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Summary:

HP’s CEO Meg Whitman said that the company is working on getting back into the smartphone market. It’s another twist for a company that has had a confused smartphone strategy. While the news gives some clarity for HP, the company still has to execute.

HP webOS
photo: Hewlett-Packard

It’s deja vu all over again. After a whole lot of dithering on its commitment to the smartphone market, Hewlett-Packard is getting back into the game. CEO Meg Whitman told Fox Business News that the company is “working on” a smartphone, something it can’t afford to ignore.

“We have to ultimately offer a smartphone because in many countries of the world that would be your first computing device,” Whitman said. “We are a computing company.”

This is a bit of a no-brainer decision for HP, which has been a leader for years in computer sales. But its track record in mobile devices has been a lot more confusing. The company was an also-ran in smartphones when the iPhone launched in 2007.  It then acquired Palm for $1.2 billion in 2010 in a bid to get relevant again. But HP was slow in rolling out devices based on Palm’s WebOS and ultimately threw in the towel on its webOS hardware business last year under CEO Leo Apotheker, just months after launching its first webOS-based tablet. HP announced it would open source webOS and has been downsizing the Palm unit.

HP webOSNow, Whitman is reversing course again, acknowledging what everyone else already knows: it’s becoming a post-PC world and HP can’t afford not to compete there. “We did take a detour into smartphones, and we’ve got to get it right this time,” she said.

The news comes after HP reportedly launched a new mobility division last month with Nokia’s Alberto Torres to lead it. And it follows another weak quarter for HP, which reflects some of the big struggles that PC makers have had in adapting to the realities of smartphones and tablets.

So what will HP’s smartphone run? Apparently not RIM’s BlackBerry platform. Whitman told Fox Business News that HP wasn’t considering considering buying any part or all of RIM. With its investment in webOS waning and a smaller developer community behind it, it’s unlikely that HP will stake a big bet on that platform again. A more natural choice would be to reconnect with Microsoft and use Windows Phone 8 for future smartphones. That would make sense considering HP last month announced the Envy X2 tablet-laptop hybrid device running on Windows 8. But we’ll have to see if HP follows through.

The bigger question is how fast and how well can HP execute. The company has not been timely in the past on getting out mobile products and now with the back and forth on its smartphone strategy, it’s lost even more time. Smartphones have passed the 50 percent penetration rate in the U.S. and the heady growth of the past several years is now slowing. Android and iOS are firmly entrenched at the top of the market and Nokia and Samsung are likely to be the biggest manufacturers on Windows Phone 8.

The long and short of this saga is, HP can say the right things about getting back into the smartphone market but it’s a lot easier said than done.

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  1. HP, at this point, cannot add value to the smartphone, or even the tablet, market, so they should not waste their shareholders’ money on entering these markets. Yes, a large part of computing has been shifting to mobile devices, but HP has not demonstrated any ability to execute that transition. Instead of mobilizing their engineering capabilities, they have chosen to rely on brand name recognition and channel partners to sell commodity products like PCs. That strategy will not generate profits in mobile devices, especially since they have wasted their credibility with customers on previous products in these markets.

    If HP wants to re-enter these markets, Whitman is not the person to lead them. She brings absolutely no value to the company’s efforts to define, design, manufacture, and market such products. At best, she can be a George W. Bush-style leader, making speeches and agreeing with her advisers, while not ever having any real understanding of the issues. And we know how that turned out.

    1. Thanks for the comment. I think if HP wants to stay relevant computers, it has to try again in mobile. But yeah, I don’t think Whitman is the one to lead this charge. You need someone whose going to push them on product innovation and execution. Don’t see that as her strength.

      1. Hp should buy nokia ……. Right size the merged organisations, converge technology and innovations, pay former CEO of yahoo to lead it and fin their place in the market. The apple model is not a complex one ………. People over simplify what apple did. They made it cool, they made it hip and then they made it work by listening to their customers …… If hp/Nokia does not act then hp can kiss goodbye to the business side of their market ….. Because apple are knocking and with executives moving to standardising with apple and apple being affordable for the everyday man on the street ,,,, iT managers will save literally millions on company costs by connecting personal devices to the work technology. You heard it here first! Or maybe not!

    2. Smartphones are no longer about adding revolutionary value, as the iPhone 5 has evidenced. Incremental innovation is what will win in this market, and HP has the capabilities to execute on incremental innovation.

      Although HP has not demonstrated success in the past in this market, the past isn’t necessarily the best predictor of the future. You could have easily made the same comment when Apple pressed on with personal computers – they didn’t have major success in this market and shouldn’t try to attempt any sort of monumental push. We all know where that story now lies. That glowing Apple on the back of MacBooks is burned into my retina.

