin’s keynote at D: Dive into Mobile is scheduled for just before dinner, expect to hear a lot of talk about dessert. On the menu are Froyo, Gingerbread and perhaps even a hint of Honeycomb.

Google did release a couple of tasty treats already on Monday–announcing plans for the Samsung co-developed Nexus S as well as the release of Android 2.3 (Gingerbread). But I hear the cookie jar isn’t quite empty yet.

In between sugary snacks, Kara Swisher and Walt Mossberg will pepper Rubin on the many issues facing Android and the wireless industry. Mobilized will have live coverage of the session at this spot beginning around 6:45 pm PT.

Liveblog

6:37 pm: The crowd is still settling into their seats here at the Ritz-Carlton San Francisco, the swanky home to the inaugural D: Dive Into Mobile.

6:40 pm: Lights dim. Kara Swisher and Walt Mossberg take the stage. “My husband, Walt Mossberg, and I would like to welcome you to this intimate dinner,” Swisher quips.

6:42 pm: Ironically, the crowd was asked to silence their mobile devices, but Kara says they should just feel free to leave them on.

6:44 pm: It’s Rubin time (and he has brought a satchel of goodies with him).

Rubin is asked about the Nexus One and why it didn’t shake up the business model. “We bit off a little more than we can chew.” Rubin says that they were hoping for a model more like that in Europe, where people can pick a phone and then separately pick service, typically at retail stores like Carphone Warehouse. “We were trying to do that model in the U.S. and only do it online.”

6:46 pm: Kara: So have you given up on that business model?

Rubin: With Nexus S, which is the thing we announced today, we still have that notion of an unlocked phone. But we are not selling it ourselves, but through traditional channels, in this case Best Buy.

6:48 pm: Walt: How is Android doing?

Rubin: Android started as an eight-person start-up. “During that time at Google we obviously staffed up.” Now there are 172 different phone models using Android after the OS was launched two years ago with one, the T-Mobile G1.

Rubin credits the quality of the software and the open nature of it.

6:49 pm: Walt: I notice more and more they are taking on the personality of the carrier, not Google, not the handset maker. There are lots of what I would call craplets. Verizon, for example, swapped out Google for Bing. Is there a danger it is being taken over?

Rubin: That’s the nature of open. That’s actually a feature of Android.

He takes a swipe at Windows Mobile, saying that the alternative is a commoditized world where all the phones have to have a start menu in one place and all the icons have to be tiles.

6:54 pm: Kara: Do you consider yourself the Microsoft of phones in that regard?

Rubin: No. We’re probably more like the Linux of phones, and that’s a true statement.

Walt: You mean hard to get drivers for, only for geeks, no real consumer would buy it?

Rubin: No, I think we’ve already proven that wrong. Bad analogy.

6:55 pm: Discussion about all the crapware that comes on many phones.

Rubin: The consumers are voting and the consumers are voicing their opinions.

6:56 pm: Rubin has some relatively nice things to say about the iPhone.

“I think everybody is embracing the iPhone. They are pretty open.”

Rubin says that most developers actually are having a pretty easy time getting their apps approved by Apple.

6:57 pm: Kara: How do you consider Apple as a competitor?

Certainly they make great products, Rubin says–robust, solid, good user experiences. A lot of consistency across applications. More recently I see them getting involved in the other end of the spectrum–services like a bookstore, the app store.

6:59 pm: Walt: What about Apple’s massive data center? That’s another area of competition for you guys.

Rubin talks about the power of Google’s ad-based model, which allows the core advertising to fund all kinds of applications.

Walt: Do you think Apple has the DNA to do this?

Rubin: “My assumption is Apple is a company that learns from its mistakes.”

7:01 pm: Kara and Walt: Are you profitable? Is Android profitable? Does Android make any money?

Rubin: We’re making money on the advertising that’s generated through Android.

Walt: Are you profitable if it was broken out as a separate business?

Rubin: Yes. [Wow. I'm curious about the math, but maybe if you add all the searches on Android-based devices.]

There’s no way I would have ever been profitable as a start-up. I probably wouldn’t have made it as a separate company.

7:06 pm: Walt: How do you see the rest of the competition beyond Apple?

Rubin: I don’t think it’s ever going to be just two [Apple and Android]. There’s a lot of innovation and a lot of ideas out there.

Rubin says there is a fundamental advantage to Android and iPhone since they are new and designed from the ground up.

He notes even Windows Phone 7 has legacy code from the original Windows Mobile from way back when.

