Lazy Man and Money

How HP Can Still Succeed with webOS/TouchPad

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At the end of August, HP announced they were discontinuing the production of their TouchPad. This lead me to write an article on how, in hindsight, HP could have succeeded With the TouchPad. Note the past tense on that article.

So why am I writing this article today? Ten days ago HP CEO Meg Whitman met with their webOS division of the company. For a company as large as HP it isn’t typical for the CEO to address the employees of such a small division directly. When they announced that they were going to stop making hardware for webOS, the CEO didn’t even tell the manager of the webOS division beforehand. In Meg Whitman’s address to the employees, she essentially said, that HP is still trying to figure out what to do with webOS. They’ve reportedly been looking for a buyer, but it seems that they aren’t getting the offers that they want. It’s not much of a mystery why. The acquiring company would have the same problem that HP has – how do you compete with Apple and Google?

Meg Whitman understands this and reportedly told the employees, “If HP decides to do this [keep webOS], we’re going to do it in a very significant way over a multi-year period.” I’m a huge fan of webOS and consider it the best mobile operating system. Even from that biased perspective, I didn’t really think that HP was serious about keeping webOS and making hardware for it again. However, on Wednesday, HP started probing TouchPad customers for feedback. The article makes a good point that it is very odd for company to ask for feedback on a cancelled product. It made me think, “My previous article doesn’t have be viewed ‘in hindsight’ any more.” However, things are different now than when they first canceled the hardware and hence an updated strategy going forward is necessary. (It’s amazing what a difference 6 weeks makes!)

Let me run through a couple of new challenges:

Amazon Kindle Fire

At $199 these are reportedly flying off the shelves. Amazon’s business strategy seems to be like the old razor and blade model, sell the tablet at as low a cost as possible and collect the profits from people buying books, music, and movies from Amazon. In my previous article, I suggested that HP sell at a loss to build market share, but that was at a time when competing tablets were selling at $399 or more. Now with a popular brand at $199, it isn’t clear that people would opt for a TouchPad, even if it technically vastly superior in every way to the Kindle Fire.

Lack of Phones and Carrier Relationships

HP actually did make a bunch of Pre3s, which was supposed to be the next flagship webOS phone. I see them on Craigslist and Ebay. However, since HP announced they were going to stop making webOS hardware, they never got launched on Verizon or AT&T as planned. I can’t imagine that either of those companies accepting a call from HP saying, “Ha ha, gotcha… we were just kidding about that stopping the phone thing, so let’s continue with our agreement… Kthxbye.

HP has also appeared to have inherited a burned bridge with Sprint from Palm with the lack of sales on the original Pre. There were no indications that HP was even going to offer the Pre3 on Sprint.

Where does HP go from here?

Let’s presume that HP does want to go forward with webOS. (If they don’t, the answer of what do with webOS doesn’t matter much.) HP is going to need a plan. It’s also going to need a lot of that aforementioned money and thinking in terms of multiple years (as Whitman said it would be) is the a good start.

I’d start with my previous plan of releasing the 16GB TouchPad at a new retail price of $299. However, I’d offer the first million people who buy them a $200 instant rebate (effective price: $99). When the first million are sold (at a loss of about $200 million to HP), sell the next 2 million with a $150 instant rebate (effective price: $149). This will cost HP another $300 million. That’s $500 million in losses, but a userbase of around 4 million people (counting the million or TouchPads that were previously sold). I suggested a few more rounds of this until you get to the full retail price of $299 – at that point with perhaps 7 million or more sold. In addition, HP can do this with 32GB versions and add another $50 to all the prices.

