HP has been on a slippery slope even before they bought Compaq. Their hardware is just not up to snuff. I worked for them in the late 90's and I can tell you that at that time, the main concern for each department was to spend every penny of their budget and make a profit so they could get a bigger budget the following year.
My job was to help put together tech manuals for the service technicians. Instead of simply giving our department the tech manuals, they would bill us $300 per manual. Since HP has 10's of thousands of product... Well, you get the idea. So what we had to do is get the PDF's of the user manuals (they were free) and strip them of the "fluff" and create a quick guide for technicians. It was pitiful that they couldn't work together in their own company. They tried to turn that around just before I left, but because of how they allotted the budget, it never happened. Basically, everyone was out for their own department and not for the company as a whole. When you have that type of mentality, things really suffer going out the door.
It doesn't surprise me in the least that the TouchPad has lack-luster hardware. and I am not talking about the processor or the ram. I'm talking about the system board they are on. The architecture is HORRIBLE. It's like they totally forgot how to do it.
This is also why HP isn't doing well in the consumer market, and why they are probably going to sell that businesss side off before the end of next year. their only "bread and butter" at this point is the printer biz and the corporate computer biz -both of which is suffering right now from the aftermath of the earthquakes in japan. Plus, Dell is whooping their butts in these markets because they do it better and a little cheaper.