“You just have this package of stuff that was invented before the Internet,” Rubin says. “When the architects built that product, they didn’t have the Internet in mind.”

7:08 pm: Walt: Is there anything you do like about Windows Phone 7?

Rubin: It was a big bet. They struck upon that notion of the centerpiece of the main tiles. It’s a good 1.0 product. It does look different and it does look unique. It’s solid. I’m not the predictor of being successful.

He says if he were to give advice to Microsoft, he would suggest that it give more freedom to carriers and phone makers so the devices don’t look the same.

Kara: Have you gone to Finland to woo Nokia?

Rubin: I haven’t been to Finland.

Walt: Forget Finland, have you tried to convince Nokia?

Rubin just laughs (a-ha).

7:12 pm: Kara: The discussions with Nokia–talk about them in detail.

Rubin: The company has new leadership [referring to CEO Stephen Elop]. They are evaluating lots of alternatives. I’m open-minded and a big proponent of Android.

Rubin again declines to talk about any meetings he may have had.

7:14 pm: What about the challenge of iconic products like RIM?

Rubin: Talks about the challenge of legacy and points out Motorola had that problem when it became overly dependent on the Razr. Then, “they bet the company on Android,” he points out.

Rubin said RIM is doing the right things–acquiring assets like QNX and DataViz to build a more modern operating system.

7:16 pm: Walt points out that RIM will be here Tuesday–PlayBook tablet in hand.

7:16 pm: Back to the discussion about persuading companies to use Android.

Rubin: If it’s good–and we all believe that it’s good–everybody can use it.

“You don’t need to be a partner of Google to run Android.”

7:17 pm: Walt asks about tablets. Are they exciting to you? Are they important to you? Can they replace laptops for some people?

Rubin: I think what is going on in tablets is interesting. It’s fundamentally changing the model of computing interaction.

It is much more physical. You touch it. You feel it.

7:19 pm: What changes in the paradigm? It’s not a laptop. It’s not a phone.

Rubin points out that we used to have PDAs, but the cellphone eventually replaced it. The tablet is a sort of in-between device so the use case is less clear. You might definitely have it on the couch, but maybe not on the subway.

7:21 pm: Walt: What makes it more interesting and more immersive? There is something different there?

Rubin: If you do a good job, what you’ve done is make it a reflex. Like a car. You learn how to drive and you can drive almost any car. You don’t get distracted by things. That’s the result of many, many years of evolution. That’s true of any consumer product. They become almost like second nature for you.

7:24 pm: Kara and Walt ask about privacy.

Rubin: There is nothing in open source Android OS that sends keystrokes or what applications you use to Google.

He encourages people to look at the source code.

Walt: There are Google services that do collect certain things?

Rubin: Yes, like on other platforms. But he encourages people to read the company’s privacy policy.

7:27 pm: How do you overcome the perception that Google wants to collect more information than the others?

I think you just have to be transparent. You have open source–be inspectable. Any other interpretation is either FUD or just people who don’t understand.

7:28 pm: On to the goodie bag. Rubin pulls out a Nexus S. Says it is his personal device.

Kara: Oh good. She grabs it and pulls it close to her.

Now Rubin is showing the features, screen, etc. He’s talking about the Near Field Communications technology that is actually printed inside the back of the case. NFC allows a phone to scan specially printed tags.

Walt: Is that what sends all the information back to Google?

Rubin: Laughs. Goes back to demoing NFC and showing the Nexus S scanning a tag, which sends a URL for a video of the Nexus S to the phone, which then starts playing.

7:31 pm: Rubin talks about the applications: Buying coffee, getting coupons.

What we are hoping is third-party developers create a lot of cool apps. Devices can also use NFC to exchange contact info between two devices as well, kind of like beaming in the old Palm days.

7:32 pm: Rubin is talking abut the Nexus strategy.

To give a “Pure Google” phone. Google works with the hardware maker to take maximum advantage of Android’s features.

7:35 pm: What’s new with Gingerbread?

We added a garbage collector. Added broader voice over Internet Protocol support. Can cut, copy and paste without a trackball.

7:36 pm: Walt: What about video calling? I know there are third-party apps that do that. It seems like a natural thing that it belongs in the phone function.

Kara: FaceGoog or GoogleTime.

Rubin: There’s a whole bunch of software engineers hitting their keyboards back in Mountain View. If consumers want it, we’ll add it. [He strongly hints that it is coming, points out there already is Google video chat for PC.]

