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HP TouchPad

HP Pre 3
Acquired Palm unit lasted little more than a year

Hewlett-Packard Comp. (HPQreported [press release] on Thursday afternoon news that some of us saw coming.  It was killing webOS.

I. From High Hopes to the Depths of Despair

HP acquired webOS, a smart phone (and later tablet-adapted) operating system from its purchase of struggling gadget-maker Palm, Inc. for $1.2B USD in April, 2010.

At the time the price seemed right for Palm, Inc.  The company had tremendous industry experience having defined the PDA movement, which would later transform into the smart phone craze.

WebOS seemed like a winner -- many reviewers billed its card system of multi-tasking as the best on the market, and praised features like "Synergy" and the unified messaging system (which combined im's, emails, texts, etc. into a single conversation stream).  Sales were horrible, but the hope was with HP's brand might and expertise it would be able to make the attractive parts into a market winner.

However, in the end it was Palm's same flaws that led it to abysmal sales in the first place -- sloppy execution, overproduction, and a snail's pace of hardware releases -- that killed sales of its new HP-branded devices.

In the end enough was enough and during its quarterly earnings report on Thursday HP sealed the deal, discontinuing the Pre 3 smart phone, and the TouchPad.

II. Why Palm Failed on its Own

The news of webOS's demise is somewhat shocking because the operating system was once viewed as the strongest challenger to the iPhone.  In late 2009 Palm, Inc. had just launched the Palm Pre and Pixi and had nearly half the users of Apple, Inc.  That would be about the closest to Apple, it would ever get.

But over the course of the next several months the market was swept by a wave of chic Android handsets [1][2] with bleeding edge hardware.  Overnight Palm went from legitimate contender to forgotten footnote.

One major factor in Palm being left behind was that it just wasn't keeping up with Android in hardware and wasn't release enough handsets.  Palm didn't have the luxury that Apple did of selling phones with outdated hardware solely on brand image.  

After its November 2009 release of the Pixi, Palm only was able to muster a minor memory bump in January 2010 for its Verizon versions of its smart phone duo.  At the time these units lagged behind the top-of-the-line Androids, particularly in screen resolution.

As the months passed by in early 2010, Palm's sales plunged.  In addition to dated hardware and limited selection, Palm increasingly found itself experiencing another problem -- overproduction.  It was classic supply and demand -- Palm was supplying, but the market wasn't demanding.  The consequence of Palm's unrealistic sales hopes was a downward plunge in prices that hastened Palm's sales plunge, as interested customers opted to wait for next month... and then next month... in hopes of lower prices.

By April 2010 the situation had gotten so bad that Palm was looking to sell itself to the highest bidder.  It wasn't producing smart phones as it had accumulated abundant surpluses.  And those smart phones it was selling at fire sale prices -- as low as a penny.  And the company had nary a new product.

Despite Palm's increasingly self-defeating performance, the company did perk some interest from prospective buyers.  HTC Corp. (SEO:066570) considered a purchase, but ultimately (and perhaps wisely) decided to stay away.  Hong Kong-based Lenovo Group, Ltd. (HKG: 0992) similar contemplated a deal, but then bailed.  

And then what Palm hoped was its night in shining armor appeared -- HP.

III. Why HP Failed at Palm

HP desperately was looking to come up with an entrant in the burgeoning smart phone and tablet markets, and Palm seemed the perfect vehicle for those aspirations.

But ultimately HP's plan fizzled for a simple reason -- it let Palm be Palm.

Much like Palm did on its own, Palm at HP committed the familiar sins.  It overproduced.  It under-delivered in hardware. And it delivered new releases at a familiar lackadaisical churn.  

After the April acquisitions, HP would not release a new webOS handset until November, when it finally pulled the wraps off the Pre 2.  And to make matters worse, the Pre 2 lagged badly behind its Android counterparts with a measly 320x480 screen -- unacceptable dated hardware for a flagship phone at the time (unless you happened to be the iPhone).  That would be bad enough, were it not for the fact that the Pre 2 was also Palm's first major hardware revision in a year.

In February things were already starting to look bad again for HP's acquisition.  It had no sales presence and the Pre 2 was largely a market flop.  But if there's one thing that Palm's mastered in recent years it was entertaining high hopes.  So when it unveiled the Veer, the Pre3, and the TouchPad tablet in February, many -- DailyTech staffers included -- were hopeful that things might finally be turning around.

Shakespeare recognized that to craft the perfect tragedy you always had to build high hopes and optimism before the final fall.  Thus it was with webOS.

