GO
Loading...

Analysis: HP Faces a Long March in Mobile

HP 9.7" Touchpad
Photo: hp.com
HP 9.7" Touchpad

When Hewlett-Packard executives announced their new mobile lineup of two webOS phones and a tablet on Wednesday, it reminded me of Apple .

Apple 10 years ago, that is.

Back then, Apple had great products, as HP appears to now. The new HP Veer, a petite webOS phone, could easily appeal to the fashionista set (and others with small fingers). The Pre 3 finally has a screen big enough to stand toe-to-toe with the best Android offerings. And the TouchPad tablet has the most refined look and feel of any tablet I've seen besides the iPad. In my hands. I like the TouchPad better than the Motorola Xoom.

HP's challenge will be to turn these solid products into great mobile market share. And I have a feeling HP's going to have a tough time.

Why?

For some of the same reasons Apple struggled to gain share in PCs a decade ago. Despite its solid products and reputation with its customer base, mainstream consumers didn't give Apple a second look. Some of that was because of Apple's relatively high prices, but PC buyers also had some entrenched habits. They had old Windows apps they needed to run. Old files they needed to open. Switching to Apple (and paying more to do it) just seemed like too much hassle.

Similarly, HP needs to convince today's mobile consumer — who uses iTunes and Google services to make some changes to embrace webOS devices. HP won't be able to offer the breadth of hardware partners Google has with Android, or the high-end shopping experience and luxury brand Apple has with iOS.

HP does have several advantages. Its Personal Systems Group is a $40.7 billion powerhouse, and its position as the world's biggest PC maker means it has an edge when it comes to securing critical components at a great price. HP already had a relationship with Qualcomm , which will provide processors. It had a relationship with display manufacturers and other chip suppliers. The one area where HP has less pull — flash memory — is one where its experienced operations team should be able to cope. HP also has strong relationships with the big-box retailers who sell PCs, and shouldn't have much trouble securing shelf space there -- especially for the TouchPad.

But smartphones are a far different game than PCs.

HP executives will have to strengthen relationships with the global wireless carriers who dictate so much about distribution these days.

They will have to adjust to the vagaries of smartphone marketing, which is a strange animal. And they will have to figure out ways to stand out from the pack of Android, iOS and BlackBerry devices at retail. In PCs, HP's cost advantage allows it to offer more bang for the buck in stores. In phones it won't work that way.

With the iPhone, Apple was able to stand out in part because it had money to spend. The iPod's success provided cash and electronics brand recognition, and Apple's retail store network provided an unparalleled platform to pitch consumers without competing for shelf space. Apple's heavy spending on advertising kept its message in front of consumers constantly, lessening its reliance on fickle carrier marketing budgets.

So my take:To get significant share in mobile, HP is going to have to do what Apple did: spend a lot of money over a period of years. It can't just focus on product development and cost controls either, but will have to give attention to branding and distribution, too. HP might also have to build out a retail presence.

Oh, and guess what? All of that's going to be hard to do. Why? Although HP's PC group has huge revenues, it also commands thin margins that analysts watch closely. Wall Street isn't likely to look kindly on the sort of mobile marketing spending it would take to achieve success.

What's more:Even if HP does everything right and decides to invest in mobile despite Wall Street's reservations, it could take years to gain a significant presence in the smartphone market. Remember, Apple sold 16.2 million iPhones last quarter, but barely sold 10 million the first year. And that was back when there were zero touchscreen phones in the market.

This is going to be a long game. We'll see if HP has the patience to play.

Questions? Comments? TechCheck@cnbc.com And you can follow Jon Fortt on Twitter @jonfortt

Symbol
Price
 
Change
%Change
HPQ
---
QCOM
---
BB
---
AAPL
---
GOOGL
---