HP's TouchPad plan: Become the Pepsi to Apple's Coke

HP's TouchPad plan: Become the Pepsi to Apple's Coke

Summary: Hewlett-Packard's WebOS and TouchPad platform needs to provide not only brand awaremess in order to solidify its position in the tablet race against Apple's iPad, but also value.

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My ZDNet Mobile News colleague James Kendrick believes that HP with its WebOS has huge potential to be a mobile contender with tablets and smartphones. He's an optimist.

Unlike James, I'm not an optimist. I'm a realist. I know that the battle that HP is facing with WebOS is very much an uphill one.

I originally predicted that the TouchPad would be Dead on Arrival a few weeks before it came out. When it was officially released, I also heavily criticized HP for failing to engineer the product correctly.

I stand by those statements because I believe that unless HP takes drastic corrective action, the platform has no chance in hell of succeeding against Apple's market leader, the iPad, or even Android Tablets.

If WebOS is to make any progress as James Kendrick suggests, it's going to be a bloody war on the way up that awful hill. One which will require incurring heavy losses in order to increase mind and market share.

Last weekend, Hewlett-Packard reduced the price of the TouchPad $100 (down to $399) in a tactical move to help them move product and generate interest.

Additionally, Staples issued another $100 coupon which allowed customers to "double dip" effectively reducing the price of the TouchPad for one weekend to $299.00.

Not all Staples stores actually honored the double dipping coupons, but enough did to generate a lot of news on various tech blogs.

The TouchPad is now hovering steadily at $399 for the entry-level model.

At that $299.00 double-dipped price point for a 9.7" device, even with the faults in the product that I've discussed in earlier articles, the TouchPad suddenly starts to look at lot more attractive. That's significantly cheaper than effectively anything else being offered in the Android space right now.

I'm not sure if this is the kind of deal that HP is willing to stomach long-term. The double-dipping deal they ran last weekend was a short-term, one-shot deal.

But I think that if any sort of progress is going to be made with this product, they will probably have to continue to offer steep discounts on it and anything else that comes down the pike using the TouchPad brand, like this new 7" TouchPad Go, the "Opal" device that has been previously alluded to in leaked HP presentations.

Much of what we are talking about comes down to establishing a brand, and that brand becoming identified as the more "affordable" choice than iPad.

To some extent, this is what Google is attempting to do with Android, but it's not doing it very successfully, because there isn't a unified "Android" brand message with the various Android OEMs per se.

You can buy some Honeycomb devices around $400, but there aren't many Android tablets in the $300 range. At least not many worth owning... Yet. And please don't tell me the $249 Barnes & Noble NOOKColor qualifies a tablet. For most end-users, it won't.

I'd like to pull an example from history, one which I think illustrates this value-oriented strategy very well. It's the story of Pepsi-Cola.

Today, soft drinks and particularly cola drinks are viewed very much as commodities, this despite all of the advertising attempts at brand identity and garnering customer loyalty through expensive advertising campaigns by companies like Coca-Cola, Pepsi and Dr Pepper.

While there is loyalty to certain regional brands of soft drinks, from a national brand perspective, people tend to buy them either by taste preference or by whatever is on sale at the supermarket by the case or the liter or whatever.

In my case, I like Coke Zero better than Pepsi Max, but if push comes to shove and a refrigerator pack of Pepsi Max or Pepsi One or even Diet Pepsi is on special, I'm gonna go for the Pepsi product.

And a lot of times when you order a "Coke" at certain food service establishments, sometimes you even get Pepsi, because that's who they're doing business with. And for the most part, most people don't care if they get served Pepsi or a Coke or even say, an RC.

However, this didn't used to be that way. Many, many years ago, all of this had to do with value. And providing more for less.

As a company and as a brand, Pepsi didn't become popular until it became the more affordable choice to Coca-Cola, which was and still is the more established brand, much like Apple's iPad is the established brand for tablets.

Back then the beverage industry wasn't as sophisticated as it is today, and there weren't as many product offerings (there weren't three or four versions of Diet Anything from each bottling company, for example) but Coke was still very much an American icon and formidable competitor even back then.

If you look at Pepsi ads from the Great Depression, and through the 1940s, 1950's and 1960s, you'll see the emphasis on a "Bigger Bottle" for the same price as their competition.

Pepsi's own official corporate history details their stratospheric growth as a company from the moment that they shifted towards a "value" oriented soft drink.

In 2011 while Pepsi is in second place to Coca-Cola which takes the lion's share of the market at 42 percent, it still has a respectable 29 percent share of the beverage industry, with Dr Pepper/Snapple coming in at 16 percent.

For HP to succeed with WebOS, and to occupy the #2 spot, it has to do the same thing that Pepsi did. It has to become the more affordable alternative choice.

Like the 1930's and the world that Pepsi faced during its growth as a company, Hewlett-Packard, America and now the world is in the midst in a global recession which according to most economists is just going to get worse.

Tablets are luxury devices, and while Apple may be able to sustain a market for itself by charging $500 a pop and above for iPads, Apple is still the luxury choice.

