Goodbye Wintel, Hello Googvidia?
Over the past year, HP has released new products that have decreased its dependence on the Wintel system ruled by Microsoft Corporation (NASDAQ:MSFT) Windows and powered by Intel Corporation (NASDAQ:INTC) chips. Out of all the leading PC manufacturers, HP has remained the most loyal to Microsoft Corporation (NASDAQ:MSFT), while its competitors Lenovo, Acer, Asus and even Dell have all started producing Android products. Unfortunately, that loyalty was ill-advised and caused HP products to lag behind in demand.
In February, HP finally launched two major Android products – a 14″ “Chromebook” (Chrome OS laptop) which runs on an Intel Corporation (NASDAQ:INTC) Celeron processor, and a 7″ Android tablet powered by a RockChip CPU.
The HP Pavilion Chromebook, which competes with similar products from Samsung and Acer, is a lightweight cloud-based experience, where Google’s ecosystem of apps can be accessed online and offline for a streamlined, no-frills Internet experience. The product is competitively priced at $330, which places it in the mid-range of its fairly small niche market.
The HP Slate 7 Android tablet, on the other hand, doesn’t really offer anything new to the market, and at $169, it costs only $30 less than Amazon.com, Inc. (NASDAQ:AMZN)’s Kindle Fire HD or Asus’ Nexus 7. Both the Kindle Fire HD and Nexus 7 have been met with better reviews than the Slate 7, which has been criticized for its poor quality screen and camera.
Recognizing the shortcomings of the HP Slate 7, HP is planning to release new 10.1″ Android tablet-laptop hybrid devices, the Split x2 and the SlateBook x2, which are similar to Asus’ Transformer devices. While HP’s form factor is nothing new, it’s notable that these new devices will be powered by NVIDIA Corporation (NASDAQ:NVDA)’s Tegra 4 mobile processors as well as Intel’s i3 CPUs. This represents a significant shift in its strategy of manufacturing traditional x86 devices powered by Intel and Advanced Micro Devices, Inc. (NYSE:AMD) chips.
Late to the party
It’s clear that HP realizes that the key to turning around its sluggish PC segment is to team up with Google and Android to decrease its dependence on Microsoft. But I believe that this may be too little, too late, considering how saturated the tablet and hybrid market is.
HP is several years late to this party. Chromebooks have been on the market since June 2011. Current generation tablets have been around since 2008. Asus Transformer hybrids were first released in March 2011. All three technologies were introduced to the market while HP was busy ousting its leaders and making poorly advised acquisitions.
If anything, HP’s “new” approach to PCs is just a testament to the rising significance of Google and NVIDIA Corporation (NASDAQ:NVDA), which could usher in a new age to succeed the Wintel era. For HP, it is a last ditch effort to make up for lost time.
The Foolish bottom line
Looking forward into the full year of 2013, HP expects to earn non-GAAP diluted EPS between $3.50 to $3.60, which tops the consensus estimate of $3.49. This indicates that HP is relatively positive about its ability to hold steady for the rest of the year. Whitman expects net debt to reach “pre-Autonomy” levels by the end of the year.
