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Stunted By Reality Just another know-it-all talking about life, business, technology, sports and music.


HP’s margin envy will be the death of them

Palm Pre shot from Mobile World Congress.

The first ever phone with a lip.

It didn't come as a surprise when HP decided to kill off all it's WebOS related projects. From the time they paid $1.2 billion dollars for Palm in order to get their hands on the by all accounts 'great' operating software they have consistently made theĀ  wrong moves.

With the company making most of their money from selling hardware to other companies it was always a dumb move in my opinion to get rid of the Palm brand once the acquisition had gone through. Palm had pedigree in the high-end consumer market that formerly crossed over into the business user market way before RIM ever got there. It didn't stop HP from renaming all the Palm devices with the HP prefix which I think never had the same brand cache to compete with Apple. HP definitely skipped a beat there as they could have had their own 'Lexus' of the mobile world. A brand with which they could package the best part of their low-end stuff in a shiny slightly different case and still have users falling over themselves to buy it in the mis-guided belief that it was somehow more exclusive because it was pricier. Works every time in these days were even us poor people can buy a Mercedes or an iPhone without paying a penny upfront.

In addition I think that Palm had only lost the battle with Apple simply because their pockets were not as deep. The only thing they probably needed from HP was their money. Can you imagine where Palm would be now if HP had poured in another billion, given the Palm access to their manufacturing base and stayed well clear? The initial Palm Pre wasn't good hardware, but I think there was enough to work on and if they'd simply been given the money to match Apple's annual release cycle and copy HTC's lineup of all-touch and qwerty keyboard handsets, they might have made an impact.

Only 18 months after the right move was stunted by the wrong strategy we now hear that HP are throwing the towel in following the dismal sales of the WebOS tablet. Not only that, but they are also looking to spin off the whole PC and hardware business and acquire the UK software house Autonomy. Leo Apotheker the CEO who has only been in the job less than a year has called the moves and it seems that just like Mr Elop at Nokia he already had pre-conceived ideas about what direction he wanted to go before he joined.

I can see where he's going with this. He wants HP to be making high margins. Well higher than they are right now and higher than you can get flogging hardware to corporates. It's admirable but sometime you just have to stick to making money the best way you know how. There's isn't much evidence that HP know the services and software business or that they can stake out a claim against, Microsoft, Apple and whilst fighting away the millions of small start-ups with new and innovative ways to do the same things cheaper and faster.

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