Only those who were at the highest levels of HP at the time will likely ever know the full story of the spectacularly botched $1.2 billion acquisition of Palm and webOS. In the span of only eight months in 2010, the IT giant's plans for the operating system underwent a titanic turnabout -- from a foundation technology that would infiltrate every crevice of its device business to an orphaned open-source project ultimately sold to LG Electronics. Was the shift driven by core business softness that precluded further investment, the personal fiat of a short-tenured CEO or a justifiable reaction to disappointing sales? All three likely played some role.
HP purchased Palm because it was dissatisfied with the options it saw in the mobile operating system landscape. Beyond the deep relationship the company had with Microsoft for PCs, it had dabbled with Windows Mobile on a couple of smartphones such as the HP Glisten that never saw broad distribution. It had also produced an Android device, an obscure netbook called the Compaq AirLife 100 that lacked Android Market and was distributed exclusively via Spanish telecom giant Telefonica.
HP faced the same dilemmas that RIM and Nokia did. Despite exceptional freedom to customize, Android was the path to commoditization that offered the chance to be a small fish in a big pond. Windows Phone, with little freedom to customize in the software layer, was a gamble on a comeback that offered the chance to be a big fish in a small pond.
Like other PC manufacturers, HP has used Windows 8 on tablets, notably on its slim, yet highly serviceable enterprise-focused ElitePad 900 that uses a clever system of add-on sleeves that provide new functionality. But when it comes to ARM-based consumer products, it has steered clear of both Windows RT and Windows Phone. Neither has grabbed significant market share from iOS or Android in the tablet or smartphone markets yet.
But now, about three years to the month that HP announced its acquisition of Palm, the company is returning to the consumer tablet market with the Android-based Slate 7. Unlike the TouchPad at its release, it's dirt cheap, coming in at $30 below the Kindle Fire HD or Nexus 7 and just $10 above the second-generation Kindle Fire. However, it provides full access to Google Play in a stainless-steel frame and boasts support for Beats Audio and printing. (The latter is something that HP hopes to extend beyond its own Android devices.) These may not represent the kinds of differentiation HP once aspired to with webOS, but they satisfy more consumer requirements than the TouchPad had a shot at addressing.
If anything, judging by the consolidation of power we've seen in the smartphone market, it is easier to make a case for Android as a force for commoditization than it was three years ago. But Android has improved significantly in that time. It's smoother, more polished and its developer support is stronger than ever as it stands on the verge of a major upgrade that will almost certainly be revealed at Google I/O next month. And HP will be one of the only major companies in the game with a sub-$170 tablet that offers access to the largest library of Android apps.
HP's first Android tablet should play well to its strength in the retail channel.
The Slate 7 may not set the world on fire in a blaze as red as one of its color options. And while HP may be better than Amazon at eking out some margin from low-cost devices, the Slate 7 likely won't contribute much to the bottom line that HP has its eye on in its devices business.
But after seeing TouchPad volumes crawl at the tablet's introduction and fly after it was discontinued in a fire sale, HP's first Android tablet should play well to its strength in the retail channel, particularly at Walmart, and should make for an easy bundle with a PC at back-to-school time. As it starts over in mobile, HP seeks to switch from a strongly differentiated product with marginal sales to a marginally differentiated product with strong sales. For that, there is nothing without volume.