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The TouchPad Is Dead; Is Adobe's Mobile Strategy Next?

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Chalk up another win for the iPad.

Launched in early July, HP's TouchPad is being discontinued. Poor sales were the reason, says HP's CEO Leo Apotheker.

The TouchPad was based on the WebOS operating system, which HP acquired last year when it grabbed Palm for $1.2 billion.

A reader of my recent Android/Google/Motorola article asked why I'd failed to mention WebOS along with Google Android and Apple iOS.

"Is your lack of mention of WebOS, the HP (former Palm) operating system mean you feel that it is a non-starter in this mobile world?" asked David Daniels. "Do they have a chance of gaining market share?"

My response was that WebOS was a robust operating system, and the company's control of hardware and software was compelling in a way that only Apple could match.

The concern about market share came from the operating system sitting stagnant while HP digested what it had acquired, waited for new hardware that missed several delivery windows, and then priced the chunky TouchPad on par with the iPad 2 and Galaxy Tab 10.1 tablets.

"It's up to HP to execute and convince consumers why they should opt for WebOS over Android or iOS," I replied.

Apparently, this was impossible after the TouchPad was "poorly received" by the market, according to Apotheker. He said HP made the "difficult but necessary decision to shut down WebOS hardware in Q4 2011, as sales would require significant investment over one to two years."

HP may leave consumer-facing products entirely: the HP board approved a strategic exploration of alternatives, which could result in spinning off the consumer laptop and desktop division.

HP and Video: Mixed Results

HP isn't necessarily abandoning the video space, however.

The company found success in the video world with its Z series workstations, with its flagship Z800 series machines used for high-end video editing and forming the base hardware configuration for a handful of on-demand and live streaming server software packages that Transitions tested as part of last year's 2010 Best Workflows report.

In the home entertainment space, HP launched the HP MovieStore, powered by RoxioNow. Similar to the iTunes Store, but available exclusively on the TouchPad, the HP Movie Store offered recent Hollywood blockbusters as well as TV shows for either rental ($2.99-3.99) or purchase ($9.95-15.95).

The execution, however, left a lot to be desired. HP touted a buy-once-play-anywhere approach ("Order the movie on your TouchPad and watch it on your TouchPad or PC without paying again!"), but users had to buy it on the TouchPad and then transfer it to the PC — a cumbersome process at best.

Even more frustrating was the inability to send TouchPad video to a big screen, a staple of the Galaxy Tab and other iPad competitors.

"Having a tablet that costs $500+ without the ability to do video out with your freshly purchased/rented movies and TV shows really brings down the experience for TouchPad owners and further shows how much they're missing out when compared to other tablets," wrote Nothing But Tablets' Allen Schmidt.

Looming is the bigger issue that HP may not find a hardware vendor to license the WebOS.

Apotheker said the company is exploring market opportunities, but announced no hardware licensing deals. This led to significant confusion in initial reporting, as most journalists assumed the operating system was so tightly integrated with the hardware that WebOS would also be buried in a landfill with the 250,000 unsold TouchPads that Best Buy is returning to HP.

The End for Adobe's Multi-Screen Strategy?

Finding a licensee for WebOS isn't only in HP's best interest. It matters to Adobe, too.

Adobe placed significant emphasis in its Flash mobile marketing strategy on the Flash Player being available on multiple platforms — from Android to RIM QNX to HP WebOS.

The fact that RIM's PlayBook and HP's TouchPad have both languished has to make Adobe nervous. Besides that, both devices deliver sub-standard video experiences compared to Android-based tablets such as the Motorola Xoom (which is itself lagging — in both performance and sales — against Apple's iPad). The risk for Adobe is being boxed into an Android-only strategy and having to abandon the line that it's the solution for any platform (save iOS).

A full 80 percent of the tablet devices that Adobe showcased at last October's MAX event either never made it to market, made it to market and floundered, or made it to market and were killed off quickly.

The decisions by tablet manufacturers are out of Adobe's control, and it's possible that RIM's QNX and PlayBook might survive in a future hardware update. That would be a good thing for Adobe, as it seems the company needs at least one hardware or firmware rev to optimize video playback.

Yet, the shrinking market for non-Apple and non-Android tablets has to worry a company that doesn't want to look like it's competing directly with Apple. Based on the events of the past few days, people will look to this year's MAX conference, in early October, to see if Adobe can shake the rapidly-forming perception that the Flash Player's mobile strategy relies strictly on Android. 

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