In August, a group of top HP reps and product directors gathered in New York to show off the company's newest devices: laptops, tablets, desktops, hybrid PCs. But its flagship product—or at least the device HP reps spent the most typing selling to attendees—was the HP ElitePad 900, a 10-inch Windows 8 tablet designed for business. With a slew of business-friendly accessories (keyboard, docking station, Stylus pen), HP believes its slate can finally compete with the iPad in the corporate world. But what about Microsoft's Surface tablet?
Like most hardware makers in the space, HP's interest in the enterprise space is indicative of its larger struggles to keep pace with Apple in the consumer tablet market. Long have hardware manufacturers (or OEMs) relied on corporate customers to boost sales: Not only did these customers value low-cost products over high-end design, but their employees depended on legacy applications, meaning programs built for older systems that required backward compatibility to function—programs that would be too costly to migrate over to a new platform like Apple's. In this environment, Windows-based PCs thrived. But that's all changing thanks to the iPad. Apple's best-selling tablet has dominated the enterprise space—one recent study suggested the iPad accounted for 97.3% of tablets activated by enterprise customers last quarter, a strong indication that even stodgy business clients value quality design and user experience.
Apple now sells more iPads than HP does PCs. Mike Hockey, worldwide public relations manager for HP’s multi-billion-dollar personal systems group, describes this sea change: "Let's be honest, there's a certain expectation in the market—the iPad has set an expectation for what a tablet should be. We know that you have to design something that looks good. At the end of the day, nobody wants to be embarrassed to pull something out—it's got to have a consumer look and feel. If you pull out something butt-ugly these days, end users will revolt. It used to be, 'You take it; you're going to like it.' That's changed. It really has. You got the IT guys saying, 'I need X, Y, and Z.' But you have the end user going, 'Man, screw you, I'm going to bring in my own device.' So if you're not even close to the iPad, then why even bother?"
It's a radical change in thinking for HP. Only last year, the company was trying to sell me on the HP Slate 2, a super-thick, Windows 7-based tablet that had barely any of the functionality of the iPad yet sold at an alarmingly high price of $699. At the time, Hockey and his colleague Kyle Thornton, category manager for emerging products at HP, argued that due to the reliance of the enterprise on Windows and legacy applications, the HP Slate 2 would be a huge hit in the market, despite its deficiencies and appalling design. "To be honest with you, we've had many customers look at [the iPad], but they're not necessarily looking for that whiz-bang experience," Thornton said then. "Let me tell you, for a lot of customers, the Windows 7-based [Slate] performance is more than enough for what they're looking for… Now, the CEO might get the iPad, but for the 500 or 2,000 [employee] deployment? They're not going to get iPads. They're going to get something like this [Slate 2]."
In other words, the CEO gets the good device, while the employees get the cheap device. Look how much has changed: "I agree with you: Windows 7 was not the answer," Hockey told me over the summer. "I'm not going to argue with you. I'd be the first to tell you that Windows 7 on a tablet was not a very strong product. But we think that with this new generation of Windows 8, touch-enabled devices, there's an opportunity now."
All told, the ElitePad 900 is a pretty sleek device on its own. At 9.2mm and 1.5 pounds, the ElitePad is actually more appealing than many of HP's consumer offerings. The company hopes the tablet's accessories will set it apart: a two-piece Smart Jacket system provides extra battery life and ports; a docking station provides additional features such as USB and HDMI connectivity; and the company is also offering an external keyboard and Stylus pen.
However, these accessories are also the ElitePad's downfall: The thick and heavy jacket system is anything but Smart; the docking station provides little differentiation; and the external keyboard is a bulky slab of hardware that doesn't match the device's lightweight design, while the Stylus pen doesn't even attach intuitively to the tablet itself when not needed. (Because the Stylus pen was foolishly designed thicker than the tablet itself, you actually need an external cover just to store the pen.) Compare that to Microsoft's Surface tablet, which features a sturdy, built-in kickstand as well as a super-thin attachable keyboard that doubles as a cover. Why would corporate customers want all the additional clutter of accessories if Microsoft's offering eliminates the baggage?
"Because you may have a situation where you may need more options—the [Surface] might not be enough for you," Hockey says. "If all I'm looking for is a notebook, well, I might as well buy a notebook. If I'm just going to carry the Surface with a kickstand, what's the point? We've got notebooks that are down to 2.5 pounds now. I don't know what the Surface is with the kickstand—it's right at 2 pounds I think. If i'm going to have the kickstand and keyboard all the time, and that's really all I'm using it for, then why not just go buy a lightweight notebook or ultrabook?"
It's a talking point HP was clearly prepared to deliver. Only several weeks ago, HP CEO Meg Whitman knocked the Surface, which she said "doesn't function like a laptop," adding that "it lacks a keyboard you can do real work on." Whitman argued the Surface is more so geared toward the consumer space, while HP's offering will compete in the enterprise market.
One thing is for sure: HP can no longer rely on the same formula and advantages it has for decades. High-end design and user experience are now incredibly important, even in the corporate world. And with Apple's rocketing success in the enterprise space, HP and other hardware makers can't depend on Windows forever to sell its products.
"You and I can debate whether iPads belong in the enterprise, and absolutely, yes, they've made some in-roads," Hockey says. "But if you're an old dinosaur, and you want to continue with your legacy apps, or if you're willing to invest in something new, we can do that. We're the best of both worlds."