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---------- Forwarded message ----------
From: Ryan and Peter / gdgt <noreply@gdgtmailer.com>
Date: Thu, Oct 28, 2010 at 11:48 AM
Subject: Why HP bought Palm
To: Jason <jason@calacanis.com>

New at gdgt / October 2010

Welcome to the latest installment of the gdgt newsletter! For this week's edition we have a longer piece on why HP bought Palm, a report from the launch of Barnes & Noble's new NOOKcolor, and our usual roundup of new and notable gadgets. Oh, and if you're in the Bay Area make sure you come to our big gdgt live event on November 12th, you'll have a chance to hang out with the gdgt team, play with gadgets from over 45 companies, and win lots of cool stuff!

-Peter

Why HP bought Palm by Peter

The recent news about about HP finally launching their Slate 500 tablet got me thinking about the tablet we're all really waiting for them to introduce -- the PalmPad -- and why HP bought Palm in the first place. To me HP's decision to buy Palm says a lot about where they think the future of the PC business is going and that after years of screwing around they are finally ready to get serious about mobile.

HP knows that although they're the number one PC maker in the world, being number one in an industry that has stopped growing and will be flat at best for the foreseeable future is not the way to stay a $100 billion company. They've figured out that mobile is the future of computing, and that despite some early successes in that space (mainly after purchasing Compaq and its iPAQ line of handhelds) HP's efforts to date have been anemic. Let's put it another way: you see plenty of people using HP netbooks, but when's the last time you saw anyone one of their smartphones? Exactly. Right now HP isn't a significant player in mobile and that needs to change.

They've also figured out that in the post-PC world mobile isn't only going to be about smartphones, it's going to be about tablets as well. And HP, the company that sells more PCs than any other, has woken up and realized that it absolutely cannot cede that market to Apple or to anyone else -- long-term HP can't afford to be anything except number one or two in the tablet market.

The only problem is that when HP realized that its future depended -- at least in part -- on creating a tablet that could go toe-to-toe with the iPad it probably didn't take them long to survey the OS landscape and find themselves lacking any good options. This is important. It's not that HP didn't think it could come out with a decent tablet -- I'm sure they stand behind the Slate 500. It's that they didn't think they could come out with an AMAZING mass market tablet with a user experience that would rival the iPad's.

So what could they have done? They could have gone with a full-fledged OS like Windows, but HP -- which has sold tablet PCs for years (mostly convertible-style notebooks) -- has encountered the same issues with putting Windows on a tablet that OEMs have been dealing with for years, namely battery life, responsive, and a UI that isn't optimized for touch input. Though Windows 7 is an improvement in this last regard over earlier versions, HP recognizes that it can't successfully compete with the iPad with a tablet that has Windows shoehorned into it, which is why they've wisely positioned the Slate 500 as an enterprise device.

What Apple got right with the iPad is that it made more sense to scale up a smartphone OS than to scale down a PC OS, and undoubtedly HP spent a lot of time weighing their options here. They could have continued their long-standing relationship with Microsoft and waited for some future version of Windows Phone 7 designed for tablets or even tried to figure something out with Windows CE, but it's obvious that if Microsoft had a decent solution HP wouldn't have decided that they needed to take matters into their own hands here. My guess is that HP had enough of an idea about where Microsoft is headed to know that a viable option was either never coming out, is so far off that it would make it impossible for HP to get a tablet to market quickly enough, or is simply so awful that it won't be worth using. Regardless the reason, it looks like Microsoft simply does not have a suitable OS for a tablet device on the horizon. If they did HP would have been their best customer for it.

Other obvious options would be Android or Chrome OS. There's no shortage of no-name Android tablets being announced right now, and even a few big names like Dell and Samsung are coming out with models. What Android lacks is a version geared specifically for larger screens and the different kinds of interactions they engender. Yes, a tablet-friendly of Android is coming, but it's obvious that HP couldn't wait for its arrival.

Chrome OS is a bit trickier, since Google wants it to be used in larger-screened netbooks and tablets, but my sense is that it will be a few years before it will be user-friendly-enough to feel comparable in quality to iOS on the iPad and its cloud-centric nature probably isn't suited to a consumer-friendly tablet that demands apps and easy consumption of music, video, and e-books.

So that left HP, which very badly wants to be a player in this emerging market, in a difficult position. They could do what Samsung and lots of other players are doing and customize Android to get it to a place where they'd be satisfied with it, something which can bring its own host of issues (i.e. app compatibility, the difficulty of upgrading to the latest version of the OS, etc), offer a sub-standard experience via Windows 7, or wait possibly a very long time for a version of Windows Phone 7 for tablets.

