Hewlett-Packard CEO says he'll 'get to the bottom' of leaked memos

Hewlett-Packard Chief Executive Leo Apotheker said in an interview with CNBC that the world's largest PC maker is going to "try to get to the bottom of this" after three of his company memos were leaked to the media.

The memos, two of which were leaked to All Things Digital and the third to Bloomberg, warned of upcoming cost-cutting measures for the company, telling top execs to "watch every penny and minimize all hiring" and said the firm's current workforce plans were "unaffordable given the pressures on our business."

On the CNBC show "Squawk Box," Apotheker said the cost-cutting measures were being put into place because of the earthquake and tsunami that struck Japan in March, weak PC sales and a slowdown in HP's tech services business -- each reasons that HP cited as it trimmed back its profit projections for the year on Tuesday alongside its earnings report.

"We were affected by Japan," Apotheker said on the show. "It's very hard to forecast a tsunami. And because of our exposure to Japan, we wanted to be prudent. We didn't do anything more than just to do prudent margin management, and actually our investors should applaud us for doing that."

The moves also show that HP is focused on long-term growth, and not just short-term profit, he said.

"I could have continued operating the business as we have been," Apotheker said on CNBC. "But that would not have set us up for medium- or long-term growth. The point is to succeed from our cloud and connect strategy. So we execute now. Now is the time. We're going to make a few changes and therefore, we have to readjust our margin expectations for services."

The memos, Apotheker said, also demonstrate that HP was making the correct steps to manage profit expectations given the concerns in the areas mentioned.

"We knew that there was an issue in Japan and a softness in the consumer PC segment and wanted to make sure that we were covered for that," he said. "Now that was pretty clear, we were very transparent about that. It's unfortunate that such a memo leaked. But it's part of day-to-day management."

Apotheker later said he would find our just how the memos made their way to the media.

"It is very unfortunate that these things happen and we will try to get to the bottom of this," Apotheker said. "But I have full confidence in the team that I am working with and we'll continue to execute."

The chief executive also said, that while PC sales were likely to remain soft for the rest of the year, it won't affect HP's plans to offer new PCs, tablets and smart phones running the company's WebOS operating system.

"On the commercial side, PCs are doing extremely well,"  Apotheker said. "On the consumer side we believe there will be some continued weakness for another couple quarters, but the PC will remain the main computing device. But we are also very excited about our WebOS devices, in particular the TouchPad, that is still scheduled for this summer."

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: Hewlett-Packard CEO Leo Apotheker. Credit: Tony Avelar / Bloomberg News

HP to offer cloud computing platform

Hewlett-Packard is getting into the cloud-computing business and taking on competitors Amazon and Google.

The technology giant announced plans Monday for a portfolio of cloud computing capabilities from infrastructure to platform services, the company said.

As part of that push, HP plans to deliver an "open cloud marketplace" in which developers can create applications for consumers and businesses.

“We see clearly a world in which the impact of cloud and connectivity is changing not only the user experience, but how individuals, small businesses and enterprises will consume, deploy and leverage information technology," said Chief Executive Leo Apotheker in a statement.

After purchasing smart phone maker Palm and its WebOS last year, HP also announced plans this week to expand and put its WebOS into a broader range of products, ramping up its presence in the gadget world by delivering 100 million devices a year.

This is the first time Apotheker has publicly announced his strategy for HP since taking the helm from Mark Hurd, who is credited with rebuilding the technology giant into the world's largest computer maker and resigned last August after allegations of sexual harassment and falsifying expense reports.

No date was set for the launch. It remains to be seen whether HP can lure software developers to the new platform with a bevy of other competitors such as Google and Amazon already present.

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Photo: HP Chief Executive Leo Apotheker opens the HP Summit. Credit: Tom Raftery via Flickr

 

Apple reportedly exploring introducing a smaller, cheaper iPhone model

Apple is in the process of developing smaller and lower-priced models of the iPhone in an effort to garner a larger share of the smart-phone market, according to a report from Bloomberg.

Along with making a phone that could be marketed on the lower-price end of the smart-phone market, Apple is working on technology that would make it easier for such a phone to run on multiple networks, Bloomberg reported, citing unnamed sources.

Splitting the iPhone into a product line of multiple phones, with different features and prices could be a move on Apple's part to further compete with smart phones running Google's Android operating system, which have such diversity, Bloomberg said.

A similar move was made Thursday when Hewlett-Packard introduced new low-end and high-end models to its Palm line of smart phones with the HP Veer and HP Pre3.

The Veer is the size of a credit card and is likely to be the cheapest phone HP offers while the Pre3 will have the largest screen, largest price and features not available on other models in the line, such as a front-facing camera for video chat and the ability to record high-definition video with a rear camera.