The Veer would eventually launch in May of this year, and the TouchPad in July, but the final act was already beginning.  Negative reviews of the HP TouchPad poured in.  Many, like Anandtech's writeup, praised the overall operating system, but said that it was a series of flaws that prevented the device from shining.

The TouchPad entered into a cycle of price cuts and plunging sales, as "fickle" customers opted to wait to get that lowest price the next month.  Even an OS update from HP, which polished off many of the device's rough edges, wasn't enough to change the public's mind.

Still, it wasn't just the Palm units old bad habits -- overproduction, lacking hardware, and too few releases -- which doomed HP's webOS project.  It was also lack of patience of HP.

HP could have tested the waters with its new, more polished webOS 3.0 interface, cutting production to more cautious levels, pushing for more devices (a device every two months would have seemed a minimum), and better hardware in the flagship models (more RAM, higher resolution LCD screens, etc.).

Instead HP chose to ax the webOS experiment altogether.

We'll never know if webOS could have turned the corner under more disciplined leadership.  
But if there's one take home message from this announcement, it's that HP since day one was rather clueless on how to manage a mobile device unit and remains just as clueless as ever.  While it may eventually muster competitive tablets, it appears increasingly unlikely HP will ever succeed in the near term in the smart phone market.  That's very bad news financially for HP.

As for webOS, HP promises, "HP will continue to explore options to optimize the value of webOS software going forward."

But don't get your hopes up.  HP has buried its webOS smart phones and tablets.  About the most a webOS fan has to hope for is that long-promised webOS printer.  But even if HP isn't officially killing webOS at present, the operating system is now a dead man walking.  After all, there's little reason to maintain a full-fledged smart phone and tablet operating system for printers only.

webOS -- the webOS tech enthusiasts knew, at least -- leaves behind a legacy of five phones and one tablet in the U.S. (the Pre, Pixi, Pre Plus, Pix Plus, Pre 2, and TouchPad).  The Pre3?  It never made it to market in the U.S.  For Palm and webOS fans, that may be the bitterest pill to swallow amid all this gloom.


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Screen Snafu
By Aikouka on 8/18/2011 4:59:55 PM , Rating: 2
quote:
And to make matters worse, the Pre 2 lagged badly behind its Android counterparts with a measly 320x480 screen -- unacceptable for a flagship phone at the time (unless you happened to be the iPhone).


I thought the iPhone 4's resolution is actually 4x that at 960x640 (614400 pixels vs. 153600 pixels)?




RE: Screen Snafu
By JasonMick (blog) on 8/18/2011 5:18:55 PM , Rating: 5
quote:
I thought the iPhone 4's resolution is actually 4x that at 960x640 (614400 pixels vs. 153600 pixels)?

True, but Android smart phones had 800x480 displays as early as Nov. 2009, while the iPhone 3G and 3GS sold blissfully well in the seven months when they had effectively obsolete screens.

My point is that Apple is the only company that has shown an ability to convince customers to swallow mid-range hardware at a high-end price in the phone market. The iPhone has trailed Android in hardware virtually constantly since late 2009.

The only reason Apple can do that is because it does such a brilliant job market and suckering people into believing it's the "best" phone on the market.

Sadly webOS wasn't as good at marketing and thus when it tried to sell mid-range hardware at a high-end price, customer reactions weren't so forgiving.


RE: Screen Snafu
By madoka on 8/18/2011 5:32:33 PM , Rating: 3
The point, that you seemed to miss yet again, is that he iphone 3gs was NOT their flagship model at the time. That was their budget model. Let me quote your exact words before you go and surreptitiously change it without apology or mention of your mistake:

"And to make matters worse, the Pre 2 lagged badly behind its Android counterparts with a measly 320x480 screen -- unacceptable for a flagship phone at the time (unless you happened to be the iPhone). "


RE: Screen Snafu
By JasonMick (blog) on 8/18/2011 5:52:38 PM , Rating: 1
quote:
The point, that you seemed to miss yet again, is that he iphone 3gs was NOT their flagship model at the time. That was their budget model. Let me quote your exact words before you go and surreptitiously change it without apology or mention of your mistake:

I can see your point from a pedantic perspective.

I've changed the wording slightly to clarify that I meant the iPhone 4's hardware in general was dated at the time (which it was -- less RAM than competitors, no swappable memory, slower modem, etc.).

The iPhone 3GS was quickly rendered obsolete hardware by Android. The iPhone 4 was out of date when it was released and looks even more badly dated today. Let's see what Apple manages with the iPhone 5 (or 4S perhaps), but I wouldn't hold your breath.


