Friday, September 7, 2007

HP wants to make smartphones, too

Lost in all the noise of Apple’s intro, HPQ unveiled a passle of iPAQ PDAs on Wednesday. All run some derivative of Windows CE and have WiFi, but I think the segmentation is a little more clever than that. At the high end of the product line are two smartphones:

They also have the iPAQ 310/314 ($450) which is like a portable GPS (with a 800x480 touch screen) running Windows CE 5.0. All three replace earlier models in these segments. Overall HP is targeting RIM and its Blackberry product line. However, HP badly trails both RIM and even struggling Palm in global PDA sales.

Microsoft has always wanted more impact on the US smartphone market, but it seems that their Windows Mobile sales leaned towards the carrier-branded (ODM-made) phones like the HTC 8525 even though Cingular also carries HP, Palm and Samsung WM phones. HP née Compaq is Microsoft’s best known licensee, so these new iPAQs have the potential to put portable Windows Media players into more hands than ever before. (Particularly if HP could someday leverage its PC distribution in Office Depot and Best Buy to sell smartphones).

Also on Wednesday, Microsoft quietly announced a price cut of its 30gb Zune MP3 player from $249 to $199. As Bloomberg reports:
Microsoft has sold more than a million Zunes since the player went on the market last November, less than 3 percent of Apple's iPod sales over the same period.

“If they're going to grow the Zune, they're going to have to offer a viable alternative to what Apple is offering,” said Michael Gartenberg, an analyst at JupiterResearch.

Microsoft, based in Redmond, Wash., held 3 percent of the portable digital player market in the six months ended in June, compared with Apple's 71 percent, according NPD Group Inc.
Clearly Microsoft’s greatest handheld success has been with business users, not consumers. Since HP was selling about 1.5 million iPAQs a year with its obsolete product line, its new family could easily outsell the Zune.

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