Why is HP spending $1.2 billion on Palm?
Not just to get into the fast growing smartphone industry, but to end its reliance on Microsoft Windows as the basis for its hardware gadgets.
This is an ambitious task, and could obviously have a big payoff if it’s successful. HP will invest hundreds of millions of dollars into the project, and will certainly make some noise.
But the odds of this working are very low, and HP’s plan will probably not be successful.
Simply put, HP wants what Apple has: One operating system, which it completely controls, at the heart of all of its consumer electronics — phones, tablets, lightweight PCs, perhaps music players, digital cameras, televisions, etc. And HP doesn’t want to have to licence it from Microsoft anymore, always having to wait for Redmond to make a move before HP can.
So that’s what we think HP will do with WebOS, the newish operating system and app platform that it just bought along with Palm. Besides an obvious move into smartphones, we think HP will quickly use WebOS as the basis for its slate tablets, and perhaps eventually release WebOS netbooks and other devices.
The problem is that WebOS, despite its nice user interface and some nice technical qualities, is a failed platform. Consumers haven’t found a need to buy Palm devices instead of Apple or Android devices. (For proof, Palm just slashed its guidance by almost half.) And, as importantly, developers haven’t found a need to develop for WebOS, either. Without unique apps, there’s no reason to have a unique platform.
Meanwhile, the mobile platform industry is becoming a waltz of elephants. Apple’s iPhone and Google’s Android are running away as the dominant platforms for smartphone apps, and both platforms are being ported to run on tablets. Windows will also be around on tablets, with lots of Windows apps already ready to run on it. So here, too, HP will be starting in fourth place, and trying to improve from there.
To be sure, there’s always the chance that HP will do something brilliant, and that its phones and tablets will be wonderful devices that are huge hits with consumers. But that’s magic that HP has never found in the consumer electronics industry, and Palm hasn’t had in years.
So the odds are likely that HP’s big bet will be a flop, and that it’ll have to go crawling back to Windows or Android, whichever is the dominant consumer electronics platform in a few years.
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