7:38 pm: Rubin reaches into his bag of tricks again. Pulls out a prototype Motorola tablet to show a forthcoming version of Google’s mobile map application.

7:38 pm: Shows the improved 3-D abilities and new panning and zooming options. What we are showing off here is some pretty cool performance.

“It will be available for cellphones in a matter of days,” Rubin says.

What allows the new presentation is that maps are no longer a series of tiles, but rather vector graphics.

7:40 pm: Vector data is smaller and more efficient, so users can load data in case they go offline. “You could load a whole state,” Rubin says.

This app runs on Android only for now, though it will work on tablets and phones.

Walt: What about PCs?

Rubin: That would be a natural extension.

7:41 pm: What version of Android is running on that tablet?

Rubin: Honeycomb [the next version of Android, due out some time next year]. There are no buttons on the Motorola tablet. He’s showing his personal email again.

7:43 pm: More on Honeycomb: We added new APIs to Honeycomb that allow an application to split its views to multiple views. On a a tablet they can be side by side, while on a phone they might be one after the other.

7:46 pm: On to Q&A.

7:46 pm: What about the Chrome OS team? What’s the delineation between the two?

Rubin: That’s a good question. Google was born on the Web. “I don’t think it would be doing its job unless it reinvested in the Web.”

But evolution of the Web had stagnated a bit, prompting Chrome. “It’s kind of slowed down a bit.”

Apps vs. Web?

There’s no need to argue. We’re doing both, Rubin says.

7:50 pm: What are the plans for the Android team to focus on the enterprise?

We did a little bit, Rubin says, but he likens it to baby steps. Support for VPN and some secure browsing. Gingerbread has some added features like remote wipe. Each release you will see more and more.

7:51 pm: App discovery. What are your plans?

Rubin: This is all evolving. The Android market is evolving as well. Gingerbread allows “related applications.” We are always adding features.

As a search company, if we can’t help you discover apps, I think we have a problem. We should be very easily able to organize a few hundred-thousand apps.

7:53 pm: Question about mobile payments; What is Andy Rubin’s vision? Groupon?

Rubin: I think there is a lot of opportunity. It is not an opportunity that is going to be seized by one company. Today Android does carrier billing integration, so you can put apps on your carrier bill. Creates an efficient micropayment option.

With Nexus S having added gyroscope capability, can see things from even within a store. Should help make, for example, better coupon apps.

7:57 pm: Android on TVs?

Rubin: That’s exactly what Google TV is. It is Android running on a set-top box. The first versions of that are running an Intel processor.

Have demonstrated the same app can run on both a three-inch screen or a flat-panel TV.

People are building all kinds of things. Refrigerators, ovens, automotive. Rubin says the nice thing about open source is that he and Google don’t have to be involved in every use. “We knew what to do to make it scale as widely as possible.”

7:58 pm: Question about carrier data plans and pricing.

Rubin: Average usage on an Android phone is 440MB a month. Rubin points out we are at a bandwidth crunch, but that it tends to be a cycle. New networks tend not to be overwhelmed by demand at first, but then the demands grow. Then new networks come along.

How should OEMs try to differentiate?

Rubin: I think HTC has done a really good job with Sense. Motorola has Blur. People are really differentiated.

Rubin says he often hears complaints about fragmentation. “Fragmentation” is the wrong word. Different phones do things differently, but that’s differentiation. Basically the apps are still compatible, Rubin says.

8:04 pm: Is Android too clunky? Will we see a sea change where Android really gets more user friendly?

Rubin: I would probably characterize Android today as an enthusiast product for early adopters–or wives of tech enthusiasts.

8:05 pm: Rubin says the company made some concessions that led to “geeking it out.” But then there are apps that offer easier customization and personalization.

8:07 pm: Walt points out places where it requires an extra step to do things like compose an email, while the iPhone does it in a single step.

Rubin: Yep. We get it. You will see the fruits of that investment in the tablets first and then in the phones. It’s going to get better. Honeycomb will be a good start

8:08 pm: Applause and they exit stage. ‘Night.

The second key feature is copy and paste. While not the biggest deal for many customers, it is an omission in Windows Phone 7 that early adopters and reporters have given Microsoft plenty of grief about. Adding this feature should end that and put another tick in the feature check box for those comparing Windows Phone 7 side by side with iPhone and Android. (Now it just needs full multitasking, visual voicemail and a couple of other things.)

