Just before Mobile World Congress officially kicked off in Barcelona, Hewlett-Packard Company (NYSE:HPQ) announced that it was jumping back into the consumer tablet fray with a new Android device, the Slate 7. As far as strategic positioning goes, the Slate 7 is like a mix of Amazon.com, Inc. (NASDAQ:AMZN)‘s first-generation Kindle Fire and Google’s own Nexus 7.
Can the Slate 7 give Hewlett-Packard Company (NYSE:HPQ) a bigger foot in the tablet door?
What would happen if a Kindle Fire and Nexus 7 hooked up?
From a hardware standpoint, the Slate 7 bears an uncanny resemblance to the first Kindle Fire, which was launched back in 2011. The display is the same size and resolution as the e-tailer’s device, and also carries a similar price point. The processor powering the Slate 7 is an ARM Holdings plc (ADR) (NASDAQ:ARMH) dual-core Cortex-A9 processor, but HP is not specifying exactly who is making this chip.
The software front is where the Slate 7 resembles the Nexus 7, since Hewlett-Packard Company (NYSE:HPQ) has decided to ship its tablet with a mostly stock version of Android 4.1 Jelly Bean. I say “mostly” because HP is adding a couple of customizations, but the additions are nowhere near the level of software modifications that other OEMs are obsessed with adding.
HP is embedding Beats Audio in the device for improved audio capabilities, but also integrating an HP ePrint app to gently encourage consumers to keep on printing (and buying expensive printer ink). Incredibly, printing is still 21% of the business, with that segment generating $5.9 billion in revenue last quarter. Other than these two additions, the Slate 7 is mostly a stock Android affair.
Here’s how the Slate 7 stacks up against its two adopted parents.
|Specification||Slate 7||Nexus 7||Kindle Fire (first-generation)|
|Display resolution||1,024 x 600||1,280 x 800||1,024 x 600|
|Storage||8 GB||16 GB / 32 GB||8 GB|
|Cellular option?||No||Yes, $50 extra||No|
The device is about as entry-level as it gets, and it commands a commensurate price point. The Slate 7 has no illusions of competing with high-end devices in this market segment like Apple Inc. (NASDAQ:AAPL)‘s iPad Mini.
While HP is primarily tapping Microsoft Corporation (NASDAQ:MSFT) Windows 8 for its enterprise tablets, the company is choosing Android for its consumer attempts. This comes just months after HP’s PC chief Todd Bradley said that the company would indeed be entering the consumer segment in 2013.
The new tablet also comes after HP launched its first Chromebook earlier this month, and the Slate 7 shows that HP is getting cozier with other software platform providers like Google in an attempt to hedge its bets should tensions with Microsoft continue to grow as the software giant becomes a competitor with its Surface tablet.
As an entry-level device, Hewlett-Packard Company (NYSE:HPQ) opted to save on development costs by shipping a primarily stock Android device. By choosing not to add a layer of software modification for the sake of differentiation, the Slate 7 is also destined to be a relatively commoditized device.
At that price point, HP is looking at incredibly thin margins to begin with on this tablet. The company clearly hopes to skim a little bit more if it can gently nudge people to print more, but HP is also trying to sell two-year extended warranties for up to $49 — or nearly 30% of the initial purchase price.
HP’s mobile chief, Alberto Torres, said that the company plans on offering a range of tablet form factors leveraging an “array” of operating systems, so the Slate 7 is likely just a preview of more to come. After the company’s first failed foray into consumer tablet turf, can it find success with a low-end, commoditized offering? Probably not.
The article It’s Official: HP Hooks Up With Android originally appeared on Fool.com and is written by Evan Niu, CFA.
Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, Google, and Microsoft.
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