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HP Flexes WebOS Muscles, Snubs Microsoft On Windows Tablets

HP says its plan to focus exclusively on WebOS tablets won't affect the strength of its Microsoft partnership, but partners expect the two companies' mobile industry relationship to change.

In one of his boldest pronouncements since joining HP last November, CEO Leo Apotheker told Fortune this week that HP doesn't intend to release new Windows 7 tablets anytime soon. "HP smartphones and tablets will be running WebOS, only WebOS, at least that's for the near future, that's the plan," Apotheker in an interview published Monday.

While it's premature to interpret HP's decision to focus exclusively on WebOS tablets as a sign of strain in its Microsoft partnership, there's no denying that mobile industry competition is a notoriously savage beast. At the very least, we could be witnessing a shift in how HP and Microsoft compete in the mobile space.

Apotheker's assessment was frank but hardly surprising. Windows 7 isn't designed for tablets, despite Microsoft's claims to the contrary, and partners have spent much of the past year clamoring for the software giant to rethink its tablet OS strategy.

HP's lone Windows 7 tablet, the $799 enterprise focused Slate 500, is still in short supply seven months after hitting the market. HP isn't talking about the cause of the shortage, but it reportedly has more to do with limited production than with sizzling sales. Microsoft, for its part, would certainly be citing Slate 500 sales as evidence of Windows 7's suitability for tablets if they'd reached a meaningful level.

Although Microsoft says the next version of Windows will include ARM support and be better suited to tablets, it's not expected to arrive until next year. So it's understandable that HP would want to pump the brakes on rolling out additional Windows 7 tablets.

"Microsoft has pretty much acknowledged they’re not going to be a player in the tablet arena until the next version of Windows with its ability to run on ARM based CPUs," said Todd Swank, vice president of marketing at Northern Computer Technologies, a Burnsville, Minn.-based system builder.

But is HP giving up on Windows tablets for good? Apotheker told Fortune that WebOS shouldn't be a concern to Microsoft. "It's not a threat at all. Microsoft doesn't view it as a threat, and we don't intend it to be a threat," he said.

Still, the fact remains that HP spent $1.2 billion to acquire Palm and WebOS and now enjoys a level of mobile platform autonomy that only Apple can claim. And some HP partners feel it's high time for the company to start leveraging this newfound autonomy.

NEXT: Partners Call HP WebOS A Strong Mobility Play


Michael Haley, president of Edge Solutions, an HP partner in Alpharetta, Ga., says the Palm deal gave HP a degree of fiscal independence it hasn't enjoyed during the course of its Microsoft partnership.

"When you look at the Windows licensing fees HP would be paying for each tablet, the $1.2 billion looks like a bargain," he said. "Palm was a great acquisition because it makes HP relevant in an area where it really needs to be relevant."

Bob Venero, president and CEO of Future Tech, a Holbrook, N.Y. solution provider, also likes the new mobile direction that HP-Palm represents. "Microsoft's tablet efforts have been kludgy and stop-and-start. I think it's crazy for an OEM like HP to be part of that when they could control the platform themselves," he said.

HP's future tablet plans may still include Windows, but there's recent evidence of strategic shifts on the part of both companies that could generate additional friction with Microsoft.

Andrew Brust, CEO of Microsoft analyst firm Blue Badge Insights, based in New York City, points to HP's aggressive cloud computing strategy, its claim that WebOS will be installed side-by-side with Windows on HP PCs and its decision in December to drop out of the Windows Home Server 'Vail' ecosystem as examples of how the longtime partners' strategies are diverging.

"HP has made several moves and announcements recently that, at the very least, have to make Microsoft feel alienated," said Brust.

Whether this alienation will affect the HP-Microsoft partnership long term is anyone's guess, although it's unlikely. And if Microsoft's next version of Windows works well with tablets, HP could reassess its stance.

Swank is holding out hope for this scenario, as he believes customers that have made major investments in Microsoft software would still prefer to run Windows tablets in their environments over Android and Apple devices.

"It seems that CIOs are still on Microsoft's side, but employees are coming in with fancy new mobile devices and they're winning," said Swank. "I’m sure that story will change pretty quickly when HP has the ability to release a tablet PC based on the next version of Windows."

Meanwhile, the clock is ticking for Microsoft, and each second that ticks by without a tablet friendly Windows is a chance for an iPad, Android or WebOS tablet to gain a foothold in an enterprise IT environment.

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