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Three Feet From Gold

Anytime I think of the decision by {complink 2376|Hewlett-Packard Co.} to exit the tablet PC market, I recall the story of the disappointed gold prospector who sold his concession only to find he would have struck the mother lode had he dug just three feet farther.

A similar situation may be developing in the tablet market. Many OEMs have crowded into the market, eager to replicate the wild success {complink 379|Apple Inc.} experienced with its iPad. Countless companies like HP, Research in Motion, Motorola Mobility, Samsung Electronics, HTC, and Barnes & Noble are hawking tablets but have not made a dent in Apple's marketshare. The only company that has experienced surging demand for its tablet is {complink 11480|Amazon.com Inc.}, which will become the No. 2 seller by the end of this quarter, according to {complink 7427|iSuppli Corp.}

What's the secret sauce? I can think of two lessons companies can draw from the story of our disappointed gold miner. First, many of the OEMs in the tablet market lack an understanding of the sector, having plunged in only because a competitor redefined the sector and ignited huge growth. It's easy to forget that Apple didn't create the tablet PC — it offered a vibrant ecosystem in conjunction with application developers to support the product. But Apple wasn't the first to introduce a smartphone or tablet. Both products existed long before Apple rolled out the iPhone and the iPad. What Apple did was offer products that got consumers and enterprises excited.

Further evidence of Apple's impact on the tablet market emerged in a report that {complink 7014|IDC} released today. The research firm said businesses in Europe are eager to deploy tablets for enterprise use. IDC forecasts sales in the EMEA area will surge to more than 20 million this year. Tablet sales in the first nine months of the year rose to about 12 million units, and consumers and businesses will buy more than 8 million in the last quarter of the year, the report said.

IDC's explanation of why enterprises are “keen to deploy tablets” is very illuminating about the impact Apple has had on the sector:

More than 22% of businesses think that the present generation of tablets defined by Apple iPad are more suitable to their needs (for example, meter reading, inventory management) rather than their present equipment, such as traditional tablet devices or vertical application devices…
Tablets are perceived as perfectly well suited for several key vertical applications such as:

  • Equipment maintenance, meter-reading (water, gas, electricity), proof-of-service in the field service category.
  • Asset and inventory management, telematics and direct store delivery in the storage and logistics, travel, and distribution verticals.

Basically, businesses believe the current generation of tablets is more utilitarian than the predecessors. Apple obviously blazed the trail, but many of the products introduced later by competitors have been disappointing. IDC questioned offerings from Apple competitors: “Do vendors have a clear business strategy, robust products and solutions, competitive pricing, and a focused vision to target and address commercial needs?”

From all I have seen so far, the answer is a qualified yes for some and a jangling no for others. Amazon is doing fine, but the performance of other players stretches from subpar to mildly hopeful. Motorola Mobility and Samsung are still in the game, though both are locked in patent wars with Apple. HP has crashed out of the market, and RIM is an example of the walking wounded. (The company's BlackBerry PlayBook crashed, and it recently took a hefty $360 million after-tax writedown on its tablet inventory.)

Which brings me to the second lesson companies can get from the experience of our failed miner. It's good to know when to cut losses, but giving up without fully exploring all possibilities or supporting a product with the right resources is a worse strategy. A mining engineer contracted by the new miner to review the “failed” mine reportedly suggested a little more digging. And that was all it took to turn the site into one of the more profitable finds of the year.

Were HP's TouchPad and RIM's BlackBerry PlayBook doomed to fail? What could the two companies have done to turn these tablets into winning products? Suggestions are welcome.

53 comments on “Three Feet From Gold

  1. mfbertozzi
    December 15, 2011

    It is a very good editorial, Anna. I personally found it is not so easy possible suggestions on the question you have reported within “doomed to fail”?. In effect we are speaking about very different corporations which are sharing similar condition, from the business' crisis perspective. RIM achieved its leadership focusing in particular on messaging, HP achieved its leadership making strong success in deploying multiple business lines, including professional services. Maybe, real key point for crisis faced is inside them; are we really convinced right innovation processes were implemented internally, including right managers rotation and right hiring from competitors and in general, outside?

  2. FLYINGSCOT
    December 15, 2011

    The other tablet makers did not have a unique selling point.  Apple is “Apple” and people will follow them off a cliff just now.  To succeed one needs fantastic apps or hwardware feature nobody else has.  Since the tablets are basically web surfers Rim and others are fighting for a low cost commodity market.  I hear what you are saying about industrial uses of tablets and that is encouraging but I wonder what the volumes will be like.

