Hewlett-Packard’s Next Face Palm

Make no mistake: the future of computing is mobile. Unfortunately for iconic PC giant Hewlett-Packard (NYSE: HPQ  ) , it has already made plenty of mistakes in mobile computing. Need I remind you of the Palm debacle? Probably not. But that was then, and this is now. This isn’t Leo Apotheker’s HP; this is Meg Whitman’s HP.

You gotta do what you gotta do
Last year, after HP decided to donate webOS to charity, tax deductions and all, Whitman had said, "I do not believe we will be in the smartphone business again," while saying that tablets were a distinct possibility. She prefaced that statement with the disclaimer that, of course, this could all change. Change it has, because Whitman just now confirmed to FOX Business that HP is indeed working on a smartphone.

"We have to ultimately offer a smartphone," Whitman said, adding  how, in many parts of the world, a smartphone is a user’s first, if not only, computing device. In those areas, some people may never even own a tablet or a traditional PC, as she sees it; so, as a computing company, HP has no choice but to "take advantage of that form factor."

The rest is a guess
That was the extent of the detail that Whitman offered up. No word on whether it would be a Google Android or Microsoft (Nasdaq: MSFT  ) Windows Phone 8 device, but my money would be on the latter, considering HP is already on board with Windows 8 tablets later this year. Technically, there's an off chance that HP will use the now-open source webOS, which has been spun off into a new company called Gram.

I think that Whitman’s previous comments about redeveloping webOS hardware in some form or fashion were merely saving face, because that move would inevitably lead to an embarrassing face palm once the platform failed for the third time. HP has never made an Android device, and that space is already overly crowded, so I think a concerted bet on Windows Phone 8 is up HP’s sleeve. That would go hand-in-hand with the company’s Windows 8 tablet strategy.

In more ways than one, rival Dell (Nasdaq: DELL  ) is behind the curve here. In June, Michael Dell specifically said, "You're not going to see us in phones, not in terms of hardware." Instead, he’s focusing his namesake company on security and management software for mobile devices supporting numerous platforms. Meanwhile, Dell decidedly will be getting in on Windows 8 tablets, just like HP.

He can’t escape Windows Phone
There were hints of an eventual regrouped push into smartphones, when HP created a new mobility global business unit last month, which is being led by former Nokia (NYSE: NOK  ) exec Alberto Torres. Tapping a former smartphone exec to lead a new mobile division generally inevitably entails -- spoiler alert! -- a new smartphone.

An interesting twist is that Torres left Nokia after the company bear-hugged Windows Phone, and his former MeeGo division’s days were numbered; yet, here he is in all likelihood spearheading a Windows Phone strategy for HP to compete with his former employer.

Palm revisited
Both Dell and HP are in precarious positions. Whitman is right to acknowledge the overwhelming significance of smartphones in the mobile revolution, but Dell is right to acknowledge his company has virtually no chance of success in building smartphone hardware. HP’s chances at smartphone success probably mirror Dell’s, also, but Whitman won’t go down without a fight.

Apple (Nasdaq: AAPL  ) just unveiled its iPhone 5, and any fledgling attempt by Dell or HP to compete with it, or even strong Android devices like the Samsung Galaxy S III, would fail miserably. Even with Windows Phone, Nokia is Mr. Softy’s main flame.

After the botched Palm acquisition, HP’s next smartphone move will just be another face palm.

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Fool contributor Evan Niuowns shares of Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, and Google. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 15, 2012, at 1:32 PM, giuseppe1149 wrote:

    Such brilliant insight! What more could one expect from an Apple investor and acolyte such as yourself Mr. Niu.

  • Report this Comment On September 16, 2012, at 2:19 PM, applefan1 wrote:

    HP won't do well with the Smartphone. What could they do to differentiate themselves between the sea of Windows OR Android smartphones?

    They don't make ARM processors, they don't design screen technology that i know of. They don't develop apps on the desktop or the tablet.

    What i see them doing is picking a standard ARM processor that everyone else makes, picking out a screen that everyone else uses, and putting the same OS and apps that everyone else does.

    Sorry, I don't know what expertise they have to make a better product.

  • Report this Comment On September 17, 2012, at 6:39 AM, RandomMeaning wrote:

    Not surprising Palm and HP would get into the game, even if they don't expect much success. Microsoft is throwing a lot of money behind WP08. Even if the phone doesn't go very far, they get the pay-off from MS. And if it succeeds, all the better for them.

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