Wednesday, February 14, 2007

HP’s Cell Phone Entry: Déjà Vu All Over Again

At the 3GSM World Congress, HP has introduced the iPaq 500, a GSM/Edge smart phone using Windows Mobile 6. The Washington Post headlined this “HP Enters the Cell Phone Fray,” but I was sure I'd heard this song before. And I had — in 2004.

Why does HP keep entering the mobile phone market, a brutal commodity business that’s in the midst of a shakeout? Who do they think they are, Apple?

Not surprisingly, HP’s entire mobile phone strategy is drafting on Microsoft — because the iPaq division is one of the few parts that HP kept from Compaq, a slavish Microsoft loyalist. So while HP (California) is a big Linux fan — and might be tempted to dive into the more difficult task of making a Linux mobile phone — it makes a lot of sense for HP (Houston) to use an open innovation strategy until they figure out whether they stand a chance in this market.

Windows Mobile is part of Microsoft’s long-standing Windows Everywhere campaign that mainly appeals to large corporate IT managers, so it’s plausible for its major systems partners to support the full range of products. But then IBM was running a money-losing PC division under the same theory until they decided synergy was too expensive and outsourced the losses.

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