HP, out of the tablet business. But why?

So HP is in and then out of the tablet business, just like that.  They have dropped the price on their tablet to $99 to unload it. 


Goodbye, see you later.


Props to Apple, right?


Well… yeah, maybe.


I know, all eyes are on me.  Why I don’t like Apple.  I try to keep my blog posts here fair.  And yes, while I’m not a fan of Apple, they are in some ways just genius and dominate.  I own an iPod and when it dies, I’ll buy another.  I don’t own a Mac, but want one.  And for my cell phone?  Yeah, it’s an iPhone.  But for a tablet… I’m still torn.  I have a thing for Amazon (what can I say… they help me put food on the table for my family).  I’ve heard they are coming out with a tablet soon, so we will see.


But back to HP.


I thought to myself – ‘how bad could it be out there for tablets that HP just leaves?’


While Apple has the hold right now, there has to be room for others.  And when in doubt, when in need of an answer, go to the financials of a company.  And that’s what I did.  HP didn’t have much previous data on their site which made me worry.  Normally companies have at least 5-10 years of data readily available.  From HP’s site, I would have had to request the data.  Uh, not cool, my friends.  Not cool.


Now in recent days, the company is trying to break itself up and I even ready in today’s paper that the CEO doesn’t care for the PC business.  Huh?  You run a company that makes computers but you don’t like PC’s?  That’s like Bill Ford saying, ‘Yeah, I’ll ride a horse instead…’  Maybe that’s me being dramatic, but it just didn’t seem right.


I tore through the 2010 financials and found my answer.  Or at least what I believe is the answer.


HP has their revenues broken up into several groups.  One is called something along the lines of personal computers, etc.  Within this group is a sub group called handhelds.  The handhelds are the phones, personal items, using the HP operating system. 
Guess what?


In 2009, HP reported that they saw a decline of 33% of handhelds.  Ouch.  Bad economy, right?  Wait a minute here… because in 2010, the handhelds dropped 49%.  That tells me that HP has been out of the handheld market for a while now.  People jumping to the iPhone, Droid phones, etc.


So now HP wanted to get into the tablet market… with such a decline in growth in the handhelds, that seems high risk.  But to come into the tablet market with a price matched device… that’s suicide. 


Apple has the spot right now.  And I couldn’t imagine why HP thought they could enter a market like that with a matching price.  Maybe they felt it was new enough and growing that their customers would buy the tablets up.  This is a fair thought, but what how many HP customers went and bought iPads already?  (Or a different brand, etc)


I’m not in HP’s office, so I don’t know how things went.  Personally, they should have entered the market with something better but more cost effective.  They should have found a way to undercut Apple via price.  Competing with Apple toe to toe is a risky thing. 


So now HP is unloading all their tablets at $99.  I wonder how much their cost is per unit and how their margins are per unit… maybe they could have stood a better chance in a lower price, lower margin market.  But then again, it’s about profits and keeping the stockholders happy.


HP is a scary company right now.  They’re shaking.  They’re breaking up.  They’re pulling tablets.  Yikes.  I hope they can figure something out sooner then later.


About Jim Bronyaur

Jim Bronyaur writes mystery, thriller, and horror books. Grab a book at www.JimBronyaur.com Tweet him @JimBronyaur And for those who have Kindles and Prime, you may be able to get some of Jim's books for FREE!
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