RE: Screen Snafu
By adiposity on 8/18/2011 6:31:01 PM , Rating: 2
Jason, the issue with the sentence is that it makes it sound like the dated hardware in question is the display, and then proceed to suggest that such an outdated display was not an issue for the iPhone 4.

I see what you mean, which was that the Pre had unacceptably outdated hardware, and that hardware was the display, and that only an iPhone could get away with having outdated hardware on a flagship model.

If you wanted to get in a dig at Apple, a better way would be to put it in a separate sentence. That way, there would be no ambiguity in what the Iphone got a pass on:

quote:
And to make matters worse, the Pre 2 lagged badly behind its Android counterparts with a measly 320x480 screen -- unacceptably dated hardware for a flagship phone at the time. The only flagship phone with outdated hardware that sold well at that time was the iPhone.


RE: Screen Snafu
By TakinYourPoints on 8/18/2011 6:55:36 PM , Rating: 3
quote:
The iPhone 4 was out of date when it was released and looks even more badly dated today.


Hardware bulletpoints simply don't matter when WP7 on Snapdragon or iOS on A4 is much faster and smoother than Android on the technically faster Hummingbird. Hardware specs can be relevant again if Google gets their OS in order.


RE: Screen Snafu
By snakeInTheGrass on 8/18/2011 5:52:15 PM , Rating: 2
As pointed out, the iPhone 3G and 3gs were no longer the 'flagship' products at that time for Apple either (not to mention that the 640x960 screen is STILL one of the best if not flat out the best on the market well over a year after its introduction...), but also:

quote:
Sadly webOS wasn't as good at marketing and thus when it tried to sell mid-range hardware at a high-end price, customer reactions weren't so forgiving.


I get the impression people have had issues with the OS stuttering - which is more likely due to its implementation than the hardware considering that iOS has run smoothly on slower hardware than that - and the lack of apps. Not that you like Apple, but comparing the implementation of iOS today on the iPhone/iPad vs. that of Pre pretty well skews in favor of Apple. To be fair, I like the Pre implementation of multitasking better, but if things are laggy and half-finished, that alone isn't going to win over many users.


RE: Screen Snafu
By JasonMick (blog) on 8/18/2011 6:03:28 PM , Rating: 2
quote:
As pointed out, the iPhone 3G and 3gs were no longer the 'flagship' products at that time for Apple either (not to mention that the 640x960 screen is STILL one of the best if not flat out the best on the market well over a year after its introduction...), but also:

Again, my wording might not have been perfect, but my point was correct -- of late Apple has by and large consistently sold dated hardware mobile devices on merits of its strong brand image.

The iPhone 4 display was a pleasant exception, but in pretty much all other categories hardware-wise the iPhone 4, lagged its Android competitors.

I'd also point out that while the iPhone 4 display is exceptional, the iPad 2 display is lower resolution than many Android tablets, so Apple isn't even consistent in leadership in that category...


RE: Screen Snafu
By snakeInTheGrass on 8/18/11, Rating: 0
RE: Screen Snafu
By MeesterNid on 8/19/2011 9:14:36 AM , Rating: 2
Who cares if the hardware itself is "dated"!? What matters is how the software is able to take advantage of and utilize the said hardware. You can bring the most bleeding edge CPU down to it's knees with a bloated operating system and inefficient use of resources.

I don't believe that the vast majority of folks buying and using smartphones even think about the Ghz rating of the phone's CPU or what graphics processor it uses. They are more concerned with how it "feels" when they run applications on it, play games, watch videos or browse the web.

Apple's model of building hardware and software in sync has proven successful and is part of the reason Google is buying Motorola, imo.


RE: Screen Snafu
By Pirks on 8/18/2011 6:25:36 PM , Rating: 2
quote:
The only reason Apple can do that is because it does such a brilliant job market and suckering people into believing it's the "best" phone on the market
Or maybe people in the market for a new smartphone care NOT ONLY about the screen resolution and core count and GHz count and other specs you geeks worship here? What would you say about such a non-conventional opinion, Jason? :)


RE: Screen Snafu
By Brandon Hill (blog) on 8/18/2011 6:35:53 PM , Rating: 2
quote:
Or maybe people in the market for a new smartphone care NOT ONLY about the screen resolution and core count and GHz count and other specs you geeks worship here?


For once, I agree with Pirks. Imagine that :)


RE: Screen Snafu
By messele on 8/19/2011 3:10:00 AM , Rating: 2
You mean in this day when everything is so incredibly powerful that specs are largely irrelevant people actually buy these things because of what they can do with them not because of something geeky numbers on the box they they don't fully understand.

The most important key to mass sales is ease of use and the overall ecosystem?

