An HP executive lays out the company's 1998 product strategy for cracking the top three in notebook and handheld computers.
The ambitious plan is part of HP's effort to become the No. 3 producer of portables in the world as well as the world's largest computing company, said Jacques Clay, vice president and general manager of the extended desktop business unit at HP.
"Our goal is to be in the top 3 [notebook vendors] by the year 2000," he said. "We will have one platform for each of the nine segments."
As for handheld devices, HP will release a three types of Windows CE-based devices, which will range in size from a PCMCIA card (that is, the size of a credit card) to a form factor approaching mini-notebook dimensions.
HP's handheld devices will not be based around the PalmPilot. Clay revealed that third parties ostensibly representing 3Com approached HP recently to inquire whether HP was interested in buying the PalmPilot division which 3Com obtained when it bought U.S. Robotics earlier this year.
"We turned it down," he said.
Saturation and segmentation will be the key to the mobile products strategy. Clay's nine categories do not necessarily mean nine different form factors. Instead, HP will use a few form factors and differentiate product lines through componentry. The idea is to appeal to a broad audience.
Notebooks for high-level executives, for instance, may use the same form factor and screen size as notebooks made for the more generic "performance" segment, but the features will be different. Other market categories include price-sensitive customers, buyers interested in small form factors rather than performance, and small business.
"If we want to grow the market, we have to segment the market," Clay explained.
Clay added that HP will heavily use its consulting divisions and its sales channels to tie HP OmniBook sales to desktop and server sales.
Currently, HP makes two different sizes of standard notebooks as well as a mini-notebook. Next year, the company will likely release a ultraslim notebook that's 18-mm thick and comes with a magnesium case. Although HP's design partner for this product, Mitsubishi, is already showing a model called the Pedion, HP will not ship the so-called tray-table product until the first half of next year.
One reason is that problems with the lithium ion battery persist, said Clay. Sources close to HP have also noted that test customers are reporting the keyboard needs to be redesigned to some degree. The keys are too close together and too small for productivity work , sources said.
As for handheld devices, Clay said the market will congeal around three form factors. The smallest will resemble a PCMCIA card and essentially allow users to carry a portable calendar that is synchronized with their desktop.
The next form factor up in size will be today's Windows CE devices. More functional than the PCMCIA cards-sized devices, these will still act as PC companions and be synchronized with desktops or other main computers. In other words, users will not deploy these as desktop replacements but as a way to lighten their load. These devices will be marketed at people who don't want to lug a notebook into a meeting.
Above that will be larger devices that will cost around $800 and come with their own docking stations. HP will come out with one of these larger devices for the first time in 1998. They could be used as productivity devices hooked up to Windows CE and NT, Clay said. Such a description seems to describe how a portable Windows-based Terminal might function.
Although Clay said he was unsure what the eventual form factor would look like, he said these products would fill a niche between the current CE devices and the OmniBook 800, which is HP's mini-notebook. Others have said the largest handhelds will resemble mini-notebooks or even notebooks. Clay was less specific on HP's plans for PCMCIA-like portables.
All of the handheld devices again will be based on Windows CE. "Windows CE is a better proposition than the PalmPilot," he said. "Windows CE is going to give an OS that can be used for productivity."
HP, which had been a laggard in the notebook arena for some time, began to reinvigorate this division in late 1996.
"We reshuffled the whole organization. Everyone was fired," said Clay. "The only way to get moving was to start from scratch."
Since then, the company has hired a number of executives, including members of the PowerBook team from Apple. Recently, certain analysts reports have shown an increase in HP sales. Resellers have also reported growing customer interest in the platform.
HP's notebook plans, Clay added, were directed strictly at corporate and business users. In HP's mind, there is not much of a consumer notebook market. "Why would [a home user] buy a notebook? To play games?," he asked rhetorically.
HP will sell in retail outlets, he said, but not necessarily direct the products at consumers.
On the other hand, Compaq has chalked up significant market gains through its retail strategy, according to studies by Computer Intelligence. Compaq is also one of the few companies selling a consumer notebook.