HP’s Surprising Tablet Attack

by Patrick Moorhead   |   October 9th, 2012

I recently attended HP’s Securities Analyst Meeting (SAM) where HP made its case to Wall Street on why investors should believe in
the company and buy the stock. I will write about the conference later when I have thought through the content a bit more, as, unlike financial analysts, I need to think three to five years out. Thinking short term about HP doesn’t do anyone any good. What I do want to talk about are two of the products shown at SAM, a new impressive tablet lineup.

The tablet market right now is exhibiting all the traditional signs of any tech market. You have a lot of experimentation going on right now to see what consumers and business users really want. Apple, like the early days of the consumer PC, is punishing everyone who stands in its way in the tablet market. If you have any doubt on that, just ask Motorola, RIM, Samsung, and anyone attached to webOS. As experimentation progresses, the markets starts to settle into more of a predictable rhythm and then after that, massive segmentation and specialization will occur. This is classic product lifecycle behavior. HP, like Dell and Lenovo have learned a lot over the last 18 months, and HP, in particular, put the pedal to the metal with their latest tablets.

HP segmented its line into a consumer and large enterprise line. What about small business? Too early to know and quite frankly this will be the last market to adopt tablets, so I like this decision. Technologically, HP has opted to forgo ARM-based technology in its latest offering and instead has opted for the Intel CloverTrail solution. Only after we all see pricing and battery life will we know if this is a good decision. Let’s dive into the models.

HP ENVY x2 for the Consumer
The first time I saw the ENVY x2 at the Intel Developer Forum I was stunned, quite frankly, at how thin, light, and sexy the unit was. My latest Intel tablet experience was a thick and heavy Samsung tablet with a loud fan used for Windows 8 app development. The HP ENVY x2 wasn’t anything like this as it was thin, light, fan-less, and sexy industrial design made from machined aluminum. No, this didn’t feel like an iPad… it felt in some ways even better. This is a big thing for me to say given my primary tablets have been iPads… gen 1-2-3. It is very hard to describe good ID in words, but it just felt good, real good.

It was apparent to me that HP stepped up their game in design and after talking with Stacy Wolff, HP’s Global VP of design, they have amped up resources a lot. While most of Intel’s OEMs are focused on enterprise devices, this consumer device stands out. The only thing that could potentially derail the ENVY x2 is Microsoft with a lack of Metro applications or too high a price tag. Net-net I will need to see pricing and Windows 8 Metro launch apps before I can assess what this will do to iPad and even notebook sales.

HP ElitePad for Commercial Markets
Let’s face it, commercial devices run counter on many variables to what consumers want. The tablet market is no different. Enterprise IT wants security, durability, expandability, cheap and known deployment, training, software, and manageability. Consumers want sexy, cool, thin, light, easiest to use, and based on the amount of cracked iPad screens (mine included), durability is not that important. HP has somehow managed to cross the gap between beauty and brawn in a very unique way. When I first saw the ElitePad, I thought it was a consumer device. It even has beveled corners to make it easier to pick up off the conference table!  Like the ENVY x2, it also feels like machined aluminum.

The ElitePad, because it has at its core an Intel CloverTrail-based design, can run the newer Metro-based Windows 8 apps and legacy and new Windows 8 desktop apps.  IT likes to leverage their investments in software and training, and they will like that they can run full Office with Outlook as well as any corporately developed apps without any changes.  You don’t want to be running Photoshop on this as it is Atom-based, but lighter apps will run just fine.

IT “sees” the ElitePad as a PC. Unlike an iPad, it is deployed, managed and has security like a Windows PC. For expandability, durability and expanded battery life, HP has engineered a “jacket” system that easily snaps around the ElitePad, which felt to me like the HP TouchPad. The stock jacket provides extra battery life and a fully bevvy of IO including USB and even full-sized HDMI. If HP isn’t doing it already, they should be investing in special jacket designs for health care, retail, and manufacturing. Finally, there is serviceability. While I don’t want to debate if throwing away a device is better than servicing it, IT believes that servicing it is better than tossing it in the trash. For large customer serviceability needs, HP is even offering special fixtures to easily service the tablet by attaching suction cups to the surface and removing the display. Net-net, this is a very good enterprise alternative to any iPad enterprise rollout.

I am very pleased to see the care and time put into the planning and design of these devices. The three unknowns at this point are pricing, battery life and Windows 8 Metro acceptance and the number of tablet apps. If there are a lack of Metro apps at launch, the entire consumer category will be in jeopardy in Q4, but commercial is quite different as ecosystems can grow into their show size over time. I cannot give a final assessment until I have actually used the devices, but what I see from HP in Windows 8 tablets is exceptional.