But perhaps even more important than all that, if you believe that platforms are the future of mobile, then putting your fate in the hands of a platform maker may not be a great idea. HP was already burned once by Microsoft, which hamstrung its OEM partners by letting Windows Mobile languish for so long, and so it's understandable that they'd chose to turn their back to Android and Windows Phone 7. When you think about it's not hard to imagine why a company as big as HP would want to have more control over its destiny, they want to develop the same kind of controlled mobile ecosystem that Apple has where operating system and devices are tightly integrated.

So this is where webOS and why Palm putting itself up for sale presented for such an interesting opportunity for HP. Palm, which rebooted itself with the Pre and webOS only to fall flat on its face in a quickly-moving market dominated by larger players, had a mobile OS that had much of the elegance and sophistication of iOS, but that just never had enough support behind it to catch on with consumers or developers. By owning webOS they'd have much more control over their own destiny -- they wouldn't be at the mercy of Microsoft or anyone else -- and they'd be able to differentiate their tablet from what will be a sea of Android tablets (a problem we're already starting to see happen with Android phones).

Up until now Palm has simply not had the money to spend on design, production, and software development to compete. With HP's backing Palm would not only be given the opportunity to stay in the smartphone game long enough to give their platform a fighting chance against an array of well-funded competitors, but also the resources to accelerate work on a tablet version of webOS. HP also has the muscle to market a tablet aggressively and cut the kinds of content partnerships that would be needed to take a PalmPad seriously.

And while being a major player in the mobile business -- in both smartphones and tablets -- is critical to HP's future, success is far from assured. So far the bulk of HP's success in the PC market has been selling PCs running on Windows, developing an OS isn't something they have a ton of experience with (stuff they've built on top of Linux notwithstanding). HP will have to do several things that Palm failed to do, like attract support from developers, move more quickly to design and produce new devices, and price its products very aggressively to grab marketshare.

None of these will be easy, but fortunately HP has deep pockets -- remember that Palm was worth less than 1% of HP at the time of acquisition -- and can do things they couldn't do. If I were running HP I'd make sure that every top iOS and Android developer out there got a free PalmPad. I'd price the PalmPad at least a $100 cheaper than the iPad. I'd even consider giving them away free to anyone buying a PC over a certain price. Flooding the zone would be the quickest way to establish a webOS tablet as the main competitor to the iPad and would help get webOS to the kinds of numbers it needs to hit to attract significant numbers of developers -- and you need developers if you want to have a successful mobile platform.

Yeah, they'd lose money like crazy for a couple of years, but this is about making a long-term investment in the future of HP, a future which HP is smart enough to have realized lays with mobile. This is a land rush, and HP cannot afford to let Apple run away with this market. They need to sell millions and millions of PalmPads in that first year if they want to gain a foothold in this nascent market, and that means throwing everything you've got into the fight. Every indication says that HP is serious about this, which means we as consumers are in for a very interesting next couple of years as HP steps up to the plate to take on Apple.

Discuss this on gdgt

The NOOKcolor launches by Peter

I hit up the launch event for the NOOKcolor, Barnes & Noble's second e-book reader on Tuesday. This latest model ditches the e-ink display of the original for a full-color seven-inch IPS LCD touchscreen that's better suited for reading magazines, newspapers, and kids' books, and they went to great lengths at Tuesday's presentation to emphasize its high quality and special glare-reducing properties (I'd like to spend some time with one before passing judgment myself).

The Android-powered NOOKcolor definitely blurs the boundary between reader and tablet, but I wouldn't pick one up if you're expecting to pick up a tablet for cheap (retail price is $249) . Even though it's similar in size and shape to another Android device coming out around the same time -- Samsung's Galaxy Tab tablet -- and includes a web browser, music player, and photo viewer, the NOOKcolor is designed first and foremost to be a reader, and the UI and feature set are optimized for that. That also means no access to Android Market or any of the default Google apps, like Gmail or Google Maps. In fact, Barnes & Noble is creating its own developer platform around the NOOKcolor.

The design of the device itself, which is by Yves Behar, is nice, but at just under one pound it felt a bit heavy for its size (the Galaxy Tab actually clocks in about 2.5 ounces lighter). Expected ship date is November 19th, but you can add the NOOKcolor to your gdgt want list right now.