Will HP webOS Get Knocked Out Before Entering the Fight?

jon rubinstein

HP will unveil its revamped webOS platform on February 9th and in the process reveal what has come from its Palm acquisition. There is also an evening event planned for that same day for developers interested in the webOS platform.

HP faces many challenges as it jumps with both feet, and webOS, into the mobile space. I give the company credit for trying. There is something about attempting the integrated approach of creating the hardware and software that I admire. I think HP is noteworthy as being the second company to give this integrated approach a try in the tablet space (still waiting for RIMM to ship its PlayBook). While iOS and Android are busy eating up mobile phone market share, the tablet market is less than a year old with only a handful of scrawny iPad competitors out there. Yes, I am calling the Samsung Tab scrawny. HP is still somewhat on time for the fight.

HP faces four major challenges that must be addressed before any new webOS products are shipped.

1) Lack of third-party developer interest. HP and its revamped webOS will enter the phone and tablet space with little third-party interest, as measured by developers devoting tangible resources to the platform. It’s clear management is aware of this problem, scheduling an event just for developers on the same day of the webOS announcement. Third-party support is crucial. There is also growing anticipation for webOS designed for a tablet, so one would assume developers would at least be interested in the platform.

But webOS is funny. Judging from tech pundits on the web, webOS is great, fantastic, and amazing. However, developers did not want to create apps for webOS, partially due to the lack of users. The Chicken vs. Egg paradox. When the Palm Pre went on sale in 2009, users were promised that a wide spectrum of great apps were coming and to just hold on. Two years later and Palm Pre users are still holding on.  As I never forget to point out, the Palm Pre was labelled as the first iPhone killer partially due to its “potential” and “possibilities”. Those possibilities never came true.

For webOS to gain widespread third-party support, developers need to divert resources from iOS (and Android) and focus on a platform that has little to no installed base, no vibrant app economy, and no solid history of consistent developer support. Good luck with that.

2) Lack of corporate support and direction. HP is a mess right now.  With a new CEO and drastic Board of Directors shakeup, I think it is appropriate to question how the change in leadership will impact HP’s mobile plans.  How did the HP/Palm integration turn out? Decisive leadership is needed to make sure HP positions itself in the shrinking sweet spot required to get a solid footing and advance the HP webOS platform.  The drastic management changes, in addition to the mass exodus of Palm talent, worries me. 


Photo: Engadget

3) Weak Branding. The HP brand has taken a beaten in recent years.  HP laptops are nothing to write home about. There are no HP products to get excited about. Excitement is needed when selling consumer technology products.  Palm may give HP some temporary brand power (and a loyal but small fanboy community), but Palm is not some spotless brand itself.  Don’t forget Palm basically was sold in a fire sale due to running out of cash, and two Palm “smartphones” had hardware that was compared to kitchen utensils.  I do find it interesting that recent HP webOS tablet renderings have the word Palm right under HP on the tablet’s back.  Maybe HP does consider the Palm brand still valuable and is planning on keeping it around, although Palm was removed from the Palm webOS name a few months ago.

4) Difficult Price Points. At the end of the day, price is maybe one of the biggest factors in determining whether HP webOS products will sell.  Phone pricing has a ceiling of $200 (after carrier subsidy). No phone will sell for more than $200, regardless of its feature set. Unfortunately, even $200 for a smartphone is becoming a rarity these days. Windows Phone 7 units and Android phones are often sold for under $100 and iPhone 3GS is selling for $49.

Tablet pricing is even scarier for HP.  iPad’s $499 base price serves as a ceiling for the tablet market.  Most companies are showing they have no means of competing with iPad on price.  I can only imagine the number of tablets turned into vapor once iPad’s $499 price was revealed.  Apple’s strategic supplier agreements (and technology) appears to result in attractive component pricing that gives Apple a strong competitive advantage that is difficult to match.  In addition, carrier subsidies are not that popular for tablets as consumers don’t want to sign another multi-year contract in addition to their phone.

What HP needs to do on February 9th to even have a chance with HP webOS:

1) Have HP webOS phones and tablet available for demo.  HP needs to show they have products that are close to being shipped.  RIMM and Android are failing in this respect, announcing tablets that are no where near ready to be shipped.  More importantly, demo units let users feel how heavy the devices are and test out important aspects of the UI.

2) A HP webOS tablet needs to be priced at $399 or lower.  Ouch, I know.  A HP webOS tablet can not have a $499 tablet because iPad sells for $499. Even if the HP webOS tablet is better than iPad, it still needs to be priced lower because of Apple’s strong brand and customer awareness. If Apple lowers the price of iPad to $399 once iPad 2 is unveiled, HP webOS tablet will need to be priced $350 or lower (these are unsubsidized prices).

3) HP needs to announce extensive and enhanced webOS third-party support with demonstrations from a number of leading gaming companies and other popular app makers demonstrating their iOS apps now ported to webOS devices. A new app store with some easy form of monetization would help.

4) Don’t give these new products silly, long-winded names. I think HP should stick with one version of a phone and one version of a tablet. HP will have more luck creating the required enthusiasm and emotional connection to webOS if all the attention is put on one product and one name. Why spread out your resources on a bunch of mediocre devices when you can release one good device?

Wild Card: HP can unveil some surprises such as completely new form factors or new technologies that Palm was working on before running out of cash. Things that make one go hmmm.

What I am afraid HP will do on February 9th (I really hope I am wrong, but we will see):

1) Have no demo units (part of me is afraid they might not even show finished units on stage).

2) Pricing will not be released or discussed.

3) The lack of third-party interest will continue to be questioned, in which HP will simply say developers are really interested in the platform and they cant wait until apps start arriving.

4) HP will announce an extensive line-up of phones and tablets with silly names and useless features. People will forget their names and which product is which a few hours later.

5) HP wont announce any of this stuff and will simply talk about webOS 3.0.

HP webOS has potential, but in a mobile phone space where powerhouses like Microsoft are struggling and in a tablet market where Motorola and Samsung are having a hard time matching the right price points, HP will need to have luck in its corner for webOS to have a chance in this hard fight

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