“The only thing that’s shocking is that we’re still shocked,” said a friend of mine (co-host of the Austin Tech Scene, Brandon Whichard) a long time ago. That’s been the phrase for acquisitions over the past year starting with Oracle buying Sun and now HP buying Palm for $1.2 billion.
Below are some interesting fragments from here and there and quick analysis to go along with them:
Owning the full stack, developer relations
Some nice bits from the announcement call yesterday:
Todd Bradley – Hewlett-Packard – EVP, Personal Systems Group: We see further opportunities beyond smart phones into additional connected mobile form factors. We anticipate that with the webOS we will be able to aggressively deploy an integrated platform that will allow HP to own the entire customer experience, to effectively nurture and grow the developer community, and to provide a rich, valued experience for our customers. With Palm HP acquires a strong operating system to deliver a unique customer experience in applications to over 2000 apps and growing, a platform to deliver mobile cloud-based services, and an opportunity to drive preference in the market among consumers.
The parts I’ve bolded point to two things clearly:
- Owning as much as the mobile stack as possible – not just OS (as with Microsoft), or handset, etc. – but the whole deal (minus wireless carriers) a la Apple.
- Good cognizance that bootstrapping to success here is about building a strong clutch of developers. This will be tough: competing for developer hearts and minds against Apple and Google (“Android”) will be hard for HP, two letters that most developers associate with nice but expensive printers. An alliance with Mozilla to push and latch onto the HTML 5 fanboy wagon would help. WebOS has been well positioned, technologically and somewhat community marketing wise, to be the “pure web” for mobile option.
Why not Android? Windows 7 Phone?
From the same transcript, in response to Citigroup’s Richard Gardner asking why HP didn’t just decide to use Google’s Andoird:
[HP's] breadth of products between smartphones, slates and potentially netbooks represents an enormous opportunity to our customers. We believe that this is a very, very early stage market. I think the developer community will very aggressively as we invest and provide support begin to develop that suite of applications for webOS that will make it even more compelling than it is today. At the same time we clearly believe in choice and why you did not ask we intend to continue to be a strategic partner for Microsoft. They are a huge piece of our business today and will continue to be so, and we believe there is a unique opportunity with Palm to create an HP experience across these connected products.
Again, some commentary on the most striking items:
- He didn’t answer the question about using Android directly. Clearly, the answer is the desire to control the entire stack rather than be beholden to Google. That’s classic tech company strategy, and Apple’s moves to shut-out Adobe from the iPhone tools marker with fine-print shoes why tech companies loathe partnerships in their stack. No one wants to create the Microsoft of mobile OSes.
- Again, there’s this notion of bringing a unified experience across all of the HP brands, of which there are many. HP has always struggled to go unified like this. Cisco is an interesting comparison: they’re in the same pickle with a portfolio filled with super-high end networking equipment and home/SOHO Linksys and Flip video camera product lines.
- Later in the transcript Bradley implies that before buying Palm, they made sure they could get WebOS to run on other HP devices, giving HP an operating system in addition to legacy OSes like HP-UX, NonStop, etc.
Can you just be an arms dealer?
The strategy of owning the whole stack, at the moment, means owning services that are largely consumer based, not just providing the technologies and software needed for the “expierience.” It means copying the way Apple provides music, video, and soon ads.
From that same transcript, this questioning from Rod Hall at JPMorgan exposes that challenge for HP:
Rod Hall – JPMorgan – Analyst I’m going to be asking for Mark Moskowitz as well who covers HP. He is out of office at the moment. One of the main questions we have got is we have seen Apple succeeding as a content platform in addition to the hardware platform that they are providing. So they are doing a lot of content aggregation. Do you intend to get into that side of the business to move the platform forward? Can you just talk a little bit about what your content strategy might be?
Todd Bradley – Hewlett-Packard – EVP, Personal Systems Group Our focus is to provide connected devices that enable people to safely and seamlessly connect to that information that is important to them, be that entertainment or work or personal data. So I don’t think we are content creators, but we are access providers.
Rod Hall: So does that mean you would look to do deals with music companies and video companies and things like that, kind of along
the lines of what we have seen Apple do?
Todd Bradley: Well, look, we are not going to get into the specifics of how we will execute the strategy that we have laid out for the acquisition. I think we will do more of that as we get the transaction closed.
This is where things get messy. Where-as HP has strong connections to carriers (providing equipment, software, and services) can you imagine them sitting down with the music, movie, and entertainment industries to broker iTunes-like deals? Perhaps a partnership with Amazon or someone else who’s riddled that problem away.
The question becomes how much success can be had if the “content,” as Hall puts it, is not controlled by HP but outsourced through partners. Then you’ve got a mess of cable, TV, a music distributors world-wide to deal with, much complexity that can leak up to the “experience” and look sloppy.
There is, however, a chance to do a classic open flexibility vs. closed perfection: while the Apple “experience” may be unified and beautiful, it’s not at all open. We’ve yet to see what a truly open experience in mobile would look like – or if it can work.
We know from painful experience that letting a third party layer of software come between the platform and the developer ultimately results in sub-standard apps and hinders the enhancement and progress of the platform. If developers grow dependent on third party development libraries and tools, they can only take advantage of platform enhancements if and when the third party chooses to adopt the new features. We cannot be at the mercy of a third party deciding if and when they will make our enhancements available to our developers. –Steve Jobs’s “Thoughts on Flash”
First off, Adobe has a short term win that could be a long term win if partnerships pan out. Since getting pooped on by Apple who shut-out Adobe’s clever end-run around Apple’s (strategic and otherwise) loathing of Flash, Adobe was forced to put the eggs everyone cares about in Google’s basket, which is dicey. Now they have three baskets: traditional handsets (Nokia, RIM etc.), Android, and Palm.
I don’t believe that iPhone/iPad access is critical for Adobe’s overall success – Creative Suite 5 is a whole lot more than just Flash development – but getting on widely used and enjoyed mobile platforms is key for it’s Flash ambitions. If HP can boost up Palm, and Google can raise the profile of Android devices, Adobe is sleeping on something better than the old cardboard boxes Apple would like to tuck them into.
Clearly, Microsoft would have preferred that HP went with Windows 7 Phone. It’s easy to start freaking out that WebOS would be a big threat against Windows, and that seems to be the case in non-traditional PC installs – all those “slates” HP keeps talking about in this discussion. But, I’m not sure that even medium-term there’s much to fret about beyond “mobile” devices where Microsoft doesn’t so much have market to loose, and market to not get.
There a question of just who Microsoft would partner with in mobile. Dell seems to be leaning more Android, and then there’s the raft of other hardware folks out there. The question to keep in mind is what landing points on hardware – PC and handset/mobile – Microsoft can easily keep slipping into. Long-term, if it’s to be a world of iPads and tablets instead of PCs and servers, Windows needs to get its act together – and everyone else will be looking to shut them out.
For better or worse, it also puts pressure on Microsoft to be more invested in the actual handset business – owning something there beyond Danger/Pink. I’m not sure that’s a super idea for Microsoft – unlike HP, Apple, etc. Microsoft is, well, more about the soft than the hard. An interesting angle to noodle on where Microsoft would fit in with all those “mobile cloud-based services” HP speaks to here. There is a certain consumer-friendlyness that Microsoft has which HP (outside of printers) lacks, and the Ray Ozzie vision of “cloud” seems a good fit here – though we don’t hear much from that camp in Redmond much anymore.
With Google, there’s only ever one question: will it help sell more ads?