Don't be surprised, but Hewlett-Packard is about to get back into the smartphone business, even after a spectacular failure and exit in 2011. Shortly after taking over as CEO, Meg Whitman said it was unlikely that HP would ever be in the smartphone business again, a stance that she backtracked on a year later when she acknowledged that HP has to "ultimately offer a smartphone."
In an interview with The Indian Express, HP's director of consumer devices in the Asia Pacific region, Yam Su Yin, confirmed the re-entry into the smartphone market, although declined to specify when the PC giant would make the move. The exec added, "HP has to be in the game."
She acknowledges that due to prior missteps, HP is awfully late to the smartphone market. Because of that tardiness, HP needs to offer a different value proposition than what's currently available in the market, but there "are still things that can be done" and that HP will offer a "differentiated experience."
That's easier said than done, as the smartphone market has quickly matured and OEMs have left no stone unturned in trying to differentiate from the rest of the pack. What platform would an HP smartphone run on?
The usual suspects
HP has become quite cozy with Google this year, releasing a slew of products running Chrome OS and Android in an effort to diversify away from Microsoft . The Android devices that it has launched are mostly running stock versions of the operating system with minimal software additions, making them anything but differentiated. An HP Android phone would make sense considering HP's recent focus on the platform, but would ultimately be more of the same in the grand scheme of the smartphone market.
The company could consider giving Windows Phone a shot. However, that would mean calling up Qualcomm for ingredients, since Windows Phones exclusively run on Snapdragon processors. It's possible that there's tension between HP and Qualcomm, since the mobile chip giant had initially picked HP as one of its hardware partners for Windows RT devices last year only to see HP bail on the idea.
Rumors suggested that Microsoft's competing Surface RT played no small role in the decision. Officially, HP said the choice was based on "input from our customers," but HP's PC chief Todd Bradley's subsequent Surface bashing told a different story. HP also axed its Snapdragon-powered TouchPad almost immediately after launch, so Qualcomm wouldn't be wrong to think that HP might have commitment issues. An HP Windows Phone is possible, but HP would need to make amends with Qualcomm.
One other possibility would be HP's zombie webOS platform, which still exists for some reason. HP is issuing a small update to allow webOS devices to continue accessing certain online services, which were set to go dark on July 23. The fact that HP is simply applying a small Band-Aid here instead of giving the aging webOS a proper update shows that it doesn't truly care about the platform.
The last remaining curveball is BlackBerry , which has hinted at possible licensing deals. BlackBerry and HP have a large customer overlap within the enterprise, and some co-branding could actually prove quite effective there. BlackBerry's last quarter was dismal, and even Jefferies analyst Peter Misek (a vocal bull), has slightly changed his tune and says the company needs to focus more on software at this point. Specifically, BlackBerry's biggest opportunity may lie in mobile device management, or MDM. Licensing BlackBerry 10 to HP could be a step in that direction, focusing on MDM and other services while HP handles the hardware.
Within the broader computing market, smartphones are the volume leader by far. HP's PC dominance won't do it any favors, as mobile adoption continues unabated. HP has no choice but to re-enter the smartphone market, but there's simply no way for it to do so in a differentiated way anymore considering how tardy it is to the party.
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The article Hewlett-Packard Has No Choice originally appeared on Fool.com.Fool contributor Evan Niu, CFA, owns shares of Qualcomm. The Motley Fool recommends Google. The Motley Fool owns shares of Google, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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