HP is a company I have always loved, whose products are well engineered and who have some of the brightest minds in Silicon Valley. So just what has got into HP and all the other computer makers, except Apple?
The recent news that HP has dropped the TouchPad a month after the US release and four days after the Australian one, the effective dropping of WebOS and the plans to follow IBM into a software and service future by offloading their PC business has amazed so many, me included.
If you believe the commentary going on, part of the blame is that companies like HP have very low profit margins on PC gear, whereas Apple does much better. And this might be the reason, but, if it is, no one has learned the proper lesson from this. I even read an article today saying that the right price for a tablet was US$300. And HP has sold well when dumping the TouchPad at very low prices. Now at this time the cheapest iPad 2 is US$499 and $579 here in Australia, and they seem to be selling all they can make. So something doesn’t add up here.
Historically Apple gear has always been more expensive than the competition. The iPod was more expensive than other MP3 players, the iPhone is more expensive than most other smartphones and the iPad is also more expensive than most tablets, including the HP one. The Macbook Air is likewise not overly cheap, and Macbook Pros, iMacs and PowerMacs are more expensive than superficially equivalent systems. Yet people buy them.
Apple has shown that people will pay more for superb design and excellent functionality. Apple has also shown a willingness to stick it out until products get accepted, as has happened with the Air. It was not always popular.
Yes, there is a very large part of the computer market that is extremely price sensitive, as shown by the run on TouchPads at $100 or so, but Apple’s experience has shown that there is a large segment that is not so price sensitive. Perhaps it would be better to say that there are customers for whom price is at or near the top of their priority list, and other customers for whom price is less critical and other factors count more.
Apple is not very reactive: it creates and makes other companies react to it. And any student of military history knows that you don’t win by giving your enemy the initiative. You must seize the initiative and make them react to you, and keep them doing so.
Oh what you could do with a company like HP and all that engineering experience. Rather than creating iPad wannabees, no matter how well they may be made, and undercutting on price, what about taking the opportunity to ‘Think Differently’ and do something unique, even if it takes several years for it to really catch on? Surely both shareholders and employees of HP should get the opportunity for some real benefit from the $1.2 billion spent all too recently on Palm?
We know that even an overpriced item will, due to Moore’s Law, come down in price as you get economies of scale and improvements in technology. So what about creating a truly drool-worthy tablet, laptop or some new category of device, even if the initial price will be US$1,000? Even if the production yields are quite low to start with it may not matter, as demand will be slow to start with. But as demand grows in line with better yields and lowering prices you have taken the initiative and others now have to react to you.
And beyond HP, what about all the other computer makers, phone makers and consumer electronics companies? All seem happy to innovate in little ways, a tweak here; a new feature there. Who is innovating anymore? Has the computer industry gone the way of Hollywood and will only rework old concepts or crank out more of the same in working franchises?
Apple has shown that you do not have to be the first in an area to win big. Apple didn’t release the first MP3 player or the first tablet. But they did release the best when they did. Let us be honest: the iPod is the best MP3 player, the iPhone is the best smartphone and the iPad is the best tablet, at present. Don’t let the annoyances that everyone feels with some of Apple’s policies and decisions get in the way of that realisation. Apple is the only real player in town and everyone else is following them.
How has Apple done what they have done? Two things. Stunning design for one. Secondly, they have taken all concepts to the extreme. The iPod eliminated almost all the buttons. The iPhone eliminated the keyboard and elevated the app to front and centre. The iPad also eliminated the keyboard completely, something many other tablet makers had tried to hang onto.
Apple has done some other things right too. Controlling both the hardware and software is a huge advantage. Though the gatekeeper role is annoying when apps that you really should be able to get are not approved, the controlled app environment for iPods, iPhones and iPads means that all the fear around malware is gone. And among less tech happy people fear is a BIG factor that holds them back from adopting new technology. I know many people who would never have bought another device, but have gone out and bought an iPhone or iPad and are buying and installing apps happily. Those same people would never have done that with Windows or Android.
It saddens me greatly to see an amazing company like HP walking away from an industry it helped found. Maybe the problem for HP is they have too many engineers and not enough dreamers. Because that is exactly what we need: dreamers in companies with the size and expertise to turn those dreams into reality.