Android, which debuted in 2008, has a nearly 33% share of the worldwide smart-phone market -- nearly double Apple's 16% take, according to the research firm Canalys.

Aside from HP's smart phones running the HP WebOS operating system, Nokia is looking to take on Android and Apple too, and on Friday announced that it will do so with new higher-end smart phones running Microsoft's Windows Phone 7 software.

Nokia accounted for about 28% of the global smart-phone market last quarter, largely on sales of phones running its Symbian OS.

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-- Nathan Olivarez-Giles

Twitter.com/nateog

Photo: Apple Chief Executive Steve Jobs as he introduces the iPhone 4 on June 7, 2010. Credit: Ryan Anson / AFP/Getty Images

HP TouchPad might beat Android and BlackBerry tablets, but not the iPad, analyst says

The HP TouchPad, running WebOS, could be slick enough to attract more consumers than any individual Android tablets or the BlackBerry PlayBook -- but it has no shot at dethroning the Apple iPad, an analyst said Wednesday.

"Collectively, Android tablets are huge; the market is already flooded with them. But if you're looking not at the whole platform, but rather a one-to-one comparison, the TouchPad could make a good case for the No. 2 spot behind the iPad," said Sarah Rotman Epps, a tech analyst at Forrester Research. "The TouchPad could outsell the Motorola Xoom or the Samsung Galaxy Tab or the BlackBerry PlayBook."

A major advantage that Hewlett-Packard's TouchPad could have over tablets running Google's Android operating system is its screen size, Rotman Epps said.

"Every Android tablet is slightly different, and Honeycomb, the first version of Android optimized for tablets, isn't out yet," she said. "So what you've had so far is a smart-phone operating system on a bunch of tablets and not many Android apps actually built for tablet use."

The mix of inconsistent specs for Android tablets has made it tougher for developers looking to make tablet apps on Android, Rotman Epps said.

"What HP has to overcome is that the only apps out there built for tablets right now are really built for the iPad," she said. "If your tablet is going to succeed, it needs apps, and making the screen on the TouchPad the same size as the iPad should make it easier for developers to port apps over. If developers start doing that, then HP can build an app ecosystem which will attract consumers."

The screen size isn't the only specification that matches the iPad, she noted. Both the iPad and the TouchPad run on Wi-Fi and 3G Internet service, weigh 1.6 pounds and have processors running at about 1 GHz.

The TouchPad features a front-facing camera for video chat, and the next-generation iPad, which should hit retail sometime this year, is widely expected to also feature a camera on the front to utilize Apple's FaceTime video-chat standard.

"It is not at all a mistake on HP's part that the TouchPad and the iPad are so similar," Rotman Epps said. "HP is explicitly trying to compete with Apple in having its own hardware and having its own operating system. So far, Apple has been by far the most successful in the tablet space, and HP is looking to replicate that success on its own. Not with Android and not with Windows."

It's noteworthy, she said, that HP isn't offering its first consumer tablet with Microsoft's Windows 7 -- the same operating system that runs on its HP 500 Slate tablet aimed at business users.

"If you're making boxes that run Android or Windows, you have the problem of competing with all the other boxes that run Android of Windows," Rotman Epps said."But it does say something about the failure of Microsoft to position Windows 7 as a winning operating system for tablets that HP is willing to go out on its own with WebOS. This is really another missed opportunity for Microsoft in tablets."

Nothing HP announced on Wednesday puts it ahead of Apple, but the TouchPad running WebOS is a bet that its brand strength and retail channels are strong enough to compete with Apple, she said.

With HP attempting to build WebOS up as a major operating system for tablets and smart phones, the trimming of the Palm brand from the name and marketing of the new WebOS devices isn't a mistake either, the analyst said.

"People love Windows, and HP now has the challenge of convincing consumers to want HP devices that don't run Windows," Rotman Epps said. "HP is trying to differentiate itself and unbundle itself from Microsoft, and that means they're losing a bit of the Microsoft brand and marketing power that could have helped their tablets, but keeping the Palm name around wouldn't help them."

HP is a high-ranking brand and a name consumers trust, she said.

"Palm is not," Rottman Epps said. "In our studies, HP ranks pretty high and Palm always ranks pretty low. HP recognizes that in the U.S. and globally, it has a much stronger brand than Palm to try and build a tablet ecosystem on."

HP made a big deal of getting apps for Netflix and Amazon's Kindle on its WebOS phones and on the TouchPad when it announced the new devices on Wednesday during a news conference in San Francisco. Having an app for Netflix does put WebOS ahead of Android -- which still doesn't have an app that can stream video from the popular movie-and-TV-show subscription service.

