A Tablet PC From HP, A Gamble On Windows

Hewlett-Packard (NYSE: HPQ) has begun to show its new Slate tablet PC. The company still guards some details about the machine, but the media has ferreted out a bit about how the product will operate. It will be called the Slate 500.  The Windows 7-based device will be powered by Intel’s 1.86GHz Atom Z540 processor It will have an 8.9-inch screen and weigh 1.5 pounds.

HP will market the tablet to both businesses and individuals. Because it will retail for $799, the Slate will be able to compete directly with the high-end Apple (NASDAQ: AAPL) iPad.

Slate is not much of a financial gamble for HP. It already has the engineering prowess and supply chain to make the product along with the marketing muscle to sell it. If the Slate fails, it is HP’s pride and image that will be damaged.

The odds of the success of the Slate are on HPs side. Some estimates put tablet sales at more than 200 million units in 2013. Apple will not sell all of those machines. There will be room for several other competitors though it may take two or three years to sort out the winners.

The real risk that HP has taken is that Slate operates on Windows 7. The market for portable devices has been driven largely by Google’s (NASDAQ: GOOG) Android operating system. The exceptions to that are smartphone market leaders Apple and RIM. Their customer bases are large enough so that they believe they can rely on proprietary operating system platforms.

Windows has been a failure in the smartphone market. Tablets sit in a gray zone between laptops and smartphones, which means that a Windows-based machine may not be attractive to consumers or businesses. HP reasons that tablets should look and feel like larger PCs. If that is right, the Windows choice will have been a brilliant one. If not, HP will have effectively knocked itself out of the tablet race.

Douglas A. McIntyre