If Apple can stop HP on the beaches and push HP back into the sea, it might not matter if an improved product shows up two years later. A comparison is irrelevant since the real competition is the rest of the tablet field. (See Table 1)
If HP fails, and Apple is successful in stemming the Android invasion through patent litigation, a recent report from Needham & Co. states it may be game-set-match.
For the moment, odds seem to favor HP, and Needham believes investors should reflect on what even a small amount of market share in the tablet space might mean for the TouchPad.
Nearly one year after the acquisition of Palm, HP shipped its first true tablet offering, the TouchPad, on July 1st. The report released by Needham & Co. summarizes the firm’s hands-on evaluation and competitive analysis of the product. Highlights from that report follow. (See, also: Will iPad 3 get killed by Android and Windows 8)
Rich Content: Life with the HP TouchPad
Since HP’s purchase of Palm in July 2010, the bank states it has eagerly awaited the launch of HP’s first true tablet offering. (Needham says it did not count HP’s Slate which launched later in 2010 running dragging Windows 7).
For the bank’s analysis, Needham purchased the 16GB WiFi version of the TouchPad pre-sale in mid-June via Newegg (www.newegg.com) for $499 and received it on the launch date of July 1, 2011. The product was tested for three weeks resulting in a summary of its findings below.
Based on Needham’s analysis, plusses for the TouchPad include:
1. Impressive build quality
2. Fast OS, with true multi-tasking
3. Useful notification feature
4. Much better virtual keyboard
5. Possibility of an integrated ecosystem with other HP products over time
6. Touch-to-Share synching capabilities, and what it might ultimately become
7. The software developer kit (SDK) is easier for developers to use, and port iOS applications from
Drawbacks to the device included:
1. A shocking lack of apps, including productivity and even camera applications
2. Lethargic accelerometer that gives false impression of a slow processor
3. Heft. TouchPad heaviest (Close to iPad1. Obese v. Galaxy 10.1, iPad2 says Needham)
4. A rear-facing camera
5. Price. Despite some specs that outperform the iPad, Needham believes the TouchPad should be materially cheaper to help HP garner tablet market share, (even if it requires little to no margin)
What was not an issue?
Battery Life: Much has been made in reviews about the battery life of the TouchPad being vastly shorter than the iPad. In Needham’s experience, the TouchPad lasted one full day (and in some cases two) of fairly active use.
The bank states in its report it believes most users would find the battery is unlikely to run out before users run out of apps to use. (See Negatives)
Crashing: Needhams writes in its report perhaps some journalists received pre-release versions or just are harder on their devices but, contrary to previously reported experiences with the TouchPad, Needham’s TouchPad did not crash to the point of requiring a complete reboot.
However, the bank does indicate some programs occasionally crashed, but in most instances it was when attempting to launch one of the many apps that HP has not completely released yet, writes Needham in its report.
Comparison to iPad and why it’s (almost) irrelevant
On balance, Needham writes the HP TouchPad boasts an impressive OS that justifies the acquisition of Palm in 2010. Unfortunately, versus the iPad1 and iPad2, the TouchPad falls short in the bank’s view due to the lack of apps.
However, after dwelling on the issue, the reports states the bank believes this may not even be the right question to ask as Apple, with its first mover advantage, will likely maintain a commanding share in the tablet market.
But the entire market will not belong to Apple.
Can HP be the best of the rest? Needham writes it believes HP can on the back of webOS, and that HP could likely represent the PC industry’s best hope for a legitimate alternative to iOS.
With one of the world’s largest distribution channels and more than 100 million theoretical units shipping annually, Needham believes HP has every opportunity to represent one-third, or more, of non-Apple tablet market share over the next few years.
The launch of TouchPad (and its successors) should be viewed like a Normandy-type invasion, writes Needham. If Apple is able to stop HP on the beaches and push them back into the sea, it might not matter if an improved product shows up two years later.
What can HP do to be the “Best of the rest”?
Needham believes HP can be the prime alternative to Apple in tablets by:
1) Closing the ‘App-Gap’ through acquisitions, innovation developer incentives
2) Materially lowering the price
3) Improving its productivity suite and garnering Microsoft support
4) faster processors / specs with quick product refreshes
5) Quick deployment of webOS on the rest of the HP portfolio
6) Thinner / lighter form factor, among other actions
Tablets, tablets everywhere
After attending CES 2011 and viewing many of the more than 90 tablet pretenders to the throne, it became clear that many would be offered but few chosen, writes Needham.
The report continues, “At the time, the front runners in the pending ‘Clone War’ with Apple appeared to be the Motorola Xoom, the Blackberry Playbook and the Samsung Galaxy Tab 7. After the abysmal Xoom showing, and the slow uptake of the Playbook, it is now clear that the true field may be narrowing to Samsung (with the larger-sized Galaxy Tab 10.1) and HP.”
Not to leave out soon-to-launch tablet products, the bank sees possible dark horses that could spoil the party later this year such as Vizio (aiming for a sub $400 “good enough” tablet) and Amazon.
Table 1 courtesy of Needham & Co. and lists the major players today and their key specifications for a quick comparison.
Major tablet offerings