      Credibility in the market still exists. Few knew of their devices, and those that I had spoken to who did, were all impressed by them. Only those that followed the market closely at that time, like you and I, would have much of a sense for the credibility of their devices.

      Finally, Whitman isn’t the right person to lead them. Hence, why she has *hired* somebody to be the expert and lead the group forward. Not every company must have a dictator at the top guiding every business decision. If that were the case, you would be reading an article on HBR about how micromanagement is the way of the future. Strategy is a highly transferable skill – something that Whitman has plenty of.

      1. I would have to disagree with you. The iPhone 5 is a leap for the majority of the market with a iPhone 4/3GS or someone who does not have an iPhone.

      2. Stop making the innovation benchmark be Apple. Apple’s innovation died with Steve Jobs.

      3. Agreed on your 1st paragraph, and the second, to a point. HP hasn’t demonstrated that they care about innovation any more, only about selling product. In the mobile device markets, their name will not be enough – they will have to innovate.

        On your third point, maybe, from the perspective of consumers, but not from developers or retailers or even carriers. Why should they trust them? If they sell a windows or android phone, then they won’t need HP-specific developers, but then they’re just going to be one more company selling basically the same thing, with no supply chain advantages that Apple and Samsung have.

        And you’re right, you don’t have to have a dictator at the top, but very few tech companies succeed without product people running the show. And Whitman is the antithesis of a product person. Maybe she’ll get lucky with her hire, and entrust all decisions to him, but I doubt it. And I don’t share your assessment of Whitman’s strategic skills, but I’ll leave that for another post.

  2. Wouldn’t the tablet market be a more natural fit for HP? Plus there isn’t an established number 2 (or 3) to the iPad. Yet.

    1. The question is of scale. Volume of opportunity in smartphones Vs tablets.

      1. and established competition. Tablets are a newer market. Also, coincidentally, I just saw an article abt the tablet mkt being 317 million units by 2017.

    2. Sure there is. http://store.apple.com/us/buy/home/shop_ipad/family/ipad/ipad2

      They are attempting to abandon it, but I suspect that they may fail.

  3. This is crazy. HP has no strategy and no vision. HP first needs to get back into its core business and make it whole.

    Yes they are a computer company but not an end user device company. Their strength lies in making big complex servers and storage devices not PC’s and Phones – they suck at both. HP pc’s are the most unreliable pieces of crap I have ever used.

  4. Uzair Farooqui, MBA, PMP Friday, September 14, 2012

    Agree with Rob… Touch pad was not a bad device. HP should consider rolling out an upgraded version of touchpad with Android. If this resurrection of Mobility division in HP means one last try with WebOS.. then they might just say done now.

  5. Stupid decision. HP needs to get out of the consumer device business. Their niche and they are very good at it is enterprise servers and storage.

    In the past few years they have gotten their fingers into so much crap that I doubt if anyone knows what the heck is going on there.

    Hp needs to fix its enterprise division and clean house, get back into printers and retake that market before wasting time and money on a product (Windows 8 phones) that is years behind the curve with no hope of ever being anything but a blip on the radar.

    HP needs to get away from Microsoft.

  6. Go Meg Whitman….I will buy a HP phone with Palm OS….

  7. Its going to take a hell of a lot of work and agility to navigate and bring forward a decent device to the market. Their execution will have to be almost flawless and the devices(s) will have to be amazing.

    Question is will they revitalize webOS or go the android route or are they staring from scratch?

    Time will tell….HP has made a lot of questionalble moves lately-maybe they get it right this time!

  8. For HP, this is a decision driven by the need to stay relevant. With smaller form factor devices taking over from PCs, HP can not afford not to participate.

    But I do not expect HP to battle it out in the consumer market with the likes of Apple or Samsung. Their focus is likely going to be the corporate market, the channel they already sell to. Aligning with Microsoft makes sense in that regard. There is a market for providing secure mobile access, and a tightly integrated solution with a higher perception of security can be a niche they can play in.

  9. WebOS or NOTHING, Meggy! We WILL buy, IF you BUILD!

    NO MS Windows 8! Stand out from the crowd! WebOS has an established (though small) base.

    IT WILL GROW!!!

    Jim Soden
    jimsoden@yahoo.com

  10. HP will gain strong position in the W8 tablet market focusing on the Enterprise. This will make the entrance into the smartphone market a much easier transition. Business leaders need a manageable device with security that is inline with all the technology the support.
    This plan was likely in place before HP dumped the TouchPad.
    Jut my opinion, but time will tell.

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