Last Thursday afternoon, the mobile and PC world was (moderately) shocked by Hewlett-Packard’s announcement that they were considering “all strategic options” for contending with the negative impact the HP Personal Systems Group (PSG) was having on the corporation’s total valuation. Key in this consideration will be the eventual fate of WebOS, the mobile OS that was brought in-house with the purchase of Palm in 2010.

We can understand a certain amount of confusion with the tech-following public as to what HP is really doing and what they committed to on the earnings call. The amount of speculation that I saw running rampant around the web on Thursday was pretty daunting for anyone trying to get the picture on what was really going on. I sat in on the earnings call and wanted to post a few notes on my own take-aways. I should mention that my comments focus on the impact to mobile. HP talked about a lot of other things on the call, including enterprise, and their move towards a software and service-centric focus, but that is not the center of this commentarty.

Leo Apotheker, who has been at the helm of HP for the past nine months, talked about 4 factors driving the strategic direction of HP for the foreseeable future. Of those, the most important to Carrypad’s readers will be the way forward with PSG, within which exists both the hardware design teams and the software development teams for WebOS and its devices to-date. Apotheker indicated that he felt that PSG can compete and win in the PC and mobile marketplace. However, and this was iterated many times throughout the call, the HP TouchPad had failed to meet the sales projections of the executive staff. Financial metrics were set before the launch of the woeful device; yardsticks by which HP determined the success of the OS and the device, and then used to determine certain strategic decisions within the corporation.

With the under-performance of the TouchPad’s launch, HP now intends to turn its emphasis towards cloud solutions for enterprise, encompassing software solutions and services. The company named a new VP for the Enterprise Services, which is the group that has evolved from the EDS purchase back in 2008. There is no question that HP is looking very intently at making themselves an enterprise-only solution provider. When you look at the financials, the reasons behind this may not immediately jump out at you. The chart below from the Quarterly Earnings Statement shows that the PSG accounted for nearly one-thrid of the company’s revenue.

And while HP still holds the lead stake in market share percentage in the personal computer market sector, financials at the next level of detail reveal what has created a concern for Apotheker and his staff. The PSG was 3% off its mark from a year ago in revenue and showed no growth in total units year-over year. Additionally the division took in 4% less revenue in notebook sales, desktop revenue is down 4%, and consumer client revenue is down 17%. Now, some of these numbers may not seem like they should cause that much concern. However, and this is only my speculation, if HP believes that tablets and smartphones will be a growth product sector, and that notebook and desktop PC sales will continue to decline, and HP is looking at its most recent product launches in the mobile category… you might start to see reasons to be concerned.

You could even interpret some of Apotheker’s statements as equating to just that. He and HP’s CFO, Catherine Lesjak, spoke several times about concern over the “velocity of change in the personal computing marketplace”. Apotheker stated that the company had assessed that the impact of the Tablet on personal computer sales was a very real threat. When considered in conjunction with the poor initial sales of the TouchPad, the various factors combined to lead them to consider restructuring into a new HP that may or may not include the PSG, and therefore WebOS.

I have seen all sorts of hyperbolic headlines around the web saying that HP is selling off its personal computing business and that, at least as of today, is simply not true. The executive staff of HP have a 12 to 18 month outlook as to what may become of the PSG. Another important tidbit, which Apotheker said himself during the Q&A following the formal presentation, is that a possible outcome of the PSG assessment is that the division may remain a part of HP proper with no change in the corporate structure. I believe that other things would still change, like strategic focus, design approaches, and so forth.

Thomas and I watched the HP event as close as we could this evening (Credit to Engadget and Twitter!) and I think it’s fair to say that we were both impressed with the might of the announcements. The main event for us was the launch of the Touchpad and after just a few hours of mulling over the specs, hands-on and information, we’ve put some thoughts together for you.

Chippy Says:

It’s slick, it’s powerful and it’s the underdog. The HP Touchpad, announced today, is getting a lot of support from the online community this evening. Or is it just the bloggers and twitterers going mad to get their early SEO and follower-optimised articles and keywords in?