Patrick Moorhead

Patrick Moorhead was ranked the #1 technology industry analyst by Apollo Research for the U.S. and EMEA in May, 2013.. He is President and Principal Analyst of Moor Insights & Strategy, a high tech analyst firm focused on the ecosystem intersections of the phone, tablet, PC, TV, datacenter and cloud. Moorhead departed AMD in 2011 where he served as Corporate Vice President and Corporate Fellow in the strategy group. There, he developed long-term strategies for mobile computing devices and personal computers. In his 11 years at AMD he also led product management, business planning, product marketing, regional marketing, channel marketing, and corporate marketing. Moorhead worked at Compaq Computer Corp. during their run to the #1 market share leader position in personal computers. Moorhead also served as an executive at AltaVista E-commerce during their peak and pioneered cost per click e-commerce models.
  • diddler

    I am not normally one to criticize companies for copying Apple – lots of industries copy the market leader, but it is a bit rich to praise their design skills when they have just made a Macbook air with a detachable screen.

    • Dipanmoy

      If they had copied Apple’s design, by now there would have been a fight between Apple and HP which is no where to be seen.

      • diddler

        Have you seen the HPs iMac also known as the Spectre One? HP are seriously flirting with a law suit. I think Apple are just waiting to see if any of these things sell.

  • Grwisher

    “Only after we all see pricing and battery life will we know if this is a good decision.”

    Precisely!

    The article points out many features of these tablets that point to them as being competitive products. However, all of these advantages will be for naught if these products are too expensive and/or the battery life is poor. Another major factor is availability. It is reported that the HP ENVY x2 (ARM) will be available October 26th. And, as the author points out, it may have a shortage of apps. The HP ElitePad seems to have more promise due to its selection of apps. From other reviews that I have seen, the HP ElitePad tablets may not be available until 2013. If that is the case, then they will run right into the introduction of the iPad 4 which means it is difficult to predict how competitive they will be. Maybe it will be successful due to its ability to run legacy Windows apps and doesn’t necessarily compete directly with the iPad.

    Many people think that Apple’s marketing allows Apple to be so profitable. Well, if providing full disclosure when introducing a product is good marketing, then they are correct. Think about the differences between Apple’s product introductions and that of their competitors. An Apple product introduction will include price, battery life, availability, models, capacity, colors, etc. On the other hand, the competition will be silent on key factors. Look at Microsoft’s surface tablet as another example, besides the HP tablet featured in this article. We are 17 days from availability and to my knowledge, we don’t know the price or the battery life.

    The other thing Apple will do at introduction is feature apps that show how USEFUL their products are. Ok, so the HP tablet is nice to hold, has a smart jacket option (didn’t someone else have a accessory with ‘smart’ in the name), is serviceable, etc. But what does it do that will compel a potential customer to buy it?

  • Defendor

    I fail to see much differentiation here. From what I have read these are both essentially Atom powered tablets that convert to netbooks. 11″ for consumers, 10″ for enterprise?

  • FalKirk

    “As experimentation progresses, the markets starts to settle into more of a predictable rhythm and then after that, massive segmentation and specialization will occur. This is classic product lifecycle behavior.”

    I’m not sure that we’re near the segmentation and specialization phase yet. The re-invention of tablets started with the iPad is only two and a half years old. The argument is that integration occurs when the market is under serving the sector and segmentation occurs when the market leaders begin to over serve the market.

    I could be wrong, but I don’t think that the tablet sector is mature enough to segment yet. Apple’s monolithic iPad currently rules the tablet market. An attack by dozens of competing products may not have the power to dislodge the iPad at this time. Time will tell.

    • W. van Dam

      You make an observation that interests me:
      “The argument is that integration occurs when the market is under serving the sector and segmentation occurs when the market leaders begin to over serve the market.”

      It is a simplification, but I can agree that is how it usually works. I wonder though how Apple’s reputation affects the classic product lifecycle behavior. For example, I’ve heard some say they did not enter a particular market (in part) because Apple is in it. They can cope with a strong leader, but not with one they cannot understand.

      Also, how does their reputation affect those who do enter the market? Generally there is a run for the market leadership position until a dominant design emerges, and then another one for automating production, and another for real mass production. With Apple having such a head start, and a demonstrated high competency at all key stages, are capable competitors not more likely to go after specific segments earlier than should be expected from the classic product lifecycle?

      In short, I suspect that markets in which Apple has a strong position deviate from the classic product lifecycle pattern. In part because of Apple’s own direct activities, but largely also due to the influence they have on the behavior of their competitors.