  3. AnalyzeThis
    December 15, 2011

    HP's TouchPad was doomed to fail, absolutely. There was no way it was going to get the App support. Yes, it was a minor success once it started selling for $99… but I could sell a lot of Lexus' vehicles if I dropped the price of them down to $14,999 too.

    For the PlayBook, that had a chance… if RIM had delivered a solid tablet for use in the enterprise. Instead, they released too soon and inexplicably did a lot of marketing to consumers… which is about the dumbest strategy they could possibly do. Had they produced a solid tablet for the enterprise market instead of trying to compete with Apple, they may have had a chance.

    Alas, that never happened. Besides, RIM has far deeper issues at the moment.

  4. DataCrunch
    December 15, 2011

    DennisQ – Good points.  HP made a number of confusing statements recently relating to their computers and tablet businesses, but it is difficult to measure how well or not well they would have done since their efforts in the tablet space were so short lived. 

    RIM on the other hand is definitely having a hard time selling its devices, but strangely enough were apple to add subscribers.   Perhaps this has to do for their recent plans to allow other non-RIM devices to access their BES offering. 

    Today RIM posted a 27 percent drop in quarterly profit and provided a dismal outlook for BlackBerry shipments.  RIM also stated today that the company does not expect to release its QNX-based BlackBerry 10 smartphones until the latter part of 2012, which were promised to be available Q1 2012.  That delay cannot be helpful.

  5. SunitaT
    December 16, 2011

    It's good to know when to cut losses, but giving up without fully exploring all possibilities or supporting a product with the right resources is a worse strategy.

    @Anna, I totally agree with you. I think HP's decison to exit the tablet PC market was premature. Tablet business is still in its nascent stage and HP should have tried different strategies to fight with competitors rather than close the business itself.

  6. SunitaT
    December 16, 2011

    HP's TouchPad was doomed to fail, absolutely. There was no way it was going to get the App support.

    @DennisQ, I don't agree with you that HP's touchpad was doomed to fail. Infact Hewlett-Packard recently said it is open sourcing WebOS and the Enyo application framework. If they had done this before they could have given tough competition to Android.

  7. Barbara Jorgensen
    December 16, 2011

    I'm not sure HP was doomed to fail in tablets–I think as a brand it stood a better chance than lesser-known brands. But I do think it is too late now–HP missed the tablet boat.

  8. Anna Young
    December 16, 2011

    @mfbertozzi, thanks for your comment. It is appreciated. I understand that RIM, HP, Motorola etc all achieved their successess on different business objectives – but still in the same electronics technology market. I just feel that Apple and Amazon cannot be left to reap the benefits alone from tablets pc. I feel that RIM, HP etc, gave up too soon.

  9. bolaji ojo
    December 16, 2011

    Flyingscot, Apple is indeed different but rivals, analysts and the industry as a whole run the risk of over-emphasizing the company's uniqueness. Apple is beating competitors in the smartphone and tablet PC market and also in terms of its market capitalization but the electronics industry is more than smartphones and tablets. Apple is not dominant in PCs and is not present in many other market segments.

    As we have seen in the smartphone market, Apple's OS is not unbeatable and it may not be quite as invincible as people think in any of its market segments. The company has a target on its back and it's only a matter of time before another company figures out how to beat it.

  10. Anna Young
    December 16, 2011

    @Flyingscot, Yes you're correct. Apple has the cutting edge due to it's strategic approach. Like I said the demand for tablet PC is forecast to increase within businesses in Europe. I suppose we'll know the volume of increase figure by early next year or so. We'll wait and see.

  11. bolaji ojo
    December 16, 2011

    Barbara, Doomed to fail is a radical assessment and I agree with you HP wasn't doomed to fail. I don't believe any Apple rival is doomed to fail, either. Anna Young raised several questions in her article many of which companies in the smartphone and tablet markets are asking themselves too. They want to know why their products are failing and what they can do to recover. They also want to know what they can learn from industry leaders and how they can beat them. These questions will get answered and they are getting answered. The competition will increase as these are sorted out.

  12. mfbertozzi
    December 16, 2011

    Fully agree Bolaji, definitely; getting back to the past as lesson learned attitute, (imo), is the right approach; speaking about RIM it seems picture isn't overlapping that position, today several editorials have reported negative feeling in two CEO situation.

  13. itguyphil
    December 16, 2011

    I think the brand recognition might be part of the problem. People may automatically assume that since you've done well in other tech sectors, you must do well in this new one. That can be a high platform to fall off of if you're not properly suited for the task.