As the rebate discounts start to be less attractive, HP needs another draw. After all, it can’t sell a device that is similar in size, weight, screen resolution, etc. as the original iPad forever. Fortunately HP already has its next tablet ready to go. HP has a 7″ TouchPad Go – nearly a dozen prototypes have shown up in people’s hands in PreCentral’s forums. With a 7″ 1024×768 screen it will have more pixels per inch than the iPad 2. It’s got the front (1.3MP) and back (5MP) cameras and real GPS (not cell-phone assisted that require network access, but a full GPS chip like those from Magellan or Tom Tom) for navigation and turn-by-turn directions. Again HP should take a loss on this as well to build market share. However, HP doesn’t need to discount as much as they did with the TouchPad, because they’ve already put some 5 to 7 million webOS tablets out there, which is enough to get developer’s attention.

Finally for tablets, HP needs to get started on a TouchPad 2. I’m sure they went down this path as soon as the iPad 2 came out. They need to throw the kitchen sink at it. If Apple says they won’t do something, HP has to take Ragu’s slogan, “It’s in there!” For example, TouchPads should have external storage via an SD card. Apple doesn’t do it because they want to up-sell people on more expensive devices with greater profit margins. Apple can afford this luxury as the leader – HP can’t as the challenger. In addition HP should bundle its Touchstone technology. This is an inductive charger where you don’t need to plug any wires on a device for it charge. You just set it in its cradle and it charges. This is one of the better features of webOS devices, but HP charges extra for the accessory and many never get to enjoy it. (Incidentally, this is why webOS devices have a plastic instead of metal back to them. People view them as cheaper, but it’s actually necessary for a feature that many never use.) HP could also bundle a gift card for its app store.

With a tablet strategy in place, many will ask about phones. I think HP may be thinking of creating a tablet strategy without a phone strategy. Apple’s iPhone and all the Google Android phones out there are a huge advantage and HP as a challenger can’t ignore that. If all bridges are burned with Sprint, Verizon, and AT&T and they aren’t possible, it is time for HP to call T-Mobile. T-Mobile has been snubbed by Apple and can’t get the iPhone. Analysts are predicting gloomy times with T-Mobile if the merger with AT&T doesn’t happen and they continue to lack the iPhone. Misery loves company and HP and T-Mobile make a great pair.

At the same time, HP should be working to get its devices on smaller MVNOs like Virgin Mobile and Boost. I’m with Virgin Mobile and they have a $35 unlimited data plan and 300 minutes of talk that could tempt a lot of people. Virgin’s biggest downside is that the phone selection is not very good. I would very much love to a Pre3 on a $35 plan – and I think a lot of other people would too.

All this is designed to build market share and build it quickly. HP can’t be thinking about making every device profitable at this point. That could come about in a couple of years. With the market share, HP can explore making webOS work well with their laptops or as a selling point for their printers (webOS devices already work well with HP wireless printers and I’ll probably get one next time so I can print from my TouchPad). With market share comes opportunity.

I realize it’s easy for me to tell HP to spend all this money, but let’s put it in perspective. They spent 1.2 billion to buy Palm and webOS. They spent some 7-10 billion to buy a company called Autonomy that left analysts scratching their heads. The money I outlined would probably cost the company another 2 billion dollars. That’s not a horrific sum considering the value of having one of the top mobile operating systems.

Do you live in Silicon Valley? Do you know someone who does? If so send this article to them and maybe it will get into Ms. Whitman’s hands. Thanks.

Samsung Chromebook: webOS Clone in a Netbook?

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Last week, I wrote briefly why the HP Touchpad may be a smart buy. I apologize for another technology article so soon, but it was entirely unexpected. As luck would have it, I currently find myself testing what, in many ways could be considered a competing device, the Samsung Chromebook. It turns out that Google was lending them out on flights from San Francisco to Boston and Boston to San Francisco. The price… everyone’s favorite: free. In fact, it came with free Gogo Inflight wi-fi, worth about $13. If nothing else, it would be a convenient way to catch up on the last week of email while I was away.