Officially, Microsoft is saying only that the update is due “in early 2011″ and will be the first of many regular updates to the operating system.

So how is Windows Phone 7 selling? It’s a little early to say definitively. There have been a couple of reports suggesting slow sales, but they are also based on very small data sets. For example, British phone retailer Mobilesplease says it is seeing Windows Phone 7 being outsold 15 to 1 by Android and 3 to 1 by Symbian-based devices. However, those numbers are based on sales data covering just a couple thousand phone sales.

Enthusiast site WMPoweruser tried to suss things out a bit by measuring how many Facebook activations there have been for Windows Phone 7 and came up with a figure of around 135,000. (Facebook support is built in to the operating system, but not all users choose to link their Facebook account to the phone). There’s also the fact that both T-Mobile and AT&T are offering “buy one, get one free” promotions on Windows Phone 7 devices. That could be a bad sign, but this is the holidays and carriers tend to like getting two users in a household and are willing to put some marketing money behind those efforts.

An AT&T spokesman, meanwhile, told Mobilized that the company has been pleased with Windows Phone 7 sales thus far, though neither he nor Microsoft would go into any specifics.

So what does all this mean? It’s hard to say. It’s clearly not a home run, with the phones selling so fast that stores can’t keep them in stock. At the same time, it is probably not the Kin-scale flop that some predicted either. (I know that doesn’t narrow things down too much. If anyone out there has more data, I’m all ears.)

Also of note, as of Wednesday there is one more Windows Phone 7 device to consider during these holidays, though you will have to go online or to one of a handful of Microsoft retail stores to find one. Dell is ready with its previously shown Venue Pro device. The rugged phone, which runs on T-Mobile’s network and features a vertical slide-out keyboard, will come in 8GB and 16GB versions.

The Venue Pro (seen above) is getting the most aggressive pricing of the early Windows Phones, starting at just $99 for the 8GB version when bought along with a new two-year contract. Those upgrading will have to pay $199, while it will sell for $449 without a contract at all. The 16GB version is priced $50 higher in all cases.

According to a new survey from NPD, only 13 percent of iPad owners bought the device in lieu of a PC. For the other 87 percent, it was an incremental purchase, a luxury purchase.

Which to NPD analyst Stephen Baker means recent claims that the iPad is cannibalizing the PC market are overblown.

“Early adopters, like iPad owners, follow a traditional pattern of consumer behavior; they purchase products because they want them, not because they need them,” Baker explains. “However, as Apple increases iPad distribution and consumer interest peaks, the profile of an iPad owner is much more likely to mirror the overall tech population. When that does happen other tech products with similar usage profiles as the iPad, such as notebooks, netbooks, and e-readers will come under increased pressure from the iPad.”

Evidently that’s happening already. According to Baker, folks who purchased the iPad within a few months of its release were 44 percent more likely to watch YouTube videos, 50 percent more likely to watch movies, 60 percent more likely to watch TV shows, and 38 percent more likely to be reading e-books. And that type of usage behavior is, as Baker observes, “a dagger at the heart of the usage model for netbooks and secondary notebook computers.”

A personal observation: For me, the iPad started out as an incremental purchase, driven by early adopter mania. But now, having used the device for some time, I see it as a needful one. In other words, I wanted the iPad, but I didn’t realize I needed one until I had a chance to use it.

PREVIOUSLY:

• IPad: Tonight We Feast on Laptop Flesh!
• Forget Netbooks, iPad Cannibalizing Entire PC Industry
• Apple: The iPad Isn’t Cannibalizing the Mac, But We Sure Hope It’s Cannibalizing the PC

Dear Apple Store Customer,

You recently received a Shipment Notification email from Apple advising you that your iPhone has shipped.

This email is to confirm that your delivery will occur on June 23rd. Although Apple and FedEx tracking information may currently indicate a later date, you can check the FedEx website the morning of the June 23rd to track your package to your doorstep.

In the event that you will not be available to accept delivery on June 23rd, it may be more convenient to use our pre-sign delivery option by visiting our Order Status website at http://www.apple.com/orderstatus.

Sincerely,

The Apple Store Team

The reason for the change in delivery date isn’t clear, though it might be that Apple is hoping to protect its servers from meltdown by staggering initial iPhone activations over two days.

Read Walt Mossberg’s iPhone 4 Review »

Noting that the nine countries in which the iPad debuted today are among Apple’s strongest international markets, RBC Capital Markets analyst Mike Abramsky said he expects the company to sell more iPads than Macs internationally–600,000 to 700,000 or more in the third quarter of fiscal 2010. Abramsky figures international Mac sales will come in at around 500,000.

