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HP Chases the Market’s Tail

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Technology becomes obsolete the moment it’s released, much as a car becomes used the second you drive it off the lot. It’s not that something better miraculously appears. Rather, it’s that our knowledge of past improvements informs all our current perceptions about future updates.

We know that whatever tech product ships today, there will be a better one within a few months to a year, no matter whether Apple makes it or another firm. There are occasional missteps, in which a software or hardware update is deemed such a failure that it’s a step back. But usually feature benchmarks—like screen resolution, storage capabilities, and battery life—only improve.

Announcing products long before they ship conflicts with this psychology of updates. When Microsoft was the tech industry’s alpha dog, the firm used pre-announcements to forestall other companies. Once Microsoft had marked its territory, the next dog had to consider whether it was big enough to claim the space, or if it would be better served by slinking off with its tail between its legs. These announcements could even be of vaporware—products that weren’t ready and might not ever ship—and still have the same effect.

Microsoft and other dominant technology firms also relied on the classic recipe of FUD (fear, uncertainty, and doubt) to cause potential buyers of competing products to be anxious as to whether or not the competing company could deliver or stay in business. Vaporware, FUD, and market dominance allowed firms to announce without delivering, and be sure that the head table was reserved and no one else at the banquet ate, even if they never showed up for dinner.

The speed of information has changed in the last few years. Pre-announcements of vaporware are now typically seen as a sign of weakness on the part of the announcer. FUD often backfires as well, because the consequences predicted by the FUDder never seem to come to pass. Fleet companies eat their own dinner, then proceed to devour all the rest of the food in the room with no regard for the former pecking order.

Take Antennagate, Apple’s supposed spin of a crippling weakness of the iPhone 4. If you hold a GSM version of the iPhone 4 so that your skin bridges one of the external gaps in the antenna, signal strength may drop in a weak reception area. There were legitimate complaints, and plenty of FUD from competing cell phone makers—many of whom, it was later discovered, had warnings in their handset manuals about how to hold certain models to avoid reducing signal strength. (See “Apple Responds to iPhone 4 Antenna Issue,” 16 July 2010.)

The iPhone 4 sold over 14 million units during the period of maximum FUD, and the problem seemed to disappear without any engineering changes by Apple, aided by a few million free iPhone cases handed out by Apple. It’s not that the technical description was incorrect, but the consequence was, and that result was easily examined by early adopters, product-testing Web sites, and others. The problem exists, but it turned out to be nearly as marginal as Apple claimed it was.

In this light, it is baffling to me that Hewlett-Packard would choose to announce, last week, its webOS 3.0 operating system, Pre3 phone, and TouchPad tablet several months before any of those will become available. (HP did announce a webOS 2.1 software upgrade for Palm Pre models already shipping, along with a tiny, powerful new handset called the Veer coming in a month or two.)

HP has not set pricing for the Pre3 nor the TouchPad, and given no availability date other than “summer.” If writing about the tech industry for nearly two decades has taught me anything, summer means as late as 22 September 2011—or even beyond. (This timeline is also doubly delayed: The HP TouchPad tablet will ship in a Wi-Fi–only version in “summer,” and 3G/4G versions will follow at an undetermined time.)

Tech veteran HP isn’t the only one making bizarre pre-announcements. Nokia said a day later that it’s more or less abandoning all its own smartphone platform efforts of many years in favor of Windows Phone 7. This action guts Nokia’s smartphone sales starting now in favor of other platforms, likely Android, BlackBerry, and iOS, which are well established, rather than the early—but well liked—Windows Phone 7 models in the market. We know that if Steve Jobs were in this deal, Nokia and Microsoft would have made the announcement with a phone ready to show, and a ship date ready to release, as Jobs did with the Macintosh Intel chip switchover, the iPhone, and the iPad.

HP acquired Palm in 2010, and the company lost at least a year in the product refresh cycle while its competitors leapt ahead and Google’s Android surpassed the iPhone in units shipped. The webOS platform received high marks in its first two versions from reviewers, who expressed hope at future improvements. The webOS 3.0 update could push it into parity with other mobile operating systems. It entered the race late, but at least it brought fresh horses.

HP’s Pre3 phone looks competitive by interface and specs compared to the best of today’s Android and Windows Phone 7 models, as well as the iPhone 4. Significantly, the Pre3 will work on both a GSM network, like that used in most of the world (including by AT&T in the United States), and a CDMA network, which Verizon Wireless and Sprint Nextel employ. The only such smartphones currently for sale are the Droid 2 Global and Droid Pro, both exclusive to Verizon. (Verizon Wireless is partly owned by Vodafone, a GSM network provider in several countries, and thus Verizon is the only carrier of scale to really need a GSM/CDMA phone. Sprint might offer such phones, too, as could other CDMA carriers in the Americas.)