But such apps are expected by consumers at this point, she said.

"Kindle and Netflix is not a differentiator, but it's necessary, and having them on board is what HP needs to do to gain serious consideration from consumers," Rottman Epps said.

And if HP can do that, then spending $1.2 billion to buy Palm last April could pay off.

Forrester has forecast that more than 24 million tablets will be sold in the U.S. in 2011, with the lion's share of them being the iPad. Apple sold more than 14 million iPad's last year, with 7.33 million units sold last quarter.

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Photo: HP Palm CEO Jon Rubinstein, shows off the new HP TouchPad tablet during a Hewlett Packard WebOS press conference in San Francisco on Wednesday, Feb. 9. Credit: Associated Press

Images: (Middle) The front of the HP TouchPad tablet and (bottom) the back of the device. Credit: Hewlett-Packard

HP announces TouchPad tablet, and Veer and Pre3 smartphones -- all running WebOS

Hewlett-Packard unveiled the TouchPad tablet Wednesday in San Francisco, along with two new smartphones -- the Veer and Pre3.

The company touted the new devices as delivering the HP WebOS mobile operating system in "three new flavors: small, medium, and large."

The three products also mark a shift in branding for Palm devices under HP's ownership. The Palm name is being cut back to a product line under the larger HP umbrella -- a move foreshadowed by the renaming of Palm's WebOS to HP WebOS in October.

HP bought the struggling Palm last April for $1.2 billion.

The first tablet from Palm, now a division of HP, is formally being called the HP TouchPad -- not the HP Palm TouchPad or Palm TouchPad or the Palm TouchPad from HP.

The device even sports a silver HP logo on its shiny-black plastic back with the Palm name nowhere to be found.

The TouchPad's spec sheet is a similar to that of Apple's iPad. The touch screen on the TouchPad is 9.7 inches diagonally and it weighs 1.6 pounds -- the same as the 3G iPad.

The TouchPad also is, for now, only going to be offered in a 3G flavor, either with 16GB or 32GB of memory. No Wi-Fi-only model was announced.

The HP tablet, however, will be capable of being used for video chatting -- a feature notoriously left off of the iPad but expected on the iPad 2 and found on many other tablets, including the slow-selling Samsung Galaxy Tab.

The TouchPad will feature a front-facing 1.3-megapixel camera and 1.2-GHz Qualcomm Snapdragon processor.

Unlike the Galaxy Tab, the TouchPad will have no camera on the back for shooting photos or video with.

HP is bringing over its Beats Audio technology, developed with Monster Audio and rap-producer Dr. Dre for HP laptops, to the TouchPad promising "great sound through the built-in stereo speakers."

The TouchPad is set to release this summer and it could end up being HP's first consumer tablet to make it to the market.

HP released its $800 HP 500 Slate last fall, running Microsoft's Windows 7 operating system, but has only sold the device to businesses through its website and has not released the tablet to electronics stores or mobile carriers. The Slate also was limited to Wi-Fi-only Internet connectivity.

The TouchPad is set to release "this summer," HP said, offering no details on price as of yet.

The HP Pre3 is the Palm division's "medium"-sized smartphone, which is growing in size from its Palm Pre and Palm Pre2 forefathers.

The Pre3 will feature a 3.58-inch touchscreen with a 480 x 800 resolution, up from the previous two Pre's 3.1-inch displays.

The new Pre smartphone will run on a 1.4-GHz Qualcomm processor and also have a forward-facing camera for video calls, a first for a Palm phone.

The third Pre will also come equipped with a 5-megapixel autofocus camera capable of shooting high-definition video, paired with an LED flash.

It and the "small" HP Veer, both runing the HP WebOS, both are set to release this summer and haven't been given a price yet.

Both phones, like the TouchPad, also are absent the Palm name and again are stamped with HP logos on back.

The HP Veer is about size of a credit card at 3.25 inches tall with a 2.6-inch touchscreen and slide-out keyboard. The Veer will come with 8 GB of storage -- the same as the Pre2.

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Top Photo: Paul Jacobs (left), CEO of Qualcomm, Jon Rubinstein (middle), senior vice president and general manager for HP Palm, and Todd Bradley, executive vice president of HP Palm's personal systems group, stand onstage during an HP WebOS press conference in San Francisco on Wednesday. Jacobs is holding the HP Veer smart phone, Rubinstein is holding the HP Pre3 smart phone and Bradley is holding the HP TouchPad. Credit: Beck Diefenbach/Reuters

Images: HP Pre2, top, HP Veer, middle, and HP TouchPad, bottom. Credit: Hewlett-Packard