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10
May
2010

HP is but one new entrant as smartphone market gets more crowded

POSTED BY Global Administrator
The definitive agreement for HP to purchase Palm and the Palm webOS mobile operating system for $1.2 billion is a sign of the times: at least three other major electronics players are looking to enter the smartphone market this year.

And its not as if the smartphone market is lacking in competition, or, for that matter, new entrants.
Dell and Acer are planning launches, as, it appears, is Microsoft. Microsoft already has its own mobile OS, of course, but has shied from the hardware market even in PC domain, despite its massive dominance in the OS market.

For HP's part, taking out the superlatives from the first lines of its press release gives us: “Palm’s ... operating system provides a ...platform to expand HP’s mobility strategy ... [over] multiple mobile connected devices.”

The phrase is telling. One only has to look at the success of the IPad to realise that connectivity will be at the centre of the next generation of consumer electronics devices, hence the interest from the consumer electronic giants.

And in the device market, barriers to entry have been coming down for some time- if you are big enough. Many aspects of the PC market are now "commoditised", with few differentiating factors but price. With open source, even the operating system is open for any company to develop into its own-brand handset. Screens, batteries, chips, casings and SIMs can also all be bought en masse for assembly. And Michael Dell has demonstrated what can be done with a commoditised market. Dell's smarphone efforts will be concentrated on Brazil and China, it appears.

As for HP, the one asset that HP is purchasing not mentioned in the release is Brand. And Brand is becoming more and more important in a market where differentiation is harder and harder to achieve (though Apple still excels). Palm may have lost out to other players as the PDA was superceded by the smartphone but HP now has the unique chance to revive it.