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

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.

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.