Meg Whitman, hired to turn around the fortunes of struggling Hewlett-Packard Company (NYSE:HPQ) a year ago, has announced her latest idea for the company: a return to smartphones.
In an interview with Fox Business News last week, Whitman said that HP should add smartphones to its product line since it is a computing company.
"My view is we have to ultimately offer a smartphone because in many countries of the world, that is your first computing device. There will be countries around the world where people may never own a tablet or a PC or a desktop, they will do everything on a smartphone, we are a computing company; we have to take advantage of that form-factor," she said.
HP has, of course, previously ventured into the smartphone market with its acquisition of Palm, but failed spectacularly. This time, Whitman promises greater caution.
"We did take a detour into smartphones, and we've got to get it right this time. ... So we are working to make sure that, when we do this, it will be the right thing for HP and we will be successful," she said in the interview.
Whitman did not provide further details on the device, but it is likely that HP would select either Google Inc's (NASDAQ:GOOG) Android or Microsoft Corporation's (NASDAQ:MSFT) Windows 8 as the phone's operating system, especially since its native webOS has been aborted.
Analysts have mixed opinions on the idea of a HP smartphone, with GigaOm Pro analyst Colin Gibbs telling TechNewsWorld, "HP had a chance to really move the needle with webOS, which could have emerged as a threat to Android and iOS, but it completely dropped the ball because it failed to commit to smartphones. I think HP definitely needs a move towards mobile -- maybe by moving more aggressively into the tablet market, but building a successful smartphone is a long shot at this point."
HP certainly knows all-too well that the smartphone market is dominated by the big guys, Apple Inc. (NASDAQ:AAPL) and Google. According to a new study from Global Equities Research, by the end of 2012, the two tech titans could combine for up to a staggering 98% of mobile device sales,
"There will not be any third spot left," Global analyst said in the repot "Nokia Corporation (ADR) (NYSE:NOK), Microsoft and RIM [Research In Motion Limited (USA) (NASDAQ:RIMM)] will struggle in the remaining 2% of the market."
Similarly, Ben Bajarin, director and founder of Creative Strategies, opines to TechNewsWorld, "Everyone outside of Apple and Samsung is already killing themselves battling over the little profits that are left in the smartphone space. If HP believes that the core of this strategy is outside the US, then they are looking at a high volume, low margin strategy. This by itself is a very difficult and cutthroat strategy. I'm not exactly sure why a company would want to jump into a market like that with zero momentum."
One analyst who's more optimistic is Tim Brugger over at Motley Fool, who argues that Whitman, having dismissed the notion of buying RIM, could target the Canadian company's enterprise market stronghold, since HP's strength always lies there.
As Whitman plans for the eventual introduction of a HP smartphone, she has also been actively implementing cost-cutting measures. Last week, the world's largest PC maker increased its expected number of job cuts through FY 2014 to 29,000. Shares of the company have increased 4.51% since that announcement, although HP is still down 29% year-to-date.
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