  14. mfbertozzi
    December 17, 2011

    @pocharle: it is a very interesting observation, you need to perform well, it isn't only a matter of brand. At the end RIM was focused specifically in one sector, HP held several business lines, was really the destiny their current condition?

  15. itguyphil
    December 17, 2011

    The saying “Jack of all trades, master of none” comes to mind. Sometimes having a reach in alot of different sectors can backfire, and badly.

  16. Taimoor Zubar
    December 17, 2011

    I don't agree with you that HP's touchpad was doomed to fail.”

    @tirlapur: You would agree that what HP was offering in the touchpad was not much different from what Motorolla and Blackberry are offering, and both of these companies have not had much success lately. Based on this, I would agree that HP would have failed to create a big impact with it's tablet. However, I think they would have captured a small market share and would not have completely failed with it.

  17. prabhakar_deosthali
    December 18, 2011

    In my opinion The main reason behind HP's downfall may be the lack of conviction from its top managment . At one time they announce thier exit from the PC and tablet business and then they declare a clearnce sale of their existing tablet stock at bargain prices.

    Who would believe in them in such a scenario?

  18. Cryptoman
    December 18, 2011

    I think HP made a good decision by exiting the tablet market. There are pretty good and solid players out there in the tablet market already and competition with such players would be too costly for HP anyways.

    Also, there is the issue of quality. Even though HP is a well known brand, I am not so sure about the quality of its laptops and printers that I had the opportunity to use and test in the recent years. I remember a time when HP laptop used to last and was reliable. However, I must admit I had quite a few disappointments with the HP products both in my business and personal use. Therefore, I would definitely stay away from an HP tablet anyways. I am sure I am not the only one who feels this way.

    In my opinion, if HP decides to spend time on getting its laptops to the same quality standard a few years back, its business will thrive. (Maybe it should also fix the scanner functionality of its multifunctional printers as well while at it.)

    Yes, a table PC has a niche market but it can never be a replacement for laptops (at least not for a few more years) and therefore “reliable laptop manufacturers” will be still making money.

     

  19. Clairvoyant
    December 18, 2011

    It's possible HP may have made a premature decision to exit the tablet market. However, it's also possible that they were a lot farther away than “3 feet from gold”. There are many unknowns looking towards the future and it is possible that if they stayed in the business, they may have ended up loosing more money. Who knows for sure?

  20. Himanshugupta
    December 18, 2011

    Tablet market and iPad's success is a case study in itself. As far as i can remember, tech companies did not find it difficult to break the ice in most of the other segments. Tablet segment has been a tough nut to crack so far. Most of the companies have failed to capture the imagination of the consumers either though price or through features or the eco-system. 

  21. Himanshugupta
    December 18, 2011

    @mfbertozzi, we will soon find out the problem with RIM's strategy to focus in one sector. RIM is already feeling the pinch after the soaring success of the smartphones. There has been whispers that RIM should abandon its mobile segment to keep floating. Finding new markets to grow is the key to remain solid in the tech market, especially in the consumer markets where the taste and preference of the consumers change quite frequently. 

  22. mfbertozzi
    December 18, 2011

    Yes Himanshugupta, I could share your perspective, but after all, even a possibile strategy for ramping the market is what outlined, each one corporation needs right board and top managers for achieving that and it seems picture at RIM is still confused and maybe a new hiring season would be start.

  23. Ashu001
    December 18, 2011

    Himanshu,

    I strongly disagree.Under no circumstance should RIM exit the smartphone space.

    Its the one area where even today they have instant recall,especially amongst busy professionals and in the Enterprise space.

    Its more about defending this mind-share today and the best way to do it?

    Spruce up their offerings and and build a much-much better App store.

    RIM can still turn this ship around,if enough Senior Execs have the faith.

    Regards

    Ashish.

  24. Wale Bakare
    December 18, 2011

    Should RIM sell off its tablet PC at very low prices to hold onto its market potion, can this bring RIM back to the right track? Hardly can we not reckon with RIM as a strong force in smartphone market, i can't see reason exiting its market share potion. May be RIM's NFC smartphone could be a joker this time around, who knows.

  25. Houngbo_Hospice
    December 18, 2011

    @tech4people:

    “RIM can still turn this ship around,if enough Senior Execs have the faith.”

    I don't see any reason why RIM should exit the smartphone market just yet but Senior Execs would need more than faith to turn the business around. What I think the company needs is a revolutioanry product that could put their competitors to shame, but they have to do very fast. Time is not running in their favour.