Makes sense. As I noted here last week, iPad sales in the United States are believed to be outpacing those of the Mac and closing in on the iPhone 3GS.

“Industry contact feedback and previously published surveys point to strong International demand, supported by media reports of long lineups at Apple stores, and strong demand for iPads,” Abramsky wrote in a note to clients today. “iPads appear to be stocked out already at some stores and resellers, particularly in countries like Japan, Australia, and UK.”

With that in mind, Abramsky reiterates his earlier estimates for iPad sales. He believes Apple (AAPL) will sell 2.5 million iPads in Q3 and 8.1 million in calendar year 2010, adding, “Early healthy sell-through and rampant PR buzz–as it has been doing in North America–is expected to further raise demand and accelerate sell-through beyond early adopters….Over the upcoming months, we believe Apple will further ramp production to overcome initial supply shortages.” (Click on table below to enlarge.)

[Image credit: Gizmodo commenter modestmouse and RBC Capital Markets]

So here come the folks who want to invest in iPad apps. Last week, a U.K. group announced a very small fund to promote iPad apps in that country. Today, we hear from AppFund, which says it has a “multi-million” kitty that will allow it to invest any amount between $5,000 and $500,000 in new iPad apps.

The two obvious questions here are:

• How does this differ from any of the iPhone app funds we’ve already heard about, specifically Kleiner Perkins’s $100 million iFund? After all, one of Apple’s (AAPL) key selling points for the iPad is that all existing iPhone apps will work on it from Day 1.
• If you really only need $5,000 or so to help you build your app, does it really make sense to give up equity to get it?

Daniel Klaus, who is launching the AppFund with Kevin Wendle (bios here), says his venture differs from iFund in that it has a smaller scope–the iFund’s minimum investment starts at $100,000–and that his group is willing to buy pieces of individual apps instead of their parent companies.

As to the economics? Hard to tell, since the AppFund guys aren’t providing any transparency into their offer to developers (as opposed to groups like Y Combinator, which offer entrepreneurs a fairly boilerplate deal).

In any case, if you’re interested, here’s what the AppFund guys are looking for in an app:

• Target early adopters and urban dwellers
• Target users 16-39 with higher incomes
• Incorporate video, audio, interactivity, and other capabilities unique to the iPad
• Have a long shelf life
• Have the potential to become “hits”

This wasn’t the case when e-books first appeared a decade ago. But Amazon (AMZN) has made a point of selling its Kindle titles at a discount compared with physical editions, even if it means losing money.

And then there are the titles that Kindle owners really, really love–the ones they get for nothing. As the Washington Post noted earlier this week, the list of best-selling Kindle titles is dominated by free books:

Amazon’s customers have made it clear that $9.99 is still too high for their taste. Most titles in the company’s list of top 100 Kindle bestsellers are priced below $9.99, and the most popular price point is $0.00.

The good folks at MediaBistro have gone ahead and counted, so you don’t have to. As of a day ago, 64 of Amazon’s top 100 Kindle titles cost nada.

How exactly does that work? I understand why Amazon is able to hand out public domain works like “The Adventure of Sherlock Holmes” and “Pride and Prejudice” for free. But I’m not sure what’s going on with titles like Noel Hynd’s “Midnight In Madrid” (No. 1 on the Kindle charts) or Beth Hensperger’s “Not Your Mother’s Slow Cooker Recipes for Entertaining” (No. 9). Anyone want to weigh in?

I’m also not sure what conclusions we can draw from the dominance of freebies on the Kindle charts. I’m tempted to say that Kindle buyers are rabid but indiscriminate readers, and they’ll lap up whatever you put in front of them.

But without a real sense of the numbers, which Amazon is never going to cough up, it’s hard to tell what the sales patterns really look like.

I suspect, for instance, that a lot of the freebies are picked up by readers in the first few weeks they own a Kindle when they’re looking to download something simply for the sake of downloading something.

I also assume that the Kindle charts are skewed by hardcore early adopters’ reading habits. And that the patterns will start changing now that more casual users are picking up the Kindle for the first time.

And in case you were wondering–because I was–Amazon says it is not counting free book downloads when it releases sales statistics like the one it put out on Saturday, when it said more customers had purchased Kindle titles than physical books on Christmas day.

[Image credit: lordcolus]