HP's Plan to Make TouchPad a Hit

During an interview at Hewlett-Packard's (HP) Palo Alto headquarters, Todd Bradley, the head of the $41 billion PC group, is, as always, full of praise toward his microprocessor suppliers. Intel (INTC) and Advanced Micro Devices (AMD) are "important partners," he says. Then he holds up a TouchPad, his company's first tablet computer, which is powered by a Qualcomm (QCOM) chip and HP's in-house operating system, webOS. It goes on sale July 1, starting at $500. "The AMD-Intel thing," he says, "I think that's kind of over."

Stunning as it is to hear a PC executive essentially declare the end of the Wintel era, HP had no choice but to distance itself from the Microsoft-Intel ecosystem. For years, HP used its supply chain prowess to lead a commodity PC market, and eke out 8 percent operating margins. Now, in the age of mobile, HP's margins are down to 5 percent or 6 percent. The TouchPad is part of a big gamble that began last year with HP's $1.3 billion purchase of Palm and webOS: to build an ecosystem of its own, despite a landscape littered with the carcasses of others that tried.