HP Unveils Palm-Based Tablet Computer, Smartphones

Hewlett-Packard Co. unveiled a tablet computer called the TouchPad in a bid to gain a foothold in the market for handheld computers, and said the product’s software, acquired in last year’s purchase of Palm Inc., will run on personal computers this year.

HP, the world’s largest maker of PCs, showed off the TouchPad and smartphones dubbed Veer and Pre 3 at an event in San Francisco today. The company will deliver PCs and printers running WebOS, originally designed for touch-screen devices, to attract more software developers to the platform and expand HP’s market, Palm chief Jon Rubinstein said in an interview.

“That’s going to have a huge influence on the installed base,” Rubinstein said. “Our long-term goal is to deliver a connected experience to all of our customers. You get a unified experience across all your devices.”

Rubinstein, who helped develop the iPod and iMac when he worked under Steve Jobs at Apple Inc., is now pushing to help HP products vie with Apple’s iPhone and iPad as well as devices that run software from Google Inc. and Microsoft Corp. With the first new mobile devices under Chief Executive Officer Leo Apotheker, HP is trying to ease its dependence on PCs by focusing on smartphones and tablets, two of the computer industry’s fastest-growing markets.

Photographer: Tony Avelar/Bloomberg

Jon Rubinstein, chairman and chief executive officer of Palm Inc. Close

Jon Rubinstein, chairman and chief executive officer of Palm Inc.

Close
Open
Photographer: Tony Avelar/Bloomberg

Jon Rubinstein, chairman and chief executive officer of Palm Inc.

HP, based in Palo Alto, California, rose 80 cents to $48.94 at 4 p.m. in New York Stock Exchange composite trading. The shares lost 18 percent last year.

New Applications

Rubinstein came to HP when it acquired Palm, where he was chief executive officer, for $1.2 billion in July. HP’s plan for Palm relies on courting software developers to create new consumer and business applications for its devices, and taking advantage of HP’s broad retail distribution, analysts said.

“Developers will tell you that after Apple, it’s HP that understands how to create hardware,” said Richard Doherty, director of consulting firm Envisioneering Group.

HP’s expertise in mobile computing, touch-screen technology and selling to large companies that want to equip workers with tablets could help it gain market share from Google, Microsoft and Research In Motion Ltd., Doherty said. “They have tremendous developer reach with HP.”

Palm’s Revival

HP needs to get Palm’s revival right if it wants a piece of the fast-growing mobile-computing market. Vendors shipped 100.9 million smartphones worldwide in the fourth quarter, up 87 percent from a year earlier, according to market researcher IDC. PC shipments grew just 2.7 percent to 92.1 million in the same period.

HP lags behind rivals in handheld computing. WebOS was used by less than 4 percent of U.S. smartphone subscribers age 13 and older in the three months ended in December, according to market researcher ComScore Inc.

By contrast, RIM’s BlackBerry software had a 31.6 percent share, Google’s Android operating system was used by 28.7 percent of subscribers, and Apple controlled 25 percent of the market, ComScore said. Microsoft held 8.4 percent.

The tablet-computer market may also be tough for HP to crack, analysts said. Apple said last week it has sold more than 15 million iPads since April. Researcher IHS ISuppli predicts Apple will sell 43.7 million tablets this year, about twice as many as all other manufacturers combined. And Google is rolling out a new version of Android tailored for tablets.

TouchPad Tablet

“The bar now is set very high,” Wells Fargo Securities analyst Jason Maynard said in a Feb. 7 note to clients. Maynard, based in Santa Monica, California, has a “market perform” rating on HP.

The TouchPad tablet, the first powered by HP’s WebOS operating system, will have a 9.7-inch-diagonal touch-screen, Wi-Fi and a front-facing webcam for video calling, HP said. It will be available with 16 or 32 gigabytes of storage, weigh 1.6 pounds, and ship this summer. Versions of the tablet that can connect to the Internet over 3G or 4G networks will be available later, HP said.

HP didn’t disclose pricing, though Rubinstein said the TouchPad would be competitive with the iPad. Apple charges $499 to $829 for iPads, depending on their storage and network connectivity.

Sharing Information

Rubinstein also declined to give details about how WebOS, which runs on processors from Qualcomm Inc., would work on HP PCs, which use processors from Intel Corp. and Advanced Micro Devices Inc. Features in the tablet and phones HP demonstrated today indicate how users of future WebOS-powered devices might share information, he said.

For example, TouchPad users will be able to tap their tablets to a WebOS phone to automatically open Web pages on the phone’s browser that are being viewed on the tablet.

“We showed touch-to-share today, and that’s the beginning,” Rubinstein said.

HP’s announcement that it will bring WebOS to PCs is meant to excite software developers about creating apps for the operating system, said Richard Shim, an analyst at market researcher DisplaySearch. The system could run as a software layer on top of Windows, or could boot up separately, he said.

“The reason they’re doing this to build a big installed base. That’s their No. 1 challenge as an operating system company,” Shim said. “The question is how well WebOS can run on a PC.”

Developer Community

Palm, maker of the namesake handheld computers that led the market in the late 1990s, had difficulty replicating its early success and has bounced among owners. The device maker was once owned by U.S. Robotics Corp. and 3Com Corp., went public in 2000, and split into two companies at one point. Palm announced WebOS and the Pre smartphone at the Consumer Electronics Show two years ago, yet made little headway against its nimbler rivals, leading to its acquisition last year by HP.

“Palm had one of the richest developer communities in mobile for about 10 years,” said Tim Bajarin, president of research firm Creative Strategies Inc.

It lost that distinction by releasing unpopular devices and dividing its efforts between its own software and Windows, he said. “The developers go where the units are.”

In support of the new products, HP also kicked off a global advertising campaign that will cost hundreds of millions of dollars, built around the tag line “everybody on.” The ads are meant to show that HP computers and software can keep people connected to information and each other no matter where they are, said Page Murray, a marketing vice president in HP’s personal systems group

HP’s announcement that some of its PCs will run WebOS could create business opportunities for developers of open-source software, Jim Zemlin, president of the Linux Foundation trade group, said in an interview. WebOS uses technology from the open-source Linux operating system.

“I’m psyched,” Zemlin said. “The world’s largest PC maker is announcing it will put a non-Windows operating system on its laptops -- it’s the end of an era.”

To contact the reporters on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.