August 18, 2012
In the following video, Motley Fool senior technology analyst Eric Bleeker discusses Hewlett-Packard‘s move to get back into the tablet game. Just a year ago, HP shuttered its webOS mobile lineup it had acquired when it bought Palm. HP and Dell followed similar paths, admitting defeat in mobile and retreating back to their core PC businesses. Unlike Dell, HP apparently wants back in the mobile game.
A leaked internal memo released on Friday shows that HP plans on rebooting its tablet ambitions. As Eric discusses, investors tend to focus on HP as a PC seller, but it derives just 17% of its operating profit from the unit, so the company is much more than a PC giant. Still, it’s scary that HP feels the need to jump back into the tablet world a year after waving the white flag. That’s not only an admission of the traction tablets are gaining, but the company also faces the prospect of relying on two companies – Google and Microsoft – that are hawking their own tablet hardware. In Google’s case, its Galaxy Nexus is priced aggressively at $200, while there are reports that Microsoft is readying to aggressively price its own Surface tablet. That doesn’t leave a lot of room for profits from a company that wants to compete with Google and Microsoft’s attempts to jump-start their own tablet platforms. Then there’s also the need to compete with the giant in the space, Apple, which from all reports is readying a lower-priced and smaller iPad that will further choke HP’s avenues for tablet success.
Surprisingly to some, HP’s biggest problem isn’t PCs — it’s price competition in its services and a lack of traction in big IT initiatives. However, if you’re counting on seeing the slow bleed in HP’s PC unit turned around by tablets, don’t hold your breath. To see Eric’s full thoughts, watch the following video.
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