Meg Whitman Boldly Proclaims Hewlett-Packard Will Not Deliver a Smartphone in 2013 (and Nokia Needs a Billion Dollars to Survive)

By Tony Rizzo October 24, 2012

In all actuality, HP's CEO Meg Whitman may not really have been all that bold when she stated that HP is not going to deliver a smartphone in 2013. She stated this during an on-stage keynote interview at a conference today in answer to a question.

In early September, right about the time Whitman was completing her first full year on the job at HP and during an interview with Fox News, Whitman had asserted the opposite - that HP needed to deliver a smartphone for the simple reason that smartphones are now an intimate part of all enterprise devices that employees carry and HP had to be able to provide them to its enterprise customers and to enterprise workforces. It seemed clear at the time that Whitman was convinced HP needed to do this, and needed to do so fairly quickly.

We provided some thoughts on the notion of HP delivering a smartphone back then. Having just reread what we wrote then, it's clear to us that what we believe was a great suggestion at the time is an even better suggestion today.

First and foremost, the only way HP is going to be able to legitimately get into the smartphone game is not to reinvent a hundred wheels and try to deliver an actual HP-designed and HP-built smartphone. HP significantly lags the smartphone market and can never hope to catch up to it with its own smartphone. It can only get into the game for real (and not simply for show) either by partnering and OEMing/white labeling another manufacturer's smartphone design and actual product, or it can far more smartly look to make an acquisition in the space.

The former makes no sense as it leaves too much out of HP's hands and would also easily lead to and leave HP without the significant leverage it would have if it owned the entire hardware development process. The latter makes a great deal more sense, but the question becomes one of which player makes the most sense for HP to acquire.

We've already provided our perspective in our earlier article highlighted above as to why Research in Motion and HTC would lead to failure, and won't rehash that here. We also provided the details on why we very strongly believe that Nokia is the right vendor for HP to acquire. We won't rehash those details here either.

The Nokia in the Room

But it is certainly well worth noting that only a few days ago Nokia announced that it was in need of a billion dollars - which it is looking to raise through a bond sale - in order to ensure it remains viable long enough to be able to take advantage of its new hardware offerings that are based on Windows Phone 8. Raising money through a bond offering and taking on debt simply means that Nokia will subsequently owe that money. Whether or not Nokia can truly recover, survive and ultimately thrive following a billion dollars' worth of a cash infusion is highly problematical. In fact we seriously doubt it would make any difference.

Considering that a Nokia acquisition is highly affordable - even with a premium tacked on to its current share price - we absolutely believe that a Nokia acquisition makes a huge amount of sense for HP. With such an acquisition Nokia can skip the billion dollars, it can remain an independent operated arm of HP, it already has all of the Windows Phone 8 hooks in place, and can deliver some mighty fine tablets with HP's help.

HP in turn can put its huge marketing machine into action in North America and can finally give Nokia the only path it will ever have to truly being able to play in the United States as a serious consumer and enterprise player. This alone would be huge for Nokia. That is also something Microsoft would certainly stand behind in a major way. The tight Nokia-Microsoft relationship would also provide some interesting smartphone/tablet benefits for HP.

One of Whitman's reasons - perhaps we can look to it as the only reason - for so adamantly suggesting that HP won't deliver a smartphone in 2013 is that the company needs to remain laser-focused on its turn-around. That is not really an excuse we want to hear from a Fortune 10 company! Turn-around or not, HP must be able to execute on M&A at whatever time a strategically valuable opportunity and asset presents itself. We believe Nokia represents exactly this strategic opportunity and asset!

Note to Meg Whitman: There is no need for HP to not have a smartphone in 2013.

Edited by Brooke Neuman

TechZone360 Senior Editor

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