Will Meg Whitman challenge Apple and Amazon with her HP Tablet?
The media has been severely critical of HP’s hiring of Meg Whitman. The conventional wisdom is that HP’s board has lost direction, and has no real clue where to take the technology giant. Like most technology mavens, I have a warm spot in my heart for the company; its founders created great products, a great company culture and a legacy that’s been hard to live up to.
Even a blind squirrel finds a nut now and then
It appears to me that HP may finally have a direction that makes sense. While the world doesn’t need another IBM or SAP to provide IT services for large corporations, there might be a need for a third integrated media retailer. Over the next few years, more than 300 million tablets will be sold worldwide. It’s clear that the Apple iPad and Kindle Fire will lead the digital publishing revolution. Each of these companies has the three principal ingredients for dominating tablet computing and digital media retailing.
Tablets, content and a massive retail footprint
Both Apple and Amazon have already sold millions of tablet computers. The new Kindle Fire is expected to top 10 million units sold before year-end. Apple’s iPad, the current industry leader, could top 30 million units sold by year-end. Both Amazon and Apple offer customers digital magazines, books, movies, music and videos at pricing that ranges from free to very reasonable. While the iPad is the faster, more flexible device, the Kindle Fire is an easy to use media player priced at just $199. The rapid growth of the installed base for the Apple iPad and Kindle Fire are driven in large part by both their massive online media offerings, and the trusted relationships they enjoy with millions of customers. These customers allow their credit cards to be kept on file with Apple and Amazon to facilitate easy, no-hassle impulse purchases of magazines, movies, music, apps, books and more.
The dark horse in this race is currently Barnes & Noble. Their Nook Tablet is selling well while offering users the same mix of digital media with low prices and immediate delivery. Yet for some reason, my gut tells me that the Nook will not seriously challenge the Kindle.
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HP and Meg Whitman
When you suspend disbelief, and imagine for a moment that HP chose Meg Whitman as their new CEO for a good reason, what might that reason be?
Why would the world’s leading personal computer manufacturer, who also manufactures a feature-rich tablet computer, have hired one of the worlds most experienced e-commerce CEOs?
My answer: HP is planning to enter the business of digital media retailing. They have a world-class tablet computer, a trusted consumer brand, and a massive customer database.
What HP is missing: a world-class digital media superstore.
Many battles already won
The market battles for corporate IT services, personal computers, laptop computers, cell phones, and portable music players have already been fought and won. The battle for tablet computing and digital media retailing is just beginning. The prize will be measured in hundreds of millions of unit sales for tablet computers plus the retailer share of trillions of dollars in annual, ongoing sales of digital media products. Some of those media products like magazines, newspapers, and newsletters are renewable, and thus represent a continuity revenue stream to both the digital media publisher and digital media retailer.
My bet is that HP is planning to make a play for this market.
HP saved their tablet computer, saved their personal computer division, and hired one of the world’s most experienced digital retail executives. If I’m right, Whitman is deciding whether to build or buy. If she chooses to build, she’ll first need the massive e-commerce infrastructure already possessed by Apple and Amazon. For one of the world’s largest IT service companies, whose IT infrastructure makes up 70% of their revenue, according to Whitman, this shouldn’t present a major obstacle. She’ll also need to quickly build relationships with the world’s leading producers of high quality digital content. If she chooses to buy, she can jumpstart the structure and inventory process by acquiring a company like Barnes & Noble or Zinio.
So, if you get a call from someone at HP who wants to talk about selling your magazines, books, videos and other digital content, take the call.
If you have advice for Meg Whitman, share it with her and I by making a post below.