  26. Houngbo_Hospice
    December 18, 2011

    When RIM should learn from the past mistakes what really matters NOW is what they  should do remain viable. RIM should just move on…

    I would recommend that they improve their tablet and expand the software and apps available for it.

    They should review their marketting strategy and find a new “face” for the brand.

  27. Houngbo_Hospice
    December 18, 2011

    Overall, HP is not down yet, the PC business seems to revive. But the company is suffering from a loss of confidence. They should be able to hold to their greatest strenghs that is, hardware products manufacturing and make sure that the products are reliable and secure.

  28. Anna Young
    December 19, 2011

    @Tirlapur, That's exactly my point. HP, RIM and all gave up too soon! I think HP may have done well if a different approach had been fully explored.It failed to fully evaluate the reasons for the touchpad failure. Apple I think were it to be in similar position, would have gone back to the drawing board and ultimately improve the product and then relaunch again. This is what was expected of HP. Not the premature exit.

  29. Anna Young
    December 19, 2011

    @Tech4people, I agree with your view on RIM. I believe the company can reinvent itself. All BB need, is to re-strategize. Overhaul its interface, leverage its ever popular features i.e BBM and email services which makes its smartphone unique.

    With regards to its tablet ( playbook), I think with appropriate strategy, again it can still do better in the market. It was reported last week that Playbook sale increased significantly ever since the drop in sale price. Again it shows, BB need to do something right to push the tablet sale.

  30. Anna Young
    December 19, 2011

    @ Wale, do you think RIM selling off its tablet pc will improve its position in the market place? May be BB jumped into the tablet segment too soon – I agree.  However, would selling off improve its stake in the technology war? I doubt this very much. What's your view?

  31. Himanshugupta
    December 19, 2011

    @tech4people, Ashish i share the same zeal about RIM and BB but we should be cautious about the future. For sure RIM does not want to follow the path of Nokia and Motorola. This is the right time that RIM should refocus its strategy and make a long term plan. Right now the BB seems like the only service that RIM is dependent on and they are hard hit with the rise of iPhone and Android based smartphones. 

  32. Mr. Roques
    December 19, 2011

    Should HP make a comeback? I've heard of many people that bought the Touchpad after HP decided to end production. 

    I think there's room for low-cost tablets, for people that say: “yeah, I love the iPad 2 and the Galaxy Tabs… but I'm on a 200, 300 budget.”

  33. jbond
    December 19, 2011

    Amazon is poised to take the number 2 spot behind Apple with the Kindle Fire very soon. As a few weeks have passed since the release of the Fire, there have been many negative reviews, infact many reviews saying the Fire is not really a tablet computer at all. The big question from this will be if the reviews are correct and many people decide to by pass the Fire, which company will step up to challenge Apple? Reviews state the Nook tablet is better than the Fire and still priced at $250, but I highly doubt Barnes and Noble will compete with Apple.

  34. bolaji ojo
    December 19, 2011

    Jennifer, You are right about the negative press the Kindle Fire has received but it's dying out and Amazon has responded with a software update that's supposed to solve the problem. The Kindle should gain the number 2 slot behind the iPad despite this problem. If the Kindle fails, though, the only other company that may challenge Apple would be Samsung but it's a long shot.

  35. jbond
    December 19, 2011

    Bolaji, you are correct that Amazon has responded rather quickly to address customers issues. Personally I always take reviews with a grain of salt. There has been many times I have disagreed with reviews, both positive and negative ones. Samsung would seem like the logical choice, but I agree that it's doubtful.

  36. Ashu001
    December 19, 2011

    Houngbo,

    I don't think RIM needs a :breakthrough” revolutionary product which puts its competitors to shame-That was in case you remember RIM correctly never its strength.

    Rather just providing solid,trouble-free and super-reliable handsets that just worked everywhere.

    That is an issue which RIM needs to think about once again(especially after all the RIM outages we experienced in 2011).

    They fix those problems and jazz up their handsets and their back in the game!

    Regards

    Ashish.

  37. Ashu001
    December 19, 2011

    Houngbo,

    More than anything else HP is suffering from a crisis of leadership.They need a very strong leader in charge,someone of the calibre of Jack Welch to straigthen things out with an iron fist.

    That  will shut off all the naysayers off once and for all.

    Regards

    Ashish.

  38. Ashu001
    December 19, 2011

    Anna,

    This is exactly what RIM needs.And you have come up with some awesome suggestions,right here,right now.

    Now if only there is some way to get the message across to RIMs Inner Decision circle…

    Ashish.

