iPad, the Tablet PC and the Death of the HP Touchpad

By Richard Menta 8/21/11

Apple's iOS genesis began as an operating system for a phone and a digital media player. As far as the world thought back then, this meant a greatly limited mobile OS for texting, phone calls, plus a little extra to handle audio/video playback. We now know that it was part of an inspired several-step process to not only foist a brand new PC operating system into the marketplace, but do what no other OS has achieved since the dominant rise of Microsoft Windows. That was to successfully grab significant PC market share

Part two of this plan was the introduction of the Apple App store in July of 2008, which elevated the iPhone and iPod touch into mini-PCs and portable game systems. It was part three that is the most important part of the story. That was the refining of the iOS operating system within these two "limited" devices. As the demand for applications exploded the capabilities of iOS was pushed to address the needs of developers. Apple iOS evolved.

Two years later, in April 2010, Apple introduced the iPad. It served as part four of a plan that initiated what Apple viewed as the next evolution of PC hardware, which started with a tablet PC. While still limited when compared against a Windows PC, the iPad possessed an OS that already had two years of hands-on consumer refinement. More important, the operating system had 100,000 users and over half-a-million applications to run on it.

Tablet PCs had been around for decades without gaining much market traction. Even the mighty Microsoft, which had a tablet version of Windows a decade before the introduction of the iPad, was never able to elevate the tablet beyond anything more than a niche product. Apple ignited this market. Its opening month iPad sales blew away all tablet PC sales the previous year. Caught flatfoot and realizing the threat of Apple now posed to the portable PC market the leading laptop makers had no choice but to rush out competing tablets.

Rush is the key word here. Where Apple had the leisure of three years testing of both device and OS under the disguise of a phone, the likes of HP, Dell, RIM, Sony, and Acer did not. Furthermore, while all these makers are fully capable of getting the solder and chips part of production right, the OS was another story.

Apple's long standing market strategy is to not license out its operating systems and the same rule applies to iOS. This meant the leading PC manufacturers had to look elsewhere for a tablet-optimized operating system and the choices were not perfect. The great majority of PC makers passed on the existing Windows tablet OS, which says a lot about its present competitiveness in this market. Hewlett-Packard acquired Palm's webOS for its TouchPad and RIM utilized its own Blackberry Tablet OS for its Playbook tablet line. The rest turned to Google's Android OS. In terms of tablet performance and refinement, all of these operating systems are playing catch up to iOS.

This doesn't mean that iOS is perfect, ask anyone who wants true multitasking capabilities. But iOS is much farther along on the refinement curve in the mobile OS space. That makes the performance of the iPad all the more compelling to the average user. The mixed reviews given the first round of iPad competitors illustrate the growing pains in a brutal tablet war that didn't even exist a year ago.

The announcement that HP has axed the Touchpad after only 49 days on the market shows how devastating poor reviews can be for half-baked tablets. HP saw the writing on the wall immediately after the release of the iPad. With the expectation that a seismic shift in the mobile PC market from laptop to tablet was inevitable, HP readied itself for the shift and acquired Palm's webOS as the backbone of its own tablet strategy.

Unfortunately, HP's first product was a dud and as word got out it killed enthusiasm for the release. HP shipped 200,000 Touchpad units to dealers. In those 49 days only 25,000 TouchPads were sold, leaving a huge inventory of unsold goods. The results were so bad HP completely killed its tablet PC program.

It is amazing what can happen in 49 days. With its tablet PC endeavor a shambles and nowhere to go the world's largest PC maker just announced it is selling off its PC line altogether to shift its focus onto the service market. A dramatic corporate decision made on the sales of a single new product out less than two months. As I said, devastating.

It doesn't have to stay that way, of course. This month's issue of Consumer Reports reviews seventeen tablet PCs. While the iPad tops the list the best Android 3.1 tablets; the Samsung Galaxy and the Motorola Xoom, were not that far behind. Still, Motorola Xoom sales look no better than the TouchPad's, despite the love affair many tech-boys have with the Android OS. In a recent survey by Robert Baird co. measuring consumer interest in tablet PC brands (see graphic below) none of the iPod competitors scored well in the public consciousness. That the HP Touchpad scored the highest after the iPad with a modest 10.4% recognition suggest more makers will drop out as we drive into the holiday season.

All of this bodes just as badly for Microsoft as the company must now wait at least until next year to get into the game. That's when Windows 8 is rumored to be released. Next year might be too late, even if Microsoft's new tablet OS is superior. Then again, maybe Microsoft already learned a lesson from its failed Kin and Zune efforts and will use the extra time make sure Windows 8 will be good enough to mount a compelling challenge to iOS.

Richard Menta