Holy crap, somebody call HP, RIM, HTC and Samsung - I think we have a breakthrough in improving their sales !


RE: Screen Snafu
By Acupuncture on 8/18/2011 6:32:43 PM , Rating: 2
Yet, on the iPhone 4 I can play games like Infinity Blade that looks far better than any game on any Android phone. Not bad for an "obsolete" phone.


RE: Screen Snafu
By ShaolinSoccer on 8/18/2011 9:42:30 PM , Rating: 2
quote:
Yet, on the iPhone 4 I can play games like Infinity Blade that looks far better than any game on any Android phone.


Ever heard of the Sony Xperia Play?

http://pocketnow.com/android/sony-ericsson-reveals...


RE: Screen Snafu
By Subzero0000 on 8/18/2011 10:00:34 PM , Rating: 2
Ever seen Infinity Blade ?

http://www.youtube.com/watch?v=JDvPIhCd8N4

I think this statement is still valid.
quote:
Yet, on the iPhone 4 I can play games like Infinity Blade that looks far better than any game on any Android phone.


RE: Screen Snafu
By spread on 8/18/2011 6:38:52 PM , Rating: 2
quote:
My point is that Apple is the only company that has shown an ability to convince customers to swallow mid-range hardware at a high-end price in the phone market. The iPhone has trailed Android in hardware virtually constantly since late 2009.


The iPhone is built really well and Apple focuses on the experience more than the lower level hardware. Very nice screen, quality feeling casing, and very responsive since it does very little.

It's an expensive Fisher price toy that has a high tech feel and people love it. Even your grandma can use it. This is why it's popular and sells well.


RE: Screen Snafu
By ShaolinSoccer on 8/18/2011 9:52:39 PM , Rating: 2
quote:
This is why it's popular and sells well.


A friend of mine owns an iPhone4. I own an HTC EVO. She wishes she bought the EVO instead lol...


RE: Screen Snafu
By Subzero0000 on 8/18/2011 10:04:39 PM , Rating: 2
quote:
A friend of mine owns an iPhone4. I own an HTC EVO. She wishes she bought the EVO instead lol...

A friend of mine owns an Android. I also own an Android. She wishes she bought the iPhone instead, cus' a lot more easier to use lol...


RE: Screen Snafu
By ShaolinSoccer on 8/19/2011 5:57:35 AM , Rating: 2
quote:
A friend of mine owns an Android. I also own an Android. She wishes she bought the iPhone instead, cus' a lot more easier to use lol...


What do you mean by easier? You can do just as much on an Android phone as you can the iPhone except you can do "more" on the Android. The iPhone is extremely limited on a lot of things. I was ready to pull my hair out while I was messing around with her phone.


RE: Screen Snafu
By robinthakur on 8/22/2011 8:42:50 AM , Rating: 2
Easier in the sense that it is simpler to use for people who don't just like to endlessly play with their phones. I tried Android but found it too confusing with crappy icons, poor hardware quality and the display didn't scroll smoothly. The iPhone is still infinitely more polished in my opinion for the mass market and the display makes it seem still very relevent even as the 5 is coming upto release.


RE: Screen Snafu
By His Shadow on 8/21/2011 1:28:56 PM , Rating: 2
"My point is that Apple is the only company that has shown an ability to convince customers to swallow mid-range hardware at a high-end price in the phone market. The iPhone has trailed Android in hardware virtually constantly since late 2009.

The only reason Apple can do that is because it does such a brilliant job market and suckering people into believing it's the "best" phone on the market."


If you really believe that it's time to stop writing about tech. If you truly believe that baubles and geegaws like a few more Mhz or festooning a device with a myriad of unused ports makes said device "better", you sure as Hell shouldn't be writing about Apple.

This flatly idiotic idea that Apple's magic marketing has driven iPod, iPhone and now iPad adoption in the face of what is imagined to be superior competitors devices merely because said competitors have stuck more "G"s on a device is lazy and insulting. Apple is wildly successful because it builds a best of class experience on refined, polished WORKING hardware that fits seamlessly into a vast ecosystem Apple built over the last decade, an ecosystem which continues to expand daily. Continuing to dredge up the trope of Apple's witchcraft advertising disguising second rate hardware is a lie flatly contradicted by the facts. Unless you believe selling broken devices with promises of future fixes which you have to send the device back to acquire (Xoom) or phones that steal your personal data even before you get the trojans and spyware that infest the platform (Android) is a superior way of doing business, then please, by all means, continue to use your sour grapes/whiny cliches about Apple's sales sorcery. The competitors will keep dropping like flies as long as they believe the same thing.


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