It’s targeted directly at the iPad with a similar look and, we suspect, a similar price but there are a few differences to point out. Number one, of course, is the operating system. ‘True’ Multitasking (some of the UI features are targeted towards true window-multitasking) and a good track record of usability and speed. It’s an operating system, however, that doesn’t have the application database that the iPad has so it will have to draw users (and devs) in by other means.

• Webcam
• Dual-core 1.2Ghz CPU
• 1GB RAM

Storage, screen, weight, battery and sizing seem very similar to the iPad.

You’ve got the micro-USB port and BT 2.1 of course so at least the OS is more open to physical connectivity and there’s that touchstone technology (if you’ve got both a pre, a touchpad and the touchstone accessory – or is it BT3.0 near-field you can do some neat tricks too) but that’s about it. The key feature is really the OS brand and the CPU and with the iPad 2 coming up, that CPU advantage is likely to drop away. You’re left with an OS, applications and content choice. Both iOS and WebOS appear to have a productivity angle. Both, to be honest, are going to be slick devices. At the end of the day, the HP Touchpad is going to be for the people that want an iPad, but don’t want an iPad! I doubt many Google users (mail, maps, talk, reader users) are going to be tempted away from Android if it does look less impressive although yes, there’s a growing number of new customers out there still trying to make a decision.

Could pricing be the answer? It has to be in my opinion because unless HP can ramp up a serious amount of devs and apps before launch, it hasn’t got enough to give it long-term momentum.

Thomas Says:

The Touchpad is a very nice looking device, powered by the compelling webOS and backed by one of the worlds biggest PC manufacturers. So, why do I remain sceptical?

Firstly, it’s not about the device, it’s about who uses them. iPhone users are familiar with iOS and are much more likely to choose the iPad. Android users are generally familiar with Android (duh?) and even with the various custom user interfaces I can see Android customers to be more familiar with a Galaxy Tab, Motorola Xoom or any other Android tablet. The same can be said for any platform,  however this could never useful to HP with the webOS platform in it’s current state, thanks to it’s limited user base.

Secondly, not only did Apple and Google have a large number of users on-board when they announced their tablet platforms, they had developers too. Both Apple and Google can both boast a well stocked application store, something that HP / Palm can not.

Don’t get me wrong, I wish HP every success with their new webOS products, but in terms of tablets your average consumer will only be willing to spend big money if they’re buying the best available product. Much like the early days of Android, users won’t flock to webOS till the platform is right, never mind the product.

I’d say selling the Touchpad in vast quantities will be an upward struggle for HP, unless of course they can keep the pricing down. Buy one Pre 3, get a Touchpad half price – any takers?

Falling leaves, an Indian Summer and a brand new HP WebOS tablet. That’s the scene we could be seeing if the information coming via Engadget is correct. HP will have two WebOS tablets available in 7 and 9-inch variants called Opal and Topaz.

While we expected the HP WebOS Tablet project to hit in 2011, September seems a long way away and falls behind the early Honeycomb Android, further iOS and possible MeeGo tablets. The timing will give HP a chance to ramp up the developer community so we’re expecting SDKs to be out before summer. In order to attract those developers though, something special needs to be announced. WebOS and product renders just won’t be enough.

On that topic, I have a theory that I first mentioned in Dec 2010. [For the record – You know if it happens I’m going to be Mr Told-You-So! ] It’s based purely on the need to battle against Android and iOS that HP, Intel and Nokia could get together on this.

Qt has already been ported to WebOS, it made it to the WebOS 2.0 build and it makes the perfect layer for Symbian, MeeGo and WebOS to join forces in attracting critical development interested. Without that developer interest, what chance do these products have? Partnerships could be taken one step further too with Intel providing early Medfield samples and with Nokia providing Qt skills for the WebOS SDKs. Take it one step further and WebOS could actually be built on top of MeeGo. There’s nothing stopping HP doing this, even outside a partnership.

