HP Scraps Tablet Computer

1 05 2010

In an update to the Platform Wars discussion yesterday, HP announced that it was scrapping its newest tablet computer product and going back to the drawing board.  There are many news articles about this today, but the main reason given is that the Windows 7 OS was not competitive with products already in the market  such as Apple iPad.  The product issues include:

  • Weight
  • Performance
  • Battery life.  Nowhere near the 7-10 hour battery life of the iPad.

Note that HP does have other tablet PCs on the market today, but it is only the newest on that has been scrapped.

Tablet Market Requirements Have Totally Changed

By leveraging the iPhone and iTunes to differentiate from other eReader products, Apple has completely changed the dynamics of both the eReader and the tablet computing marketplaces.

  • eReader vendors like Amazon and Sony are competing with a product that does far more than just read electronic documents at high resolution.  The iPad is differentiated by their 185,000 apps and the power of the iTunes environment.
  • Tablet computer vendors like HP and Dell have seen the game change overnight.  Competition in the space used to be about putting a version of Windows on a small portable device.  Now, Apple has put new requirements on the industry that will be hard to respond to:
    • High resolution screen
    • Touch interface
    • Powerful online support with apps, music, podcasts
    • Long battery life
    • Quick response time (from a very lean OS)

Apple made a smart move in using the iPhone as the platform for the iPad.  Most if not all iPhone applications automatically run on the iPad.  The problem is that all of them were built to work with the small display size of the iPhone.  Apple dealt with that problem by adding a “2X” function that just doubles the display size of apps – and instantly almost all iPhone apps look bigger on an iPad.

HP Tablet Computer Options

The timing of this announcement is interesting in terms of the options before HP.  They clearly want to be a major player in the tablet computing space.  The problem is that Apple has completely  changed the market requirements for every vendor in the space.  HP’s strategic options:

  • Keep working with Windows 7 and try to get it right. HP has been a loyal strategic partner of Microsoft and going another direction might damage a very successful partnership.  However, it does not look like Windows 7 can compete in this space as it is now defined.
  • Move to Google Android.   It’s open.  It’s free to use.  They could leverage the Google application community.  This would seem to make a lot of sense except for…
  • Palm webOS.  HP just paid $1.2 Billion for Palm, so it’s hard to imagine them going in any other direction with their tablet computers.  iPhone/iPad and Android are gaining a lot of market momentum and developer support.  HP will have a lot of ground to make up in a short time.

General Observations

  • Apple has done an amazing job of disrupting the eReader business by extending the functionality of their product with iPhone/iTunes capabilities.
  • In the process, Apple has apparently also disrupted the Tablet PC market.  Two adjacent markets with one stone.  Amazing.
  • Product requirements:  Everybody building Tablet PCs was thinking in terms of smaller Wintel products until a couple of months ago.  The lesson to learn is: Listen to your customers problems, not how your customers think they should be solved.

Full disclosure: I am often critical of Apple for being proprietary, but I have to give them top ratings for innovation and strategy here.  This is an example of product strategy that will live on in MBA school case studies for a long time to come.

Other Articles on HP Scrapping their Tablet

CNN Money





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