Author Archives: Gurpreet Kaur

Hewlett Packard is cranking up its marketing machine for the Slate 500, a Windows 7 tablet PC that faces a murky future as HP prepares to launch its WebOS TouchPad tablet this summer.

In a promotional e-mail for the Slate 500 that went out this week, HP’s sales pitch to would-be customers goes like this: “Do you have yours yet? No? Why Not?” It’s an ironic approach given that HP ran into Slate 500 supply problems last November that delayed shipments for six weeks. Some customers posting recently to HP’s product support forums claim to have waited several months for theirs to arrive.

HP didn’t respond to a request for comment on whether the Slate 500 e-mail represents a renewed push to drum up interest in the product. HP’s Web site currently shows an April 27 ship date for the Slate 500, so the company appears to have at least dealt with the supply shortage.

The Slate 500, which comes with a 1.86-GHz Intel Atom Z540 processor and 8.9-inch, LED-backlit display, debuted at CES 2010 when Microsoft CEO Steve Ballmer showed off a prototype in his keynote. But a few months later, HP acquired Palm for $1.2 billion and set out in a new mobile direction with WebOS. When the Slate 500 hit the market in October, its $799 price tag raised eyebrows, and not in a good way.

Since the Palm deal, HP executives have insisted that Windows 7 would continue to play a role in HP’s tablet plans, but the fact that HP didn’t mention the Slate 500 at its Americas Partner Conference last month makes those claims ring hollow.

Meanwhile, HP spent a ton of time at APC talking about and showing off the forthcoming TouchPad WebOS tablet. Gurpreet Kaur, an analyst at Gap Intelligence, a San Diego-based research firm that follows HP, sees the Slate 500 as a measure on HP’s part intended to help Microsoft save face. “Windows 7 is not meant for tablets. The touch capabilities are bad and battery life is short,” she said.

Microsoft is reportedly working to make the next version of Windows tablet friendly, but that release isn’t expected until next year at the earliest. In the meantime, other vendors are continuing to roll out Windows 7 tablets. Asus began shipping its Eee Slate EP121 tablet in February, and Acer on Tuesday launched the Windows 7 version of its Iconia tablet. Dell, meanwhile, is reportedly planning to release a Windows 7 tablet this fall.

At this stage, OEMs are moving forward with Windows 7 tablets but appear to be doing so with a minimum of fanfare, Kaur said. “Windows 7 tablets will be low-key affairs with distribution limited to IT channels and with a B2B selling focus,” she said.

It’s unlikely that Windows 7 tablets are going to give Apple and Google much of a challenge in the tablet space, but some Microsoft partners are still confident that devices like the Slate 500 will find their niche.

Andrew Brust, CEO of Microsoft (NSDQ:MSFT) analyst firm Blue Badge Insights, based in New York City, says Windows 7 tablets can deliver value in highly customized environments with applications explicitly designed for touch.

Brust cites the example of Silverlight line-of-business applications built in the upcoming Visual Studio LightSwitch product using a touch-friendly shell extension, something Microsoft has already demoed in prototype form. “In this context, and in a situation where field portability were required, the Slate 500 could work very well,” he said. “Building apps in LightSwitch would be far more productive than, say, building a native iOS app for the iPad.”

Microsoft’s massive developer army means anything is possible when it comes to the apps that run on Windows 7 tablets. But HP is also urging its partners to build applications in WebOS, and it’s planning to offer market development funds, volume programs, big deal registration and practice development to the VARs that heed its call.

At APC last month, Todd Bradley, executive vice president of HP (NYSE:HPQ)’s Personal Systems Group, described WebOS as a strategic asset that HP plans to use to build an ecosystem around consumers, small business and enterprises. “WebOS is an opportunity to leapfrog the traditional Wintel ecosystem,” Bradley said at the event.

Seen in this light, it’s tough to see HP becoming a major cheerleader for Windows 7 tablets. Bob Venero, president and CEO of Future Tech, a Holbrook, N.Y. solution provider, says the touch limitations of Windows, and the impressive design and functionality of WebOS, suggest that devices like the Slate 500 will always occupy second tier status within HP’s product portfolio.

“Is HP going to tie its success in tablets to Microsoft? Obviously not,” Venero said. “HP placed a big bet on WebOS and I think that’s the horse they’re going to back.”

Think about all the recently revealed tablets, both those featuring 3G connectivity and Wi-Fi-equipped models. The 3G-equipped Motorola Xoom is already available at a large number of U.S. storefronts, including Best Buy and Verizon Wireless. And, if you have recently paid a visit to Staples, OfficeMax or even Kmart, you would not have missed the 7-inch Samsung Galaxy Tab. But where are new non-cellular equipped tablets? You might want to check Fry’s Electronics and e-commerce resellers, and that’s pretty much it! Unless it’s a Wi-Fi-iPad, it’s hard for non-cellular tablets, even from tier one vendors, to gain availability in this widely competitive tablet market, but those with mobile broadband capabilities have a major advantage of an added channel for greater exposure.

Samsung is a great example and is well-positioned as both a mobile and PC vendor, but it made the wise decision to take its Galaxy Tab to the market through its cellular providers. Samsung, whose Galaxy Tab is available at 10,961 US retail locations in Gap Intelligence’s tablet panel, revealed that the company played a direct role in the tablet’s placement only at Best Buy, and beyond that, the device’s saturation in the U.S. retail channel is a result of its four wireless carrier partners.  In addition to their own locations, wireless carriers such as Sprint and Verizon negotiated to place the Galaxy Tab in stores such as OfficeMax, Staples, Costco, Fry’s, RadioShack, Ritz Camera and Kmart. Now we know that one does not typically go to Ritz Camera or even Kmart for a tablet purchase, but hey, while you are there you’ll probably check out the tablet.

This means wireless carriers are essentially doing the legwork for tablet vendors. As a result, Samsung has a 17 percent weighted shelf share of Gap Intelligence’s tablet U.S. retail panel, and Motorola xoomed to a 2 percent share just one week following the launch of its Xoom tablet.

There is a lot of chatter about Apple’s price advantage, which is true when you compare the suggested prices of cellular-equipped tablets with similar iPad configurations, but this is not telling the whole story. A cellular-equipped tablet is often sold with a huge discount when bundled with a contract, thus significantly reducing the tablet’s net price and making it more competitive. For example, the 7-inch Galaxy Tab with its recently reduced $499 suggested price looks expensive in comparison to the entry-level 9.7-inch iPad that also sells for $499, but the Galaxy Tab offers stronger competition to the iPad, when priced as low as $249 through a wireless carrier with a contract. Of course, Apple can also offer its iPad with a discount through cellular carriers, but the company’s enormous brand strength allows them to sell without promotions.

There are two groups entering the tablet market: smartphone vendors and PC manufacturers.  Based on the industry’s early market share leaders, it is clear that the mobile phone vendors are benefitting from their relationships with wireless providers, at the expense of the PC vendor’s sales of both notebook and tablets. With that, I believe it is vital for PC vendors to embrace the product and channel strategies driving the tablet market and offer their tablets with broadband capabilities.

About the author: Gurpreet Kaur is a market analyst for Gap Intelligence, a San Diego-based independent technology research firm with emphasis in helping product manufacturers and retailers understand current retail market trends in order to respond to customer demands as they occur. She can be reached at gkaur@gapintelligence.com.