  39. Ashu001
    December 19, 2011

    Himanshu,

    I am not really a fan of Blackberry products.

    But I know enough people who are,so recognize the kind of market that RIM has and sorely needs to hold onto.

    Ashish.

  40. Barbara Jorgensen
    December 19, 2011

    I'm really in awe of how badly companies can shoot themselves in the foot. RIM is a classic example–part of it, I thought was bad luck, with a system outage. But the rest of the stuff…one bad decision after another. HP did itself no favors with reversing itself, but its brand is still strong. RIM has to move quickly if it ever wants to regain any cache with Blackberry.

  41. Ashu001
    December 19, 2011

    Barbara,

    You sure HP  still has a strong brand?

    I am not so sure,personally.

    Maybe in the Servers,Services and Software space.But in the PC space? No I most definitely dont think so.

    Ashish.

  42. Wale Bakare
    December 19, 2011

    Thanks Anna.

    We have to bear this in mind, RIM still playing a head of Nokia in smartphone market.  And it looks likely very difficult  to compete with Apple's iPad tablet in market and that has deeply registered into consumers's buying memory whenever shopping for tablet PC consideration sets in – but low price could off-stage Apple's iPad as number 1 choice. I think.

    Meanwhile, re-strategising of market position should be the next for RIM. And, that solely dependent on visionary leaders.

     

     

  43. Anna Young
    December 20, 2011

    @Wale, thanks for your contribution. You're absolutely correct. RIM is ahead with Nokia in the smartphone market. I believe RIM can certainly turn things around itself with appropriate strategy. As noted from readers comments on EBN, RIM will  need to act quickly. Well see.

  44. Anna Young
    December 20, 2011

    @Barbara, I agree, a single point of failure for RIM is its systems outage related issue. This has continued to plague RIM. I'm sure the company is working hard to build more data centres to avoid future occurrence. As for HP, the name and its past glory its is saving grace. ( I hope it recovers from recent bad management errors, this is highly crucial for the company's future successes)

  45. SunitaT
    December 20, 2011

    I believe RIM can certainly turn things around itself with appropriate strategy.

    @Anna, unfortunately RIM doesn't have appropriate strategy. RIM has pushed back new smartphones designed on its next-generation BlackBerry 10 software until the latter half of 2012 and this delay will create a huge opportunity for the competitiors. Many analysts now believe that even Windows Phone should now be a concern for RIM now.

  46. Anna Young
    December 20, 2011

    @tirlapur, true, it appears RIM is running out of  ideas. this is a real dilemma and disappointing outcome. I seriously hope the company's decision and strategy works.

  47. Wale Bakare
    December 20, 2011

    @tirlapur, coming out with a new service strategy in today's competitive smartphone market without tangle into patent infringements allegation, chance seems very low. 2011, we have had many cases of patent court fights/infringements on IPs, why? Simple, everyone's battling to hold on to its market share potion.

    Latest patent infringements fight, report according to BBC, BT has accused Google infringed on its IP. Especially with high fly brand and famous names in phone business. Am slightly differ on this – RIM's running out of idea — the market seems very tight, i think.

    Take a look at Nokia's Window OS phone – has it made any significant difference in market so far? Just that majority of electronics consumers like to join on the bandwagon, and it can take a while to change people's mind.

     

     

  48. Anand
    December 23, 2011

    @Anna, RIM recently rejected overtures from online seller Amazon.com to acquire the company. Do you think this was right move by RIM to reject the offer from Amazon ?

  49. mario8a
    December 30, 2011

    What could happen if RIM cannot spin their luvk this year? Would this be their last chance or they can survive another year?

  50. Anna Young
    December 30, 2011

    @mario8a, I hope it is not RIM's last for all it's worth. Can the company survive another year? Well it's wait and see game. I think it can survive another year or so doing badly, if no solution is reached quickly. What's your view?

  51. Anna Young
    December 30, 2011

    @anadvy, I think rejecting Amazon's offer is a wise move. Although at some point, RIM will need to seek an alternative options. Either to merge with other similar technology company or come up with an innovative idea that will propel the company from its current position. I will like to see the company progress from its current position. What's your opinion? 

  52. mario8a
    December 31, 2011

    I beleive RIM has a srtong pipeline of distribution channels and thier executive staff has learned to better manage their decisions

  53. Kunmi
    December 31, 2011

    I think RIM can do well. It is just a matter of having innovative and business driven leaders who can make the company to shoot out within a short time…. It boiled that strategic approach

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