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HP Outlook Gloomy: Can Tablets, WebOS Turn Things Around

HP is predicting a tough year, but WebOS and the TouchPad could turn things around.

HP cut its forecast for the year by a billion dollars, and HP CEO Leo Apotheker issued a gloom and doom memo warning staff that times are tough. With consumer demand for PCs, and business demand for tech services down, can HP get back on track with the TouchPad tablet and its gamble to put WebOS on PCs?

HP earnings are up, and even beat analyst estimates, but the future is not looking bright, and HP leadership is looking for ways to operate more efficiently, trim costs, and squeeze every penny from the budget. Production fallout from the natural disasters in Japan, combined with depressed consumer demand for PCs are bleeding HP revenue. HP services sales were up slightly, but earnings dropped about three percent from the previous year.

HP may be able to shave some expenses and costs and keep earnings on track, but that doesn't sound like an optimistic long-term strategy. If tech services and consumer PC demand don't rebound, HP will have to find other ways to bring in the bucks--like the TouchPad tablet, and the WebOS PC.

HP's TouchPad--a tablet built on the WebOS platform--is expected to hit the street sometime this summer. Fans of WebOS have long claimed that it is a superior mobile platform to Apple's iOS, but that didn't stop Palm smartphones from crashing and burning. For the TouchPad to succeed, though, HP needs to grasp what other tablet rivals don't--hardware specs may beat the iPad on paper, but it is the user experience that sells tablets.

Beginning in 2012, HP plans to put WebOS on all PCs. HP's mobile OS will run along side Windows to enhance the PC experience. Details of how WebOS on PCs will work, or what features or functionality WebOS might add that other PCs lack are still sketchy, but the opportunity is there for HP to provide unique value and set its PCs apart.

It won't be easy, though. As rivals like Motorola, RIM, and Samsung are learning the hard way, it's an iPad world right now, and breaking into the tablet market with anything more than a trickle is easier said than done. The PC market is a tough one as well with a wide variety of competitors, and HP will have to work hard to convince consumers that a WebOS PC is a better value.

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