How about Intel and Nokia helping to combine Ares, the WebOS SDK, and QT as a multi-product SDK? I think developers would be very happy indeed. It will be just another SDK like the .net, AIR and JAVA environments that already exist. Intels AppUp back-end could be unified with the other applications stores too and combined (especially with tricks like Intel Insider that I hope make the jump to Atom) there’s a better chance of negotiating major video, tv, book, game and music deals. Wi-Di technology could also be a USP.

I’m not a professional software developer and I know that a lot of these thoughts are idealistic and totally ignore the difficult tasks of cutting deals but I can see that Qt could be one very important pivot-point and with three major brands behind a single core OS, MebOS?, there’s a better chance that the dev community could be ramped up quickly. I also love the idea of a Cute-Devices brand. Without a partnership of some sort, will Symbian, MeeGo and WebOS survive?

Yesterday’s Intel Moorestown announcement caused me some surprise. It also caused some confusion so here’s a round-up of the state-of-play as I see it relating to Atom and operating systems.

A huge number of journalists clearly didn’t read the fact-sheet highlighting that Android is now formally part of the Moorestown equation. That was the surprise for me. Many didn’t even pick up on the lack of ‘Microsoft’ in the press releases and many just see ‘Atom’ as a single product when it’s not. It’s a CPU architecture component in a range of low-power computing platforms.

Intel haven’t really been clear about the strategy here (and don’t help much with their statement to Engadget) but it you had attended some of the Intel Ultra-Mobility Group events over the last few years you will have picked up on what’s going on.

Atom is a simple X86 CPU core that can run X86 code. That part is simple.

Moorestown is a platform; the first version of which will include the Atom core (yup, the same core architecture as on a netbook) but will include some very new elements such as new idle states and very very fine-grained power control. [start here for more tech detail.] It also uses a different bootstrapping and system interface (called the Simple Firmware Interface. Tech details PDF here) so no matter how you try, it’s not going to work with the DOS/BIOS/ACPI-based architecture required by mainstream Windows and Linux builds. That’s why the ‘handheld’ version of Moblin/MeeGo was built. It contains 1) the support for the new bootstrap mechanism 2) the links to enable power control. It also contains the sensor and messaging (between apps) support that Windows can’t provide. Finally, it’s compact in terms of memory and disk footprint. Oh, and it’s license-free!

Intel have also been working to bring Android up to speed for this platform. This doesn’t mean that Android will work on netbooks now but it does mean that a customer has a choice of highly branded and trusted mobile platforms and OS stacks to choose from now across the ARM and Intel portfolios. Intel is approaching business-case-parity with ARM here.

Did Intel just push Microsoft out of the door? No.

Intel is working in Moorestown-W. Moorestown-W (not officially announced but picked up in conversations and interviews) uses a more-traditional PC-like architecture that allows XP and Win7 to run. Some of the power-saving elements will be redundant (or removed) but there will be thermal, memory and size gains to be had that make Moorestown quite attractive for slim and netbook solutions.

Finally, Intel is also working on the next-generation of their netbook platform and naturally, this will support Windows.

In fact, if you look across Intel’s low-power platform product range, you can see the architecture aligning. If the next-generation netbook platform drops the GMA3100 GPU and slots-in the licensed core from Imagination Technologies (as on other Intel Atom platforms Why? It removes IP and patent issues for the customer) then will have something that be a simple variant of Moorestown-W or the Queensbay platform.

It’s confusing, yes, but you have to think of Atom as a small component in a range of low-power platforms that will support everything from tight mobile operating systems to a full flexible WIndows-7 desktop. Intel are just giving their customers the widest choice possible.

Sidenote: I’m investigating the possibility that the WebOS UI could, technically, run on top of an Intel architecture. If HP want to stick with Intel for WebOS solutions, it should be possible.

Sidenote 2: This is a 5-10 year play by Intel. What you see with Moorestown is just start of it. The next-gen 32nm Medfield platform is already announced and you can be sure that the work on the ‘tock’ after that has already started.

The Palm Pre will probably be the most powerful smartphone ever when it launches and browsing is likely to be significantly faster than any other smartphone before it. The browser is built on Webkit so there’s likely to be a good degree of accuracy and the connectivity options look good too so in many respects, this is going to be a great mobile Internet device.

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