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4/30/2010
11:25 AM
Bob Evans
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HP-Palm Can Leapfrog Apple In Mobile Apps

If you look at the volume of mobile apps available for Apple (180,000), Android (40,000), and Palm (1,000), you just might scratch your head and wonder what in tarnation Mark Hurd was thinking when he agreed to spend $1 billion to acquire Palm. But an investment manager who's a massive Apple fan suggests one clear way for HP and Hurd to make the deal a big winner.

If you look at the volume of mobile apps available for Apple (180,000), Android (40,000), and Palm (1,000), you just might scratch your head and wonder what in tarnation Mark Hurd was thinking when he agreed to spend $1 billion to acquire Palm. But an investment manager who's a massive Apple fan suggests one clear way for HP and Hurd to make the deal a big winner.Jason Schwarz is an investor and blogger who holds a long position in Apple so he's clearly got a vested interest in Apple's ongoing success. But one of the reasons he's been such a bullish fan of Apple for so long-and believes its success and stock price will both continue to rise-is the power of the application and developer ecosystem Apple has so brilliantly developed.

And that same strategy, he says, is HP's only hope for Palm. From Schwarz's latest post on SeekingAlpha.com:

HP was sick of being just another commodity so they went out and bought Palm with hopes of creating a valuable ecosystem of their own. Consumers demand the ability to utilize the same software on multiple devices. When I purchase a mobile app, it better be available on my phone and my tablet as well as on my next phone and my next tablet. It's this software continuity that creates brand loyalty. Apps will soon be available for use on televisions and PC's as well. This wirelessly distributed software is on a growth trajectory to one day overtake the popularity of websites. HP has been watching this evolution occur without being a major player in it. Now they are. Or at least they hope they are.

Noting that Android's already beaten Palm as the leading open-source mobile platform, and that Apple stands totally unchallenged for the top spot as the less-than-fully-open-source platform, Schwarz says HP CEO Hurd has to launch an incredibly aggressive initiative to woo developers by leveraging HP's world-leading market share in PCs and notebooks. Writes Schwarz:

If I were the CEO of HP I would rush to get these mobile apps compatible with laptops, PCs, and televisions before Apple, Google, or Microsoft. Merely playing catch up won't get the job done. They have to catapult ahead of the competition if they want to secure a spot on the ecosystem leaderboard.

Concluding that we are in the final days of seeing standalone smartphone companies and standalone computer companies, Schwarz hammers home the strategic significance of a pervasive ecosystem as HP's only chance for high-level success in the mobile world:

"Without an ecosystem there is no brand loyalty," Schwarz writes, "and without brand loyalty there is no sustainability."

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