Hewlett-Packard Company (NYSE:HPQ) announced this week that it’s getting back into the mobile game by working on a high-end Android-based tablet. NVIDIA Corporation (NASDAQ:NVDA)‘s been unofficially named as the processor supplier for the tablet, which would be the first device to use its Tegra 4 chip. Both have much to gain from the tablet — if HP can make it in the mobile world.
New tablet, new opportunity
HP set up its new mobility division late last year to focus on consumer tablets and other mobile offerings, and it looks like this new announcement is the company’s first fruits of the division. The new tablet will push HP into new mobile territory, something it hasn’t excelled at in the past.
When HP launched its TouchPad two years ago, the company hosted a huge press event to drum up excitement, but then launched the product six months later. All the press attention had died down and the TouchPad went on sale with no real interest from consumers. Soon after, HP canceled the TouchPad, along with the webOS running it, and sold off the remaining tablets for less than a $100 each.
But the newest tablet isn’t just an opportunity for HP; it’s also a boost for NVIDIA as well. Last month, NVIDIA showed off its new Tegra 4 chip at the Consumer Electronics Show in Las Vegas. The company claims the new Tegra chip is the world’s fastest processor, but it’s not expected to show up in any tablets until later this year.
NVIDIA isn’t new to the mobile processing world. The current Tegra 3 processor can be found in notable mobile devices like the Motorola Solutions Inc (NYSE:MSI) MMI Droid X2, HTC One X, Google Inc (NASDAQ:GOOG)‘s Nexus 7 and the Windows RT Surface tablet. But launching the new HP tablet with a brand-new NVIDIA processor may push both companies further into the right direction. HP needs to compete in the mobile space, and NVIDIA wants to grab more mobile processing market share.
NVIDIA currently comes in second place in tablet processor market share with 17%, behind Apple Inc. (NASDAQ:AAPL)‘s 53%. NVIDIA’s Tegra Group, which focuses on its Tegra chips, grew 90% year-over-year this past quarter and brought in $208 million in revenue. But some analysts are worried that NVIDIA won’t be able to gain more mobile market share in such a competitive environment.
The (possible) road ahead
NVIDIA already has more than a foot in the tablet processor door, but Intel Corporation (NASDAQ:INTC), Advanced Micro Devices, Inc. (NYSE:AMD), and QUALCOMM, Inc. (NASDAQ:QCOM) aren’t sitting idly by while mobile explodes. NVIDIA needs to grow its tablet and smartphone chips sales to ensure it can stay ahead of the pack. With PC juggernaut like HP using a Tegra chip, NVIDIA may find a good partner going forward. The PC maker knows how to sell products. HP sold more than 56 million PCs — a 16% market share — in 2012. But as HP has already learned, mobile is a completely different space.