For those who aren’t tech savvy, the Chromebook is a netbook that runs Google’s new operating system, ChromeOS. At 3.25 pounds and with a 8 hour battery life, it is perfectly suited for travel. It has Intel Atom processors that have become extremely popular on netbooks. It also has a SD card for bringing your data with you, as well as a couple of USB ports for expansion. The 12-inch screen is extremely bright… so bright that I turned it down to less than half it’s full brightness just so I don’t blind myself. Other than that, the most noticeable difference is the keyboard. One of the first things I noticed is that there is no delete key. The only way for me to edit text is to go to the end of the word and use backspace on it. In addition it has a couple of keys that I haven’t found on other keyboards. There’s a magnifying glass that opens up a new web browser tab for searching. That’s extremely handy. There is a left arrow and right arrow key on the top of the keyboard. Because I am composing this, I was in a word processing state of mind and figured that it would do something related to that. Nope, they are back and forward keys on the browser. That may be handy as well – once you figure it out.

At this point, you might be wondering why I would compare a Chromebook with the HP Touchpad. One is a netbook with physical keys and USB ports, and the other is a tablet that is half the weight with almost no expansion capabilities. They are alike due to their software philosophy. The HP Touchpad runs webOS, a mobile operating system designed around the idea that the web browser and web technologies is the future. Google’s ChromeOS is the same concept using the slogan, “Nothing but the web.” HP has announced that they intend to put webOS on netbooks in the future. One would imagine that the result of that would be very similar to the Chromebook. I could imagine Google merging ChromeOS and Android functionality in the future and the result of that would be something very similar to the HP Touchpad.

In the end, I really do buy into the “web is the future” mantra of both platforms. They are on a collision course. The interesting thing to me is that there’s a lot of optimism around ChromeOS and a lot of pessimism behind webOS. It’s something that I haven’t been able to reconcile unless people are not judging the technologies independently, but instead focusing on the companies behind them. I have to give Google a lot of credit for putting the promotion together. Letting people try the Samsung Chromebook while flying – and giving them the incentive of free internet access is a great way to spread the word about a different way of computing.

The HP Veer Debuts (and Personal Finance Links)

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Yesterday was release day for the first phone by Hewlett-Packard since they bought Palm. Followers of this blog know that I love my cell phones – and especially Palm cell phones. I worked in the industry for a few years as a software engineer, and my enjoyment for cell phones and what you can do with them has continued. I’ve been a very loyal customer of the Palm Software since the days of the Handspring Treo. Palm acquired the company and switched from making organizers to making phones. The Palm Treo 600 should go down in history as the first truly smart phone. It ran third party applications had a touch screen, gave you access to the full web pages including Javascript, and a bunch of other things.

The iPhone came around and crushed Palm into the ground. The first iPhone was pretty much on par with the Palm Treo’s at the time, but Apple came out with newer phones. Palm decided to move to a new operating system to replace its aging one and developed Palm webOS. Unfortunately, the hardware that came out for the operating system was only competitive for a few months. Apple and Android devices passed it because companies with deeper pockets than Palm could get the devices out faster. HP recognized the value of Palm webOS and bought Palm. The release of the HP Veer is the first fruit of that labor.

The Veer lives up to its name. It veers away from the dominating trend in smart phones today. Smart phones today are like the cars in the 1950’s – bigger is better. AT&T is releasing an Android phone today with a 4.5″ screen. That’s a half inch away from what Sony was using for it eReader tablets. In contrast the Veer goes back to the days when people liked small gadgets… remember the craze around the Motorola Razr? The Veer is about the size of a credit card and the thickness of a deck of cards. The screen is an extremely small 2.6 inches. However, at this size, it can do just about anything than any other smart phone can do. You can listen to your music, surf the web with a Webkit browser that Android and iPhone’s use. It has third party downloadable applications. It also has a slide down physical keyboard for one-hand typing (this comes in handy when walking my dog for instance).

