HP's Smartphone Conundrum

So, a year after throwing the baby out with the bathwater by dumping its Palm WebOS software, HP has decided it wants to get back into the smartphone game.

HP's position isn't quite as perilous as Nokia's "Burning Platform" was, but there are definite similarities. Apple sells more iPads than HP sells PCs, their traditional market for printers is drying up, its share price is on the wane, and a series of boardroom scandals have left it weak.

Meg Whitman has correctly identified where the company needs to head next

"My view is we have to ultimately offer a smartphone, because in many countries of the world, that is your first computing device. There will be countries in the world where people will never own a tablet or a PC or a desktop. They will do everything on a smartphone."

This is an extremely crowded market upon which HP has set its sites. What are its choices?

WebOS

Most obviously, it could resurrect Palm WebOS - bought for $1.2 billion in 2010 and cruelly dumped a year later. The Operating System was open-sourced earlier this year - but there is no modern hardware which supports it, and no other partners using it. There's no ecosystem of apps to speak of - although its HTML5 roots would make it very quick for developers to create new and innovative products.

WebOS has the advantage of being well-liked among users and developers. Poor pricing and execution crippled sales from the start, and a nervous CEO cancelled the project with undue haste.

Ultimately, does HP have the right mindeset to carry on with a product it once abandoned? I doubt it, and having burned its bridges with the developers once before, I suspect HP would find developers reluctant to work for them again.

Windows 8

The dirty little secret of Microsoft Windows is nobody likes it. We use it because it's foisted on us. Most people would rather stick with XP than whatever overpriced Operating System Microsoft decides to spit out next.

When you tell people that Windows is on phones, the first questions they ask are "how often does it crash?" and "do I have to run anti-virus on it?" Its reputation is fatally compromised in the eyes of the buying public - as its mediocre sales attest to.

Microsoft are also fanatical about controlling the hardware specifications. Why couldn't Nokia release the outstanding 41-megapixel "PureView" technology on its latest Lumia phones? Because Microsoft was either unwilling or unable to offer that level of customisation.

Windows 8 lacks a solution for the low-end marketplace which HP is desperate to capture.

If HP went with Windows, it would be just be returning to its roots as another beige-box PC shifter. A comforting proposition for many inside HP I suspect - but not the way to seize the future.

Firefox OS

Mozilla and Telefonica (my employers) are preparing to release a brand new, HTML5 based operating system. It's squarely aimed at the low-end market HP is so desperate to enter.

The software is unreleased, so this would give HP a chance to be a pioneer. With few competitors, they could carve out a very prosperous niche for themselves.

A fresh start, unencumbered by legacy technology, and focussed directly on HP's targeted market - it could be just the tonic.

However, these are uncharted waters for HP - and indeed for all those involved with Firefox OS. Does HP have the institutional bravery to take such a risk?

(As a declaration of interest - I work alongside the Firefox OS team , although I'm not involved in the project.)

Android

Android is perfect for capturing the low end market. It runs on $50 phones and is ideally suited to the needs of the first time web user.

Android is also highly customisable - witness the success which Kindle have had with their "Fire" tablet.

There is a trap, though, with excessive customisation. Cisco made the fatal mistake of releasing their expensive and shoddy Cius system into a market which was awash with cheap phones and tablets. Cius had to fight against products which didn't have Cisco's draconian restrictions, nor their outdated version of Android. It didn't even last two years in the market.

HP doesn't have the media muscle to create a product like the Kindle Fire. Does it want to get into a war with Chinese manufacturers who can produce a competing Android product at half of HP's price?

Homebrew

Assuming that HP doesn't pick up the wreckage of Tizen/Meego/Bada/Limo/Symbian it could always create its own proprietary OS. Or, perhaps heavily customise a version of Linux like Ubuntu.

This strategy is risky and needs at least a 5 year, fully-funded commitment in order to be taken seriously. That's time and money which HP may not have. As RIM have recently found out, going your own way can be a lonely business if the market rejects your offering.

Trends

HP have spotted the right trend - the next billion Internet users will be on phones and tablets, not on clunky PCs.
HP can leverage its excellent supply-chain and design skills to build such products. But it no longer has the talent - or the time - to create its own software.

This leaves HP preparing to compete with HTC, Samsung, Huawei, and a thousand other manufacturers in a cut-throat market.

Perhaps HP should stick to selling ink?