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HP reportedly is poised to reenter a market it abruptly quit

Jeffries analyst Peter Misek made some surprising claims in a recent research note.  He writes, "[W]e believe HP will aggressively attack the smartphone and tablet markets, which we believe are risky investments."

He writes:

After failing with its acquisition of Palm and subsequent goodwill and inventory write-offs totaling $3.3B, recent comments from HP management point to a retargeting of tablets and smartphones. While the move makes sense strategically, we see it as a high risk move. On top of adding costs and working capital burdens to an already stressed balance sheet, there could be additional write-offs. We note that to date almost all PC OEMs have failed to gain significant traction in consumer tablets/smartphones.

Of course Mr. Misek has made some controversial predictions that he's been flat-out wrong about in the past -- such as his claim that phonemaker Research in Motion, Ltd. (TSE:RIM) would post a big fiscal Q2 2013 fiscal miss (instead RIM handsomely beat analyst outlook, post a smaller than expected loss).

There is some supporting evidence, though, for this claim.  New Hewlett-Packard Comp. (HPQ) CEO Meg Whitman told Fox Business Network, "We have to ultimately offer a smartphone because in many countries of the world that would be your first computing device.  We are a computing company."

The HP chief rejected rumors of a RIM purchase, commenting, "No, that is not a direction that we're going to head."

HP's first mobile effort ended in a (largely) self-inflicted trainwreck. [Image Source: IntoMobile]

But the real question, if this idea of a smartphone push is true is what direction HP is going to head in.  The most logical option would perhaps be Windows Phone 8 [1][2][3] handset, given its strong relationship with Microsoft Corp. (MSFT).  Google Inc.'s (GOOG) Android is also a possibility.

But those with fond memories of webOS, don't get your hopes up for a comeback tour.  Much of HP's webOS staff has jumped shipped to Google in recent months.  Only a barebones skeleton crew has continued on working open-sourcing the webOS code.  Given how outdated the code base is, and the lack of experienced personnel a revival of webOS seems the least likely scenario.

However, HP's flippant treatment of webOS raised eyebrows, and thus is pertinent to the risk assessment.  If there is one thing Mr. Misek is for sure right about it's that an HP smartphone and tablet push is high risk.  After all it tried once and quickly pulled the plug.

Sources: HP, ZDNet

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By zephyrprime on 9/28/2012 5:50:21 PM , Rating: 1
The dude is right. For many, the phone is the first computing device. Also, having a full platform is useful. Too bad for HP they already screwed up with Palm. I don't have faith in HP's ability to execute.

By Articuno on 9/28/2012 5:55:37 PM , Rating: 3
Market saturation is already a serious problem. Where is HP going to fit in between Apple, Android and now Microsoft?

By Nortel on 9/28/2012 7:38:06 PM , Rating: 3
Easy, create Approidsoft

By Mitch101 on 9/28/2012 9:46:01 PM , Rating: 1
Considering the upper management expect the HP Blackberry. What could go wrong?

By FITCamaro on 9/28/2012 7:48:22 PM , Rating: 3
As the article makes light of, they likely aren't going to go toe to toe with any of them. Just sell devices that run either Android or Windows Phone 8.

So they'll have to compete against Samsung or HTC and the like.

By RufusM on 9/29/2012 11:22:28 AM , Rating: 2
Yes, this is the strategy HP should pursue for smartphones/tablets: Android and Windows.

To differentiate themselves they could go straight stock Android and Windows Phone with a high-powered, kick ass phone and tablet. Maybe even a Windows phablet given the success of the Samsung Galaxy Note line.

--In the Android world, doing a really nice stock Android phone would tromp on the Nexus devices from a feature/performance perspective, gain a following in the Android community and provide a great Google user experience.

--In the Windows world, doing a straight stock phone would mean they could leverage Microsoft's Signature label and be featured in Microsoft's stores. This would also appeal to the Windows Phone fans that want the stock Microsoft experience.

By spread on 9/28/2012 10:11:13 PM , Rating: 2
Slightly above RIM. So basically, the very bottom.

By Trisped on 9/29/2012 3:11:06 AM , Rating: 4
The lack of intelligent and relevant comments on this post is amazing.

The news post stated that HP would probably go Windows 8 (though it did say "Windows Phone 8" even though Microsoft is trying to drop the phone part). If not win 8 then probably Android, so the point is HP is going to fit right in with "Android and now Microsoft" as it will be using both (though I think it strange you said Android instead of Google, since you said Apple instead of iOS and Microsoft instead of Windows.

At this point WebOS is dead to all but the enthusiast. HP will probably keep it around for use on its printers, and they may even make their upcoming phones and tablets so they can run the OS (though you will probably have to manually switch the OS). Other then that HP will continue to sell Windows 8 devices (servers, desktops, laptops, with tablets and phones in the future).

As for managment, HP had a pretty good CEO who made some bad life choices, so HP canned him. They then brought in a CEO who they should have fired within 24 hours of his announcing the dissolution of their hard ware side (but what to rich people know about running a company). They then brought in a new CEO who has proven successful at other companies and considering she inherited a sinking ship, is doing a very good job bringing things back in line. While it is too soon to make any absolute judgments, Meg Whitman seems to be doing great things with HP's resources.

I think it is also important to note that HP has been making touch enabled all-in-ones and tablet laptops for years before apple entered the mobile phone market. To me this implies that they are veterans at this type of thing. Throw in their patents and the ones they picked up from Palm and they will be a force to be reckoned with.

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