And now for the personal finance links:

Money Writers:

Top PF Posts:

I’m curious to see how the market reacts to the Veer. In a lot of ways the big screen is helpful for viewing full web pages. I could see consumers not liking it for that reason. However, I could see other consumers like it because it’s so small it slips into nearly any pocket without an issue. You could forget that you are carrying around. And at 3.6 ounces it’s quite possible people will forget they are carrying it. For some consumers that might be the point. The ability to tether a tablet to its data connection to a tablet might make the screen size irrelevant for most.

I’m going to guess that it fails, but only because it isn’t marketed as much as competing phones leading the average consumer to not understand the product.

Personal Finance Links

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After my article about How HP/Palm’s webOS can compete on Friday, PreCentral went out and got the specs for the new iPad killer (I’m just joking about the “killer” part.) Anyway, I’m a little wrapped up in the awesomeness of it for today and I hope to work on a couple of side projects, so here are some recent personal finance links to keep you busy. I plan to be back tomorrow with a review of my favorite gift of the holidays – a product that I can say has made an impact to my (and my wife’s) daily routine.

Money Writers:

My article, Credit Cards For Those Who Carry A Balance – or Who Like 5% Cash Back Rewards, was also featured in the Carnival of Personal Finance.

Top PF Posts:

How HP/Palm’s webOS Can Compete with Apple iOS and Google Android

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When I created this website more than 4 years ago, I said that I’d write about technology about 5% of the time. Well I lied. I almost never write about technology. Today I’m going to cash in some of those credits and write about technology. If this is the kind of thing that interests you, you are in luck with one of my longest articles. If not, kindly take a stroll through the archives.

Before I get started on topic in the title, let me preface it with a few disclaimers. I have a degree in Computer Science from a top 30 (according to U.S. News and World report) University – so in a lot of ways technology is “my thing.” Secondly, almost every piece of technology I’ve own has failed on me multiple times. I’m have about 5% success rate with faxes. Scanners work about 12% for me because some mysterious driver conflict in Windows causes it to fail (seriously, you’d think Windows 7 would just work with all printers/scanners/etc., but it doesn’t). Sometimes I wonder if certain technology should just disappear. After all, if you spent as much time fixing your car as you did driving it, you’d give up on it too. There are a few pieces of technology that have never failed me. One of them is Palm. I’ve been using their operating systems and devices since the days of Handspring over a decade ago. If this makes me a Palm “fanboy”, so be it. They’ve earned it.

A (Brief?) History of Three Smart Phones

With that out of the way, I’ve been a loyal Palm Pre user since it launched on June 6, 2009. That make my phone around 200 in smartphone years. When the phone came out the only thing that was close to it was the iPhone. The iPhone had a big head start, perhaps one of the most loyal customer-bases on the planet, a virtual monopoly in MP3 players and access to songs in their music store, plus a quality device. I’m sure I’m leaving out a lot here, but clearly the iPhone had a lot going for it. Palm was a small company and didn’t have a lot of money, so it partnered with one of the troubled carriers, Sprint, in hopes that they could boost each other. Palm made some poor marketing choices with some creepy commercials that inspired spoofs. Despite what many considered the great operating system, webOS, the physical hardware of the phone was criticized for its cheap plastic feel. Within a couple of months, the market had shifted. Verizon starting its “Droid Does” campaign. Though the Palm Pre would be on Verizon in a couple of months, Verizon had chosen to back Google’s Android platform. Palm ran into some financial difficulty and started to look for a buyer. During that time Sprint decided it should ride on Verizon’s coat tails and the growing Android momentum. It makes a lot of sense, there are a lot of companies making Android phones in a lot of form factors. You can have any Apple iOS phone or Palm webOS phone you want as long as it is what those companies give you. With Google Android you get choices from Motorola, HTC, Samsung, etc.

Apple’s iPhone and Google’s Android are the big players. Microsoft came out with a Windows phone late last year, but it hasn’t picked up traction. Some say RIM’s Blackberry franchise is where Palm was a couple of years when it had an aging operating system that needed a complete overhaul to compete with the new one of today (and RIM is working on that new OS). In the meantime, Hewlett-Packard, one of the world’s biggest computer companies bought Palm.

