Oh, Goody! Another Cell Phone!

Christmas comes early for cell-phone shoppers this year. According to a Wall Street Journal report out Friday, PC king Hewlett-Packard (NYSE: HPQ  ) is about to unveil a new "iPaq" smartphone for your gabbing pleasure. I've got just one question.

Why?

The world is, after all, awash in smartphones. In addition to every second firm in Korea, we've got:

  • Research In Motion (Nasdaq: RIMM  ) and its ubiquitous BlackBerry.
  • Apple (Nasdaq: AAPL  ) with the cooler-than-thou iPhone.
  • Smartphone leader Nokia (NYSE: NOK  ) with a whole array of phones that are popular worldwide, which we've heard of, but rarely seen, here in the States.
  • Google (Nasdaq: GOOG  ) , apparently.
  • And a million other shops, mostly unmentioned and largely unnoticed (yeah, I'm talking to you, Motorola).

According to the Journal, HP's aim is to grow its mobile-device business outside the corporate realm, and try to hook more retail consumers. Jumping on the touchscreen bandwagon, the iPaq will boast a touchscreen pad, and run on Microsoft (Nasdaq: MSFT  ) Windows Mobile 6.1.

The thing
But here's the thing. According to market researcher IDC, HP already sells cells. (Really? How did I not know that?) Apparently, HP has all of a 3.3% global market share in smartphones, and yet I've not heard hide nor hair of their existence. So maybe the announcement is good news -- clearly, HP needs to do something to alert cell-phone users to its existence.

But maybe not
On the other hand -- not to put too fine a point on this, but doesn't HP have its hands full already? I mean, sure, HP has thrashed Dell (Nasdaq: DELL  ) in the PC wars. But it's also just taken on a world of trouble by buying out EDS. Now, I've written in the past that I like that acquisition. But it's inarguable that EDS earns inferior profits relative to HP, and the latter has a yeoman's task ahead of it, trying to bring the former's margins up to par.

In short, HP's got plenty of irons in the fire already, and plenty of work ahead of it. Sinking millions -- perhaps tens, hundreds, or thousands of millions -- of dollars into developing and marketing another "me-too" smartphone, that will no sooner launch than enter a bitter price war against every other cell-phone maker in the world, just doesn't make sense.

Apple is a Motley Fool Stock Advisor pick. Dell and Microsoft are Inside Value selections. Google is a Rule Breakers pick. Try these market-beating publications free for 30 days.

Fool contributor Rich Smith owns shares of Nokia. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 03, 2008, at 4:17 PM, EEEsv1000s wrote:

    On the surface given what we know it would appear to be a poor decision. However, assuming HP can bring something besides a "Me too" to the table they do have the R&D and other pieces to milk a bit of that ever growing market.

    I'm certain they're just looking at the market size and project growth. Then estimating their potential small piece of the pie and using that to justify the investment.

  • Report this Comment On October 03, 2008, at 5:21 PM, oddvan wrote:

    Wake up and smell the coffe dude.

    HP have been knocking out Smart phones since before iPods were even popular.

    The fact that you claim not to have even heard of them discredits your entire post and makes is a total waste of bandwidth.

    Stop dreaming about your iPod web2.0 cloud pants BS.

    It is all just hype and rubbish talk.

  • Report this Comment On October 03, 2008, at 11:27 PM, ikikiftangftang wrote:

    c'mon gang. the Todd-ster, head of HP's PSG unit comes from Palm. A failed leader there, he is reliving his history to show he's really a smart guy. REALLY smart. So they HAD to do a smart phone. It will likely fail, he will likely fail, but so what -- he'll get a big fat bon-us, claim victory, and bone HP in the process. MeToo 2.0.

    And by the way, HP has been knocking out smart phones that only HP employees were given. Nobody bought them. They were, and are, crap.

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