That being said, HP cannot even think of unseating the Coca-Cola of its market segment or even making significant headway against it unless it can prove value and move product in large volumes.

Once HP can prove value with the TouchPad, and move the units from a "More for Less" perspective a la Pepsi, then there's room to talk about taste and product differentiation or even derivative products. And with volume sales comes opportunity and motivation for developers to take advantage of an increasing user base.

And what of Android? I think for the time being, Google is happy being the contract bottling company for supermarket generic brands, leaving packaging, flavoring and marketing choices up to ShopRite, PathMark, Kings, Stop-N-Shop, Publix, Kroger and Piggly Wiggly.

Should Hewlett-Packard take the "Pepsi" approach to the TouchPad? Talk Back and Let Me Know.

Topics: Apple, Hardware, Hewlett-Packard, Laptops, Mobility, Operating Systems, Tablets

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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51 comments
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  • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

    I like HP products, I have a house full of them ... but, this thing is DOA. I tried out both the HP TouchPad and Samsung Galaxy Tab 10.1 at my local Best Buy at the same time; the TouchPad isn't in the same league as the Galaxy Tab, much less the iPad (which I don't personally don't think is as good as the Galaxy Tab). It might sell a few units at a much lower price point, but I see no reason to purchase one over the Galaxy for the same price.
    roteague
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @roteague , I couldn't disagree more with you. I bought a TouchPad the day it came out and I have been using it every day, many hours a day: at work, at home, at starbucks, everywhere. It is simply the most integrated experience you can have on a tablet today. All information from every cloud service you can imagine is available right from withinh the OS (gmail, google docs, skype, yahoo, exchange, dropbox... you name it) I do own an iPad2 (and had the original iPad too since it was introduced) and I finally feel free from the endless restrictions I found myself in while using the iPad: paying premium price for every song, movie or book I download; having to also pay a premium on every accessory because nothing apple does is standard (charger, video adapter, etc...) and the lack of multitasking is just ridiculous - how can you justify paying over $500 for a tablet who can't even multitask!!!???. So, don't judge the TouchPad based on your 30 seconds interaction at the store. Get advice from people who actually use it.
      latablet
      • You are a massive minority

        @latablet
        While I don't doubt a word of your story, the truth is that you are a massive minority. Tens of millions of people disagree with you and only a handful agree (as is evident from sales figures).

        I also predict that once Apple is done knocking Motorola out of the tablet marketplace with their latest lawsuit, HP will be next.

        Enjoy your TouchPad while you can. In less than 2 years, HP will stop supporting it after having been sued by Apple.
        toddybottom
      • iOS has had 3rd party multitasking since rel. 4.0...

        @latablet ..native apps multitasking since day one.. what are you talking about? how do you suppose I can stream pandora music, have my GPS navigate in the background and bark out directions and surf the Internet at the same time? Please get a clue?
        doctorSpoc
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @latablet
        Full of it.
        Premium price on accessories? Rubbish. There are thousands of accessories for the iPad and about 10 for the TouchPad.
        Premium prices for content. Any way you can get content for the TouchPad you can also use for the iPad...and most (if not all) media formats can be used on the iPad...there are many APPS that support formats besides .mp4's. You don't have to go through iTunes if you do not want to.
        The cloud services you stated are also available on the iPad.
        Multitasking is supported...sure it is not the multitasking that is implemented on PC's but think about it....you can have basically every APP loaded without having to continuosly kill them off to preserve processor/battery. The notifications still run and some APP are designed to run in the background. I notices some tablets implement a technology where APPS are automatically killed when not used for a length of time....how is that a better multitasking system...APPS being killed off automatically.
        global.philosopher
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @latablet I find myself questioning your claim to have had and original iPad and now and iPad 2 simply based on your restrictions claims. You are not restricted on where you purchase media from and you know that. Paying a premium for accessories? First, there are some many options out there that you can find most anything you need from cheap to expensive. Second, is it better to have expensive accessories (though they aren't all expensive as you implied) or no accessory options at all? If multitasking was an issue for you on the original iPad was an issue then why would you have purchase an iPad 2. Just a few reason why I suspect your post is more FUD than truth.
        non-biased
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @roteague really...my ipad2 is now a coaster...and 2 months ago threw my Galaxy Tab in the garbage..biggest waste of $$$...Luv my touchpad ..OMG it just outshines my ipad 2...and thanks to the webOS homebrew community; had my touchpad's performance overclocked before the update....
      ETrevino4400
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @ETrevino4400 Hey! next time you're of a mind to toss perfectly good technology in the waste bin, give me a call. I'll take them off your hands no questions asked. Really!
        Olderdan
  • Where is the TouchPad's equivalent to the iTunes ecosystem?

    No tablet will ever succeed unless it can offer something at least as good as Apple's iTunes ecosystem. HP doesn't have that. Even if the TouchPad was a technological marvel and was priced at $200, it would still fail against the iPad because it doesn't have the iTunes ecosystem and Apple refuses to sell license so that any other company can piggyback on Apple's massively successful iTunes ecosystem (as is Apple's right, Apple is perfectly within its rights to be anti-competitive).