That’s pretty much led to the where we are today in the smart phone wars. A lot of people are claiming that it’s too late for Microsoft, RIM, and HP to compete. They say that software developers have already chosen sides. I’m not buying that. Apple was late to the game with the iPod and iPhone (there were already leading MP3 players and smartphones in the marketplace). Microsoft was late to the game with its Internet Explorer and Xbox – Netscape and Playstation were clear market leaders. Google was late to game with search – Yahoo, Lycos, and AltaVista had already concurred that market. If there’s one thing that we can learn from technology it’s that it changes constantly (that’s kind of inherit in the definition of technology). This especially true when big players have big money to spend as is the case with all the players in the smartphone market.

What HP/Palm Needs to Do to Compete

I’m going to pretend that I follow Microsoft’s or RIM’s strategy (other than RIM is stealing Palm’s user interface for it’s new tablet). I’m going to concentrate on what HP/Palm needs to do. From the very solid rumors out there, they are already doing at lot of it. We’ll find out for sure on February 9th when Palm holds an Apple-style unvieling of its products. In no particular order, here’s what I see:

Top of the Line Smartphone Hardware – I’ve never seen a bad review of webOS – in contrast every review is glowing. The hardware has receive the complaints. HP/Palm needs to commit to putting the latest processors, cameras, screens, etc. on their devices. People like what they can quantify and that means gigahertz, megapixels, and pixels. You can’t catch up unless you are at least on par with other leading phone’s specifications. In addition to this, they should continue to have a version with a keyboard and a slate-like version to compete directly with phones like the Evo and the iPhone. The more form factors they put out there the better. It’s working beautifully for Android.

A Top of the Line Tablet – Tablets are getting the buzz in the marketplace. Who knew? My old boss in 2004 was onto something when he started selling Windows tablets. Today, I see entire subways covered with iPad advertisements. Palm has hinted that there will be a tablet announced on Feb. 9th, but rumors are dictating there might be two – a 9-inch and a 7-incher.

What will those tablets need?

  • Screen Resolution – The tablets are expected to have the same resolution as iPad (1024×768 pixels). That would be a good start for Palm if they can get it out soon. Everyone knows that the iPad 2 is coming soon. Some say that will have better resolution, but most signs seem to show it will not. HP/Palm’s 7-inch tablet with a 1024×768 resolution is rumored to be coming in September. If the iPad 2 steps up the resolution, the 7-inch tablet would counter it well by upping the dots-per-inch over the 9-inch and being more portable.
  • Great Hardware – Like the smartphones, the tablets need dual cameras (video conferencing is a crucial selling point) as well as the latest and greatest chips. It has to look as sexy as the iPad too.
  • Easy Out-of-the-Box Tethering – If you have an iPhone you should be able to use it’s data connection via bluetooth for the iPad. It my understanding that this can’t be done (due to an agreement with AT&T) now, but will be coming to Verizon. If HP/Palm can make this happen, it would be a big leap as no one wants to pay for double for data (once for their tablet and once for their phone).
  • GPS – I would want to be able to use my 7-inch tablet for GPS navigation. These devices should be converging over the next couple of years. It would be easy to do that now. It should work for wi-fi only versions of the tablets (GPS in phones typically requires access to the network). Wi-Fi versions can come with enough memory set-aside for maps (just like any of the stand-alone GPS navigation systems you see today).
  • Other features – See below for more things that could be integrated into all their devices.

Data lives in the Cloud and Every HP/Palm Device is Connected to it – This is one area where HP/Palm can separate itself from the pack. HP bought cloud computing company 3Par for 2.3 billion dollars in a bidding war with Dell. If my phone, tablet, netbook stay in sync that would awesome. They can push the limits by using webOS’ biggest advantage, its focus on web technologies such as HTML and javascript, to create a browser-based version of WebOS. Just pop it out like a chat window and be able to drag web pages, music, video, etc. to the cloud… then access it instantly on your tablet/phone. This would be the kind of “Wow feature that people would love.” It is very likely this is where webOS is going… one of the strong rumors is that it comes with “tens of gigabytes” of cloud storage. Not everything can live in the cloud though, users may want read books in the park where wi-fi isn’t available (and with a tablet that doesn’t have a 3G contract).