Likewise, HP showed off a Microsoft Windows-based slate over a year ago, which was quickly shelved in favor of expanding webOS to the tablet format. The HP TouchPad has great specs as well, and reporters and analysts at the HP announcement were impressed by its features.

But—and there’s a big one here—HP unintentionally made it clear that they are as much as eight months behind other firms already in the spaces they plan to occupy. Every feature that HP will offer in the “summer,” beyond specific interface approaches and an intriguing expansion of its app syncing services, will appear in hardware that will be available in the next few months. Competitors might boost memory, improve processors, or tip in extra features now that they know HP’s specific plans. HP will be behind again before they even ship.

HP hasn’t even announced prices for the Pre3 and the TouchPad. Clearly, they don’t know how much they should charge when these products ship, and the prices they’re considering aren’t low enough to trumpet. If they had announced low prices, competitors could choose to crush those as well, or spend eight months explaining why they’re a false bargain.

We all know full well Apple has a refresh of the iPad likely due out in or before April 2011, and, John Gruber speculates at Daring Fireball, possibly again as part of the annual iPod refresh in September. In March, RIM wants to ship the PlayBook, a standalone tablet that can also act as an adjunct to a BlackBerry handset. Motorola’s Xoom is imminent; it uses an Android flavor tuned for slate-sized devices. And a hundred others will try to hit the market before “summer” is over, too.

In essence, HP has told all its potential buyers that its product will likely be behind the curve when it ships, and has told all its present and future competitors that its product roadmap isn’t as robust as theirs. HP can catch up, of course, but starting out behind tends to leave one behind barring a remarkable burst of engineering and production acceleration that’s currently not on display. (If such energy were in evidence at HP, the Pre3 and TouchPad would be shipping by April.)

I can’t mention HP’s announcement about the future without revisiting Apple’s entrance into the smartphone and tablet marketplaces. One of my new favorite people, Yoz Grahame, a man who thinks deep thoughts about games and community at Linden Lab, was at the HP launch. He tweeted in response to some of John Gruber’s tweets and posts:

Announce->release gap: iPhone: 6mos. iPad: 3mos (not counting stock problems). New HP gear: 3-5 mos. Somehow Apple gets a pass, @gruber?

This is true. Apple introduced the original iPhone prototype to reporters and attendees at Macworld Expo in January 2007, and shipped it over six months later. The iPad was demoed in January 2010 and shipped in April 2010. Why does Apple get a pass, indeed?

In the iPhone’s case, no competing devices existed. There were plenty of smartphones, but none featured a virtual keyboard and a stellar Web browser, among other innovations. Smartphone makers spent 6 months laughing at Apple and the subsequent 42 months catching up. Likewise, the iPad entered a vacuum in which no tablet had succeeded before except in niche markets. Apple also has apparently secured supplies of components, probably displays, the lack of which is still making it hard for other firms to produce affordably priced models. (The Motorola Xoom might retail for as much as $800—some Best Buy ads were leaked, but it’s unclear if that’s the final price—compared to the low-end iPad starting at $500. The Xoom will have more features, but no cheaper version.)

HP implicitly hopes that its reputation and its relationship with the enterprise market will put corporate and some consumer buyers on notice that waiting will produce a reward. We’ll see how that strategy works when HP enters the market in whatever passes for “summer” as one of many instead of the leader of the pack. Companies can and do signal future plans, but I can’t recall a large firm trying to bring itself into the present by announcing that its future is already the past.

 

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Comments about HP Chases the Market’s Tail
(Comments are closed.)

Michael E. Cohen  An apple icon for a TidBITS Staffer 2011-02-11 10:33
HP may spell it "Veer," but when I hear the product name said aloud it makes me think of Stephen Furst's character, "Vir," on *Babylon 5*, and in my mind I hear the voice of Peter Jurasik shouting the name with disdain. Maybe it's an idiosyncratic reaction, but I'll never be able to take that product seriously because of it. {grin}
Travis Butler  2011-02-11 22:32
I'd also note that with the iPad, Apple arguably needed to pre-announce to get developers working on updated apps; I've seen at least one article claiming HP needed to do the same for its tablet.
Glenn Fleishman  2011-02-11 22:59
There aren't a significant number of apps available for webOS.
John Muir  2011-02-15 05:19
The platform effect of Apple's App Store and iTunes is a monumental obstacle to all hopeful rivals. Not only does iOS have the most apps, but it has the best apps and the proven means to make money for developers which even Android lacks. Let alone WebOS / Windows Phone / Bada / etc. 

Of course, vertical integration has always been Apple's strength. But the company's picked up two more in the last decade. The first being the iTunes Store model of convenient and popular micropayments. Apple is the Amazon of songs and apps. Who expected that ten years ago?

And the second is Tim Cook's doing. He really has closed the "pricing umbrella" he talked about on an investor call close to the iPad launch. If competitors can't make superior products (which require superior platforms) then their only viable option is to go all out on price. Apple slammed that door shut as well. A significant difference from its historical mistakes.