May 19, 2011, 5:55 AM — HP's TouchPad could emerge as a viable competitor to Apple's iPad tablet in a burgeoning market filled with disappointing competitors, industry analysts said this week.
The TouchPad, which is due for release in June, needs to be competitively priced and different on features from devices that include a slew of Android tablets and Research in Motion's PlayBook, analysts said.
"Most iPad competitors on the Android platform have had zero differentiation so far and have been unable to demarcate from each other. Other competing platforms such as RIM's Playbooks have received lukewarm-to-poor feedback from consumers as they lack critical functions," said David Daoud, research director at IDC.
Tablet shipments totaled 6 million units in this year's first quarter, of which Apple's iPad had a 74 percent market share, Canalys Research said in a study last month. The rest of the market share was taken by competitors such as Samsung's Galaxy Tab, which runs Android.
The TouchPad was originally announced in February and is based on the webOS mobile platform, which HP obtained when it acquired Palm for $1.2 billion last year. The TouchPad is critical to HP's long-term strategy of putting webOS on products ranging from PCs to smartphones so files and content can be shared easily between devices.
"For HP, the TouchPad is a risk-reward play -- it's a major investment in a non-Windows device, said Sarah Rotman Epps, a senior analyst of consumer product strategy at Forrester Research
"Success sets HP up to be a competitor with Apple -- the only PC manufacturer to also own its own operating system," Epps said.
The TouchPad could also soften the impact of lagging PC sales, analysts said. HP this week reported that revenue for the company's Personal Systems Group (PSG), which is responsible for PCs, declined 5 percent year-over-over, fueled by a 23 percent decline in consumer client revenue.
In the wake of disappointing PC sales, HP's primary competitors Dell and Acer have dialed up their tablet strategies. Dell plans many new tablets in the next 10 to 20 months in the Asia-Pacific region, a company executive said on a conference call on Thursday. Acer recently announced its first tablets under the Iconia brand with the Android and Windows 7 operating systems.
If the TouchPad were to fail, it could be embarrassing for HP, but not crippling, analysts said. HP is still the world's largest PC manufacturer, and the company can take lessons back to retool the device and OS strategy.
The product's failure would leave a cloud hanging over the company's webOS strategy, said Charles King , principal analyst at Pund-IT.