In iPad's shadow, HP ditches tablet hopes

Computerworld - Considering how hot the tablet market is right now, Thursday's decision by Hewlett-Packard (HP) to stop making tablets raised a lot of eyebrows.

Why would a company -- the No. 1 PC maker in the world -- stop making a product that's winning over users right and left? Because, as some industry analysts explain it, that while tablets in general are a big hit today, HP's TouchPad simply couldn't gain traction.

"Tablets are hot right now, but webOS isn't," said Dan Olds, an analyst for The Gabriel Consulting Group. "Tablets are rapidly coming down to a choice between Apple and Android-based machines - with Microsoft looking for an opportunity to get in as well."

It's not that webOS is a bad operating system or that HP's devices are bad, he said. The issue is the ecosystem of apps that's driving consumers toward either Apple iOS or Android. WebOS doesn't have many apps and almost none that are aimed at mass-market consumers.

"In the tablet arena, HP is riding the wrong horse," said Olds. "WebOS isn't going to knock off Apple or Android, so why keep pushing it? Besides, there's not much margin in these devices anyway. The money is in selling them bandwidth or content."

HP surprised the tech industry on Thursday with a flurry of announcements about its future. Among other things, it is considering spinning off its PC-manufacturing business, plans to buy analytics software vendor Autonomy for $10 billion in cash and it's going to kill off its webOS devices, which include webOS phones and the TouchPad.

One of the problems HP has been facing is that the tablet business is, at least for now, an iPad business, said Charles King, an analyst with Pund-IT, Inc.

"That, along with the initial failure of the TouchPad in the market are at least a couple of contributing factors," added King. "I expect the BestBuy embarrassment, which had 300,000 units shipped, 25,000 sold and more than 270,000 returned, was just a large example of a general downward trend. Pulling the plug must seem like a logical decision to someone in [HP's] C-level suite."

With Apple's success with the iPad, HP couldn't even dream of trying to compete.

"One of the most curious things to me about the consumer IT market is the willingness among vendors to abandon products, and the collective investment they represent, not long after launch," said King. "It's like an army asking for peace after losing the first battle."

He added that companies seem to calculate that carrying a failing or faltering product is more dangerous to the overall corporate brand than leaving it behind. "That makes a certain sense from a business point of view, but the only obvious beneficiary I can see in this case is Apple," said King.

However, Jim McGregor, an analyst with In-Stat, noted that a company would have to have something of real value to consider shuttering it a loss.

"This means that [HP] backed the wrong horse," said McGregor. "They should have been building on and differentiating around Android. As we have seen in smartphones, if enough vendors rally around a platform, they can compete against a monopoly, even Apple."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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