Wireless Informatics Forum

What will webOS do for HP? April 30, 2010

The HP acquisition was somewhat of a shock, even to people very much on the pulse of the wireless industry. We for one were not hedging are bets on them (Lenovo were our favorites!), so why did HP take on Palm?

The smartphone market is currently enjoying rapid growth and now accounts for one in three handsets sold in mature markets. At the other end of the spectrum, HP’s traditional laptop market appears to be fragmenting with OEMs seeing their core consumer base diluted across a broader portfolio of notebooks, netbooks, tablets, e-readers and more.

HP has already expressed a desire to take Palm’s webOS beyond the smartphone and it seems logical that they should look to Palm as a means to not only capitalize on the burgeoning smartphone market, but also to use webOS to accelerate its place in the tablet market.

The influence of the OS

The form factors of smartphones, netbooks, tablets and laptops etc are largely homogenized and brands are increasingly looking to differentiate through the OS and the surrounding ecosystem of apps.

Palm’s webOS was welcomed with great enthusiasm at CES 2009 and the company appeared to have been well on its way to making a competitive comeback. However the Palm Pre (the first device to use webOS) was not available for another six months, by which time the buzz of webOS had significantly reduced. It was further diluted when, two weeks later, Apple released the iPhone 3GS.

The webOS itself has been well received by industry commentators and usability experts. However, exclusivity deals with Sprint in the US for the Palm Pre limited its audience and lackluster marketing efforts failed to communicate the benefit of the OS and differentiate it from the Apple, Android, Windows Mobile and RIM shaped competition.

So, the marriage of HP’s long-established focus on hardware with Palm’s impressive webOS and heavy portfolio of patents seems perfect to take on the likes of Apple. HP ticks all the boxes. It has financial solidarity, a strong brand, historic interest in mobile computing, notorious technical knowhow, global distribution infrastructure and long established relationships with both the prosumer and consumer markets.

However, there are potential hurdles and some unanswered questions.

· Established third party application ecosystems.

Increasingly, the consumer driver for any given Operating System is the supporting ecosystem of apps that helps to deliver a layer of personalization to the device. WebOS is currently lacking in this field. It’s a classic Catch-22; third party developers will only invest time in the platform when the user base reaches a critical mass. However, this critical mass is unlikely to happen without compelling apps. HP is planning to invest and provide support to the developer community in a bid to ensure a more compelling suite of applications are developed.

· Branding

Although OEM brand loyalty is weaker than it once was, the loyalty to an OS is likely to become increasingly apparent as smartphone adoption expands and consumers tie themselves to apps and third party services. HP has not yet discussed the fate of the Palm brand. Microsoft and Apple have successfully leveraged their core brand into the OS market, however these brands, in part, are ‘lifestyle brands’. This has always been the case for Apple and recently Microsoft has taken a similar approach, will HP follow this trend and leverage the HP branding alongside webOS?

· Differentiation

Each successful smartphone Operating System is clearly differentiated from the next. Apple has entertainment and the web ‘experience’, RIM is built on a solid base of email and messaging capabilities and Android has shown the benefit of seamless integration with Google services such as maps and messaging. Is there a gap for webOS? Without a clear differentiator webOS will be fighting for market share from another OS consumer base, are they planning an intense head to head rivalry?

HP faces many challenges as it works to integrate Palm into its wider strategy. However, assuming their positioning and execution is as we would expect from their successful track record, it’s possible that webOS will live on, and perhaps allow HP to rival Apple in the tablet arena sooner than expected.