This new excursion into tablets and smartphones has all the hallmarks of the malaise that currently grips HPQ.
- Not content with blowing $1.2bn on attempting to enter the mobile market by acquiring Palm, it appears that HPQ is back for another whirl with Android tablets and smartphones.
- A Windows 8 tablet I can understand as it fits into the existing PC business and may help it to address market share losses to tablets.
- However, with Android I see nothing but fast growing inventories, uninterested consumers and further losses.
- The problem here is differentiation.
- Everyone has access to the Android software and Android tablets pretty much all look the same, do the same thing and cost not much less than an iPad.
- The applications for Android tablets are poor as the vast majority are simply the phone app running at 2x zoom, ensuring a sub-standard user experience.
- The questions are:
- How will HPQ make its tablets and smartphones (presumably) different from everyone else’s?
- How will HPQ persuade users to purchase its Android tablet rather than iPad which will have a similar price and a vastly superior app offering?
- The short answer is that it won’t.
- This has all the hallmarks of yet another classic blunder by HPQ.
- The company makes the correct conclusion that it needs to address the space but assumes that it will be successful simply because of who it is.
- This move, very much like the acquisition of Palm and the move towards software and services needs to be properly thought about before blundering in with its size 12s and hoping for the best.
- This is yet another sign of the malaise that is destroying HPQ.
- Its senior management and its board of directors do not seem capable of leading the company out of its current predicament.
- Until the focus switches from who is to blame for its problems to how they will be fixed, the slow death spiral seems likely to continue.
- The shares are fantastically cheap and are going to remain so until both boards have been wiped clean.
Blog Comments
tatilsever
February 14, 2013 at 8:00 pm
Well, you could make the exact same arguments about Win8 tablets. 🙂 Worse, the demand for Win8 is reportedly disappointing.
Acquisition of Palm was risky, but the pay off could be big for a hardware company trying to differentiate itself from the pack. That move may actually have been well thought out. Too bad acquiring CEO was not the same as the one who was entrusted with it.
windsorr
February 18, 2013 at 11:00 am
you could indeed…However Microsoft has not written off and closed down the Windows 8 assets like HPQ has done.
tatilsever
February 19, 2013 at 9:21 pm
I did not mean that as a dig to Microsoft, but as part of the discussion about the limited options HP had. It needs to get into tablets and if it wants to continue as a hardware maker without its own OS, its options are limited to Android and Windows. Neither presents great differentiation opportunities, but HP is used to this handicap as a traditional PC maker. The economies of scale it has attained there will probably be applicable to tablet hardware to a large extent, allowing HP to eke out a living in that market, similar to how it does in PCs. Within that straitjacket, Android is by far the more popular OS on ARM based systems (compared to Windows) and it at least allows proprietary skins and add-on features (Exchange support or running two apps side by side as Samsung did). I don’t see this move as controversial or ill thought out, but just as further confirmation that WinRT has failed to get much traction.
Of course, it would be better if HP had a more concrete plan for differentiation and its board was cleaned up, but compared to the many other boneheaded moves it made recently, this one is not all that bad.
windsorr
February 20, 2013 at 12:32 pm
These are good points…The problem is that HPQ wont be able to eek out an existence on low margin PCs anymore. This is because the PC business is declining and changing. HPQ does not have what it takes to offer interesting products and so I think it will lose maret share and hence margins will decline further…It has to stand up and do something…just chugging along wont work anymore.