“Bump” Information to Other Devices – It is rumored that you’ll be able to transfer files by just bumping two devices together. Bump your cell phone to your tablet and you are just where you left off. I wouldn’t have mentioned this feature, except that one of the credible rumors says this is a likely feature. Sounds pretty cool to me.

A Netbook – HP/Palm can go a couple of different ways with this one. They could sell a stand-alone netbook running on webOS. If they implement ideas here that could be quite successful. However, they could pull a Motorola Atrix. The Atrix is getting a lot of attention following it’s unveiling at the CES earlier this month. Essentially it is a phone that acts as the brains to a notebook. It can be docked into the notebook providing the user with a full-size keyboard and a full-size screen. This is the vision that Palm had years ago with its Foleo product. Looks like the technology with phone processors has caught up enough to make it a reality. If they go this way, the phone should dock into a television like the Atrix too.

Take Advantage of Exhibition Mode – When you have a webOS docked, it enters what is called “Exhibition mode.” In that mode it is very much just a display of information while it charges. Typically you get a clock and a calendar… and the phone knows to go into speaker-phone mode on incoming calls. For a tablet it would make sense to double as a digital photo frame. Because Exhibition modes can be customized, I can imagine an application that delivers a rich widget-based experience on a tablet. For example, it could fit a clock, calendar, weather, stock ticker, news feed, etc.

Inductive Charging – One of the unsung features of the Palm Pre was inductive charging. You just set it on the Palm Touchstone and its charging. There’s no cords to mess with. Magnets in the Touchstone keep the phone orientated and angled towards the user, so at the office you have a second screen in Exhibition mode.

Focus on Driving Experience – I would love to have a 7-inch GPS.

Premium Audio – The rumors say the tablet will come with premium audio. HP has a partnership with Beats by Dr. Dre. From what I’ve heard these headphones and speakers are Bose-quality. That’s a nice advantage over the iOS and Android tablets.

Partner with Amazon – The former CEO of Palm John Rubinstein joined Amazon’s Board of Directors late last year. Perhaps HP/Palm could leverage Amazon’s deals with music to create an iTunes competitor as well as have webOS power a color Kindle (like Android powers the Color Nook for Barnes and Noble).

Subsidize Applications, Especially Quality Ones – Apple iOS and Google Android have a hundreds of thousands of applications. While HP/Palm doesn’t need a bunch of flatulence applications, it does need to have a lot of them – people like what they can quantify. However, they also need to have the quality ones. They need to partner with banks to get the “take a picture” check deposit. They should get a Netflix Instant Play app on there. Hulu should be subsidized join the party. There should be apps for watching all the major sports in real-time (as long as users pay for the subscription service).

Compete on Price – I’m sure that HP/Palm doesn’t want to hear this, but they need to be a loss leader for a while. They need to get devices into the hands of people and win back all the fans they had from the Palm V days.

Pull in the Partnerships – HP has many business distribution channels. It’s time for HP to start pushing this out to the enterprise customers.

Ship it Soon – Every day that the goes by without a device being available to people is a day that webOS loses mind-share. HP/Palm needs to get things in people’s hands quickly.

Can HP Pull it Off?

They can if they want to. They have to be hungry and willing to go “all-in” with it as they said they’d do in the past. They have the money to hire developers and can take the hit to compete on price. The technology exists to do much of what I’ve outlined here… and they’ve certainly had the time to build a lot of them.

Will they pull it off? I can hope so. The market could use more competition. I’m trying not to get my hopes up. It would be nice to have a webOS printer/scanner/fax so that it will actually work as it is supposed to.