    That much is indisputable fact.

    What is conjecture on my part is that no one will be able to match Apple's iTunes ecosystem. That is my prediction. And not being able to match Apple's iTunes ecosystem, combined with the stranglehold that Apple has enforced on legally allowed look and feel (bye bye Samsung, Motorola, and soon HP) I do not see consumers having any real choice in the tablet market any time soon.

    It is a sick market from a competitive standpoint and while Apple stockholders can (and should) rejoice, regular consumers suffer.
    toddybottom
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @toddybottom , As much as Steve Jobs would like you to believe, the real ecosystem is already available from the numerous cloud services out there today Amazon, best buy, heck...even Walmart! HP already laucnhed its own movie store and, most importantly, TouchPad users are already accessing thousands of movie titles on several sites that are flash-based (Sorry but flash is far from dead... but you can't get it to run on iPads or iPhones because Apple who couldn't get it to work right on iOS)
      latablet
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @latablet As usual, some people post without checking any facts. You can get flash on an iPad, there's an app called vnc that has it. So I guess we know where your "facts" are coming from....
        T-Wrench
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @latablet None of the current options match iTunes and that was obviously the point, not that there weren't any options. Having to use multiple sources for your media is also a deal breaker for many versus having one source. BTW, didn't Walmart just drop their service? It's also very obvious that you are grasping for a case when you have to use tired old talking points like Flash. In case you haven't got a clue yet, sales of iOS devices indicate that the average consumer isn't worried about Flash.
        non-biased
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @toddybottom The "iTunes ecosystem" is a factor for many in the consumer market, but not the enterprise market. And I expect HP to hit the enterprise market hard with WebOS-based devices including tablets (both 7" and 10" form factors), printers, netbook, laptop and desktop PCs. HP is much more knowledgeable, skilled and experienced in the enterprise market than is Apple.<br><br>As for the consumer market, their forthcoming 7" form factor tablet might be just the ticket for playing the Pepsi card. And like latablet says, Amazon.com is a good option for media. Amazon could also be a strong player in the tablet consumer market and they can more easily play the Pepsi card than HP by subsidizing their tablet with future media sales (caveat, Amazon's tablet will be Android-based).<br><br>As for Apple turning it's patent arsenal on HP, RIM and Microsoft, I'll believe it when I see it. These companies all have strong patent portfolios and will, likely, enter into cross-licensing agreements, etc. with Apple. I think Apple is after one thing, and that's Android.
      Rabid Howler Monkey
      • To get into the enterprise, it must 1st get into the CEO's home

        @Rabid Howler Monkey The only way to get into the enterprise is if the people that make the decisions (good, bad and dumb) like the product ... meaning at home.

        So far, the consumer is not buying the TouchPad and the main reason is the lack of ecosystem. And that ecosystem is also needed in the enterprise. Or do you really think that companies are just going to pay for a device and build their own apps?
        wackoae
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @wackoae Many enterprises will not want their users downloading and installing apps willy nilly from Apple's App Store via iTunes. They would rather push the apps to their enterprise users themselves, which gives them much more control over the devices. How many apps does the average enterprise user need on their device to perform his or her job?<br><br>All enterprises are not alike. Some are happy to have their users bring their personal devices into the workplace and use them for work-related tasks. Others will not allow this and will provide their users with devices to be used only for work-related tasks. And, presumably, requirements analysis to generate use cases is still performed by some organizations and the vendors are evaluated on their ability to satisfy the required use cases along with other factors.<br><br>IMO it's too early to cede the enterprise to Apple.
        Rabid Howler Monkey
      • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

        @Rabid Howler Monkey [i]Many enterprises will not want their users downloading and installing apps willy nilly from Apple's App Store via iTunes. They would rather push the apps to their enterprise users themselves, which gives them much more control over the devices.[/i]
        I do not work in enterprise or deal with it in anyway so could be wrong but doesn't Apple offer a solution for the above issues?
        non-biased
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @latablet WALMART, who just shutdown their music cloud service, and will follow soon with their video service. And Best Buy has a cloud service? Do they have more than 10 people who are not employees using whatever service that they have? Are you in another universe?
      TBeckner
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @toddybottom

      The iTunes ecosystem? iTunes is one of my biggest gripes about my iPad. I suppose it is a draw for some (many?) but for many others like myself we loathe having to use the thing.

      The gigantic selection on their AppStore however has been a key differentiator which others have found tricky to match. WebOS in particular will have a hard time attracting developers.
      SlithyTove
    • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

      @toddybottom For me, THe problem with the iPad (and anything else Apple) IS the iTunes ecosystem. I am willing to put up with slightly less "slickness" in order to get the job done without iTunes. For me, I enjoy Gingerbread on a Nook Color, and I would probably enjoy the TouchPad even more.
      dimonic
  • RE: HP's TouchPad plan: Become the Pepsi to Apple's Coke

    Well, in your analogy Android is Pepsi even though it is sold under different brands.
    Though HP can try advertizing a bigger tablet for the same price as TouchPad is, indeed, bigger :)
    Scrabbler