      Anyhow, considering that the current iPad is the finished product as Jobs actually envisioned the tablet to be, I’d imagine the market should be pretty close to being over served.

      “Apple’s monolithic iPad currently rules the tablet market. An attack by dozens of competing products may not have the power to dislodge the iPad at this time.”
      Sure, but why care? If I were to make a tablet dislodging the iPad would not be my goal. My goal would be to make a nice profit. If I could dislodge the iPad, but only without making a profit, I’d rather not dislodge the iPad.

      • FalKirk

        Great post. Lots of intriguing thoughts. Let me focus on your last paragraph:

        “If I were to make a tablet dislodging the iPad would not be my goal. My goal would be to make a nice profit.”

        Agreed. But where are competitors going to make a nice profit? When Steve Jobs introduced the iPad, he asked if there was room for a category between the smartphone and the notebook. There clearly is. Now, Windows 8 seems to be trying to carve out a category between the iPad and the notebook.

        Is there really room there for a category? Microsoft, HP and a host of other manufacturers are betting that there is. Or is there only room for hybrids and niche products? We’re about to find out.

        • W. van Dam

          Thank you for your reply and appreciation.

          When talking about market opportunities I prefer to use ‘jobs to be done’ segmentation, which I trust you’re familiar with. If not I would highly recommend reading ‘The Innovator’s Solution’ by Christensen.

          The question Jobs posed at the introduction was a marketing statement. He was much more likely to wonder whether the iPad would be a more suitable solution for performing some of the task we were then performing with mobile phones and laptops. The question is similar, but not quite the same.

          As to where competitors can make a nice profit. Apple designed the iPad for content consumption, not content creation. As you indicate this opportunity is clearly recognized by companies like HP and Windows.

          The job of content creation clearly does exists. The question is whether any company can at this time design and produce an innovative product in high volume that fulfills the criteria well enough to be successful in overturning the currently used solutions for content creation.

          The hybrids could be a success, as could be a larger screen, or perhaps an enterprise only ecosystem. Or perhaps a combination of these three…

          I think it is just a matter of time before one succeeds. It will be interesting to see how little the dominant design will actually resemble the iPad, considering the iPad was not designed for content creation.

          Now that I think about it, I wonder whether these products should even be considered as part of the same product lifecycle category as the iPad.

  • Rich

    I don’t usually take a negative stance but what we have here is a company that in the last few years has messed themselves up thoroughly, introducing products using an OS with serious questions surrounding it, into a market which so far has loved only tablets from Apple. HP will need a whole field full of four-leaf clovers for this.

  • http://twitter.com/JackJacobs_ Jack Jacobs

    Thanks for the insight. I am intrigued about the Enxy x2. Since I have an HP Touchpad wiht the keyboard I do think this is a better and more practical option. For me I want a good word processor, email client, etc that I have on my desktop that I can take with me. I would imagine that Microsoft has taken care of this with Windows Metro. While you can do a lot on an iPad for me I am more interested in a device that lets me get my work done and play when I’m finished. Curious to see if the Envy x2 is that device.
    Interested to see the pricing on this. While it may be similar to the Macbook Air I would think that it is also a good bit cheaper.

  • capnbob67

    I think there is much wrong with these products (and all Win8 tablets) and this analysis:
    10″ Netbook for business – absurd

    Metro-fication of business apps – absurd (they are all being web-ified for any device)
    Carrying sleeves/keyboards around instead of ipad/ultrabook/cloudsync – absurd
    Desktop apps on a 10/11″ touchscreen – absurd

    Clovertrail handling terrible, heavy, corporate desktop OS images – absurd

    Corporate “users” (rather than IT) having much interest in these – absurd

    Corporates upgrading to Win8 desktop within the next 18 months – absurd

    OK, that was a bit “theater of the absurd” but you get the point. Cooing over the build quality is fine – it does matter to consumers/users but not so much to corporates. They care about 3 year warranties and on-site service contracts over the depreciation period. Adding a sleeve to a tablet that is already too heavy to make it useful in many tablet use cases is weak. Watching CS reps in AT&T or Apple wielding the 1.4lb iPad is already slightly painful. Making something heavier to make it functional won’t fly.

    I predict that the iPad mini will redefine the tablet space for high portability with just enough screen space to be productive (unlike 7″ers), light enough to tote around all day and easy enough to carry along with an i5/i7 ultrabook/MBA that can execute traditional use cases so much better than a so-so netbook.
    I just don’t buy the concept of having one necessarily compromised device (with multiple required accessories) vs. 2 that are fit for purpose.