HP Decides to Take the Obvious Path, Finally!

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Almost two and a half years ago, Steve Jobs, the late Apple (NASDAQ: AAPL) CEO, made a comment where he compared traditional computers to trucks. In the words of the iconic CEO,

When we were an agrarian nation, all cars were trucks because that's what you needed on the farms. Cars became more popular as cities rose, and things like power steering and automatic transmission became popular. PCs are going to be like trucks. They are still going to be around…they are going to be one out of x people.

Now, in 2013, it seems the words of Mr. Jobs are coming true. The ever-dynamic nature of the consumer electronic space has created as well as destroyed competition. We have already observed that the PC market is gradually declining, whereas the smartphone and the tablet markets are gaining more and more momentum. What Apple realized back in 2010, Hewlett Packard (NYSE: HPQ) finally truly realized now, after reporting a record loss of $12.7 billion in 2012.

CEO Meg Whitman recently confirmed that the company is looking at entering the smartphone and tablet space, and is also working on storage, networking, and servers. Meg’s statement “I mean company's like us come back on the basis of great products, great services, that solve really tough problems” clearly tells us that the CEO is pretty optimistic about what is being cooked at HP’s kitchen. She hopes these new fantastic devices will finally make things better for the troubled computer maker.

Now, why did I use “finally" and "truly?" That's because this won’t be the first time that HP has ventured into this segment of the consumer electronics space. Around two years ago, HP acquired Palm for $1.2 billion and within months since the acquisition, the company had launched a smartphone under the Palm banner. However, things didn’t work out and soon HP decided to close the door on it. The company decided to focus only on what it was best at - making computers, and the rest is known to all of us. HP continues reporting huge losses, its PC shipments went on plunging quarter after quarter, and the company also saw a change in management.

However, under the leadership of Meg Whitman, things have a chance to improve. The CEO is highly focused on getting new innovations out in the market and is banking on them heavily. Earlier, in September, as pointed out by All Things D, Meg stated

We have to ultimately offer a smartphone because in many countries of the world that is your first computing device. You know, there will be countries around the world where people may never own a tablet, or a PC or a desktop. They will do everything on the smartphone. We’re a computing company; we have to take advantage of that form factor. … We did take a detour into smartphones, and we’ve got to get it right this time. My mantra to the team is: ‘Better right than faster than we should be there.’ So we’re working to make sure that when we do this, it will be the right thing for Hewlett-Packard, and we will be successful.

The company is working hard to get smart devices ready and running. According to several analysts and industry experts, HP’s latest tablet device, the Elite Pad 900, aimed at businesses, may turn out to be a strong contender for Apple’s iPad and other Google (NASDAQ: GOOG) Android powered tablets, especially those from Samsung.

<img src="/media/images/user_13114/hp-elite-pad-900_large.jpg" />

(Source: Economic Times, Laptopmag)

While there are rumors that HP is working on devices that will sport the popular Android platform, available pictures in the web and the company website tells us that the Elite Pad 900 will actually run on Windows 8 platform. This seems logical because HP has always recommended Windows for its PCs, and since the device is aimed at the enterprise market, what better OS can there be than Microsoft’s platform? This being the situation, the device will also be in direct line of competition with the Microsoft (NASDAQ: MSFT) Surface and other touch-enabled ultrabooks and hybrid PCs. Apart from this device, HP is also working on the HP Envy x2, a hybrid PC with the advantages of a laptop and a tablet in one.

Though there is no announcement of HP devices on Android, we certainly cannot rule out that option. The reason being, HP is looking at a fast paced recovery. If it sports only Windows platform, its smartphones and tablets may witness very slow growth. Secondly, Nokia already controls a major chunk of the WP8 market and may soon launch its own tablet device as well. Until now Nokia has been receiving special attention from Microsoft and that can be expected to carry on. Thus, banking solely on Windows doesn’t look like a very viable option. On the other hand, Android is a sure shot path to a better performance. If HP can offer good devices on Android at an acceptable price, consumers will surely flock towards that also.

Chances are that HP might shift its focus from PCs to smartphones and tablets. But, that doesn’t mean HP will shun the PC business. Meg has no such plans and she considers the division to be important for the company. However, the need of the hour is to improve the performance and the financials of the company, and thus moving to the new generation connected devices is the logical choice. Meg has a five-year turnaround plan and she wants investors to be a little patient as she and her 300,000-plus employees work towards building products that are relevant to the changing nature of IT. The ultimate aim of Meg is to position HP as a solution for the new style of information technology.


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