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What If Apple Just Owns the Tablet Market Forever? HP Won't Care

Google and RIM are down. HP is out. Right now, Apple has a stranglehold on the tablet market not seen since...well, not seen since Microsoft took control of the market for PC operating systems, which it still has.

HP last week just surrendered to Apple and the iPad, killing the TouchPad (and thus bringing it to life for the first time, but we'll get to that) and announcing that it's done making devices with the webOS operating system on them.

In fact, it's done with webOS, period (mostly, although not entirely). Actually, what HP really said was that it doesn't even want to make computers anymore, which, of course, led to another round of speculation that the PC is dead or dying.

It isn't. Look, tablets and smartphones are popular. We get that. But in a world in which some organizations are still using Windows 2000 and lots are still running Windows XP, the PC still has plenty of life to live. Companies will upgrade their PCs to Windows 7 eventually -- and then possibly to Windows 8 -- because PCs are what they use for business.

They just are. Most IT departments aren't huge fans of revolutions or sudden paradigm shifts, to resurrect a phrase from the '90s. They don't keep the same schedule that vendors and innovators keep. They can't. Technology might move quickly, but enterprise technology adoption tends to happen glacially in a relative sense, for lots of reasons.

Let's put it this way: We're betting that probably 100 percent of people who start an office job today (if anybody's actually hiring) will get a standard-issue company PC. Maybe some of those people will get tablets; a good chunk will get smartphones. But how many will get just a smartphone, or just a tablet, or just a smartphone and a tablet but no PC? Our sincere guess is zero.

Maybe PCs won't sell the way they did five years ago (actually, we're pretty sure they won't). Maybe consumers really will lose some interest in them in a significant way -- although having an actual keyboard is still important to a lot of people. But in terms of function and familiarity, the PC will still be the base computer of business and probably consumers for some time to come. How long? A long time. Years, we're guessing. Double-digit. Check up on us in a decade and tell us if we were wrong.

Anyway, back to HP. The stock market pummeled HP after last week's kerfuffle, and all kinds of pundits expressed shock that the company would abandon webOS and the TouchPad after a relatively short period of time.

Of course, the funny part of this story is that after HP decided to discount the TouchPad heavily and sell the most basic version of it for about $100, the thing started flying off the shelves like candy at Halloween. The once unwanted, relatively unknown (despite Russell Brand's best efforts) device is suddenly a hot commodity.

(By the way, Russell, you're not fooling anybody. We know that, like the editor of this newsletter, you're a supporter of West Ham United, so you're not checking English Premier League scores on your TouchPad. No, you're watching the Championship after West Ham's relegation last season. Don't try to put a brave face on it. We're all struggling.)

The TouchPad fad won't last, as we all know, because the TouchPad is only big right now because it's cheap. HP knows that, too. And HP knows a lot more than that. It knows that "tablet" and "iPad" are nearly synonymous now. It knows that Apple, the world's most valuable company, owns the tablet market and is starting to crush its competitors in pretty much every market for consumer electronics it enters.

And HP knows that none of that matters, not to HP. Not anymore. Somebody there figured out that HP doesn't need to be one of the many pilot fish trying to pick morsels from Apple's shark teeth, at least not as far as tablets are concerned. (Getting out of the PC business altogether...well, that's probably a topic for another post entirely.)

HP wants to reinvent itself as an enterprise company. That's music to our ears, and Microsoft should be streaming the same song HP's singing. Microsoft's future -- and its partners' future -- lies in the enterprise, not in flailing around and failing to imitate Apple. Let Apple have the kids, the hipsters and the geeks. Shoot, let Apple have consumer computing. There's money to be made elsewhere.

Seriously, what would happen if Apple just ruled the tablet market forever and ever? If Microsoft never even came out with a tablet? If HP never sold another $100 TouchPad? For a reasonable facsimile of an answer, let's look at the market for desktop operating systems, the one Microsoft still owns with something of an iron grip.

Who were the main competitors -- the really big ones, not the small-time companies from the '70s -- Microsoft crushed en route to making Windows what it is today? IBM, Apple, maybe Linux? Those sound about right. And they're all in business and actually doing pretty well (or very well, in Apple's case).

Microsoft destroyed OS/2 pretty effectively, and, yeah, IBM suffered after that. But the company adapted, beefed up its consulting business, focused on the enterprise and eventually dropped almost all of its consumer presence nearly a decade ago when it sold of its PC arm to Lenovo. IBM lives on, even in a Windows-dominated world. IBM is doing fine.

Apple, of course, nearly did go out of business, but that was more a problem of leadership than a technology problem. Talk about adapting, though -- Steve Jobs came back (with Bill Gates' money in hand) and only managed to build the world's most valuable company on the foundation of some truly stunning innovation and some near-revolutionary marketing.

And how did Jobs send Apple rocketing past Microsoft? By winning the OS game and killing Windows with the Mac OS? Nah. He did it by moving into areas where nobody was doing anything particularly interesting and doing things that were massively interesting. Case in point: the iPad. And iPhone. And iPod (remember that?). The Mac is pretty much an afterthought these days.

As for Linux, it's very much alive and well, and plenty of Linux distributors remain active and profitable. Sure, Linux doesn't have a massive desktop presence, but it has huge market share as server software. It didn't kill Windows, and it didn't have to -- in fact, it didn't even have to compete all that effectively on the desktop (and doesn't).

Apple got the loot in the tablet market. At this point, it has no serious competition. Eventually, its would-be competitors, as HP has, will figure that out and give up trying to climb Mount iPad. That's what good companies do: They admit defeat when they have to, adapt and move on to something else. They carve out niches. They break new ground and listen to their customers and the market. They don't try to be everything to everybody or sink money into a product hole that's only going to get deeper.

HP is a good company. HP is doing the right thing in dumping the TouchPad. Short term, there will be some pain resulting from this decision. Long term (and isn't it nice when a company actually considers the long term?), it makes a lot of sense. Let Apple have the tablet market. HP is moving on.

What's your take on HP dumping the TouchPad and webOS? Leave a comment below or send it to [email protected].


Posted by Lee Pender on August 25, 2011