HP CEO Whitman: Smartphones Are in Company's Future

HP CEO Meg Whitman said smartphones are becoming a key computing device around the world, and as a computing company, HP needs to be in that market.

Hewlett-Packard, a year out from its failed attempts at webOS-based mobile devices, is looking to make a move back into the booming smartphone space, according to CEO Meg Whitman.

In an interview with Fox Business News, Whitman said that given the trend toward consumers and businesses worldwide embracing smartphones as key computing devices-including in emerging markets-it makes sense for HP to make another push into the market.

"My view is we have to ultimately offer a smartphone because in many countries of the world, that is your first computing device," she said during the interview. "There will be countries around the world where people may never own a tablet or a PC or a desktop, they will do everything on a smartphone, we are a computing company; we have to take advantage of that form-factor."

Whitman did not say when an HP-branded smartphone would hit the market, or whether the company would develop one in-house or get the capability through an acquisition. However, she did say it is important for HP to make sure it gets done right this time.

"In the end, I would love to be able to provide all the way from the most fabulous workstations to desktops, to laptops, to our tablets and convertibles, all the way to the smartphone," Whitman said. "But we did take a detour into smartphones, and we've got to get it right this time. … So we're working to make sure that, when we do this, it will be the right thing for HP and we will be successful."

Several years ago, HP offered a number of mobile devices running Microsoft's Windows Mobile OS. However, the company bought mobile device maker Palm for $1.2 billion in 2010, when Mark Hurd was HP's CEO. Palm had its share of smartphones, but the key was the webOS operating system. Over the following months, HP under Hurd and, later, his successor, Leo Apotheker, touted a plan to have a broad portfolio of webOS-based devices, from PCs to tablets to smartphones.

In 2011, under Apotheker's watch, HP released the webOS-based TouchPad tablet, but six weeks later spiked the device due to poor sales in the United States. With the decision, the company not only ditched the TouchPad, but also planned webOS-based smartphones. In a twist, HP's decision to sharply cut the price on remaining TouchPads to get them out of inventory drove a consumer rush on the tablets, making them-however briefly-one of the fastest-selling tablets on the market.

After Whitman took over for Apotheker late last year-soon after Apotheker's decision to sell off the PC business was met with derision in the industry-she toyed with the idea of selling webOS until deciding instead to make the operating system an open-source project. Late last year, Whitman suggested that HP may release another webOS-based tablet, but at the time said, "I do not believe we will be in the smartphone business again."

That apparently has changed. When asked about smartphones in the Fox Business News interview, Whitman said, "We are working on this."

It's not surprising to see why. PC sales worldwide have stagnated, which has hit PC makers like HP and Dell particularly hard. Both companies are looking to transform themselves, and for HP, that includes growing its presence in the mobile space. It's an increasingly lucrative market. Gartner analysts in July forecast that consumers will spend $2.1 trillion on tech products and services-including smartphones and tablets-this year, and that number will climb to $2.7 trillion by the end of 2016.

HP already is getting back into the tablet game. Most recently, the company at the end of August introduced its Envy x2, a hybrid device that can be used as a tablet or a traditional laptop, powered by Intel chips and running Microsoft's upcoming Windows 8 operating system.

Mobile devices also will figure into HP's turnaround efforts. The company has seen several consecutive quarters of disappointing financial numbers, and, under Whitman, is trying to find its footing again. Included in the restructuring program is a plan to cut 29,000 jobs by the end of 2014, through attrition, early retirements and layoffs.

It's unclear whether HP will buy a mobile device company to help drive its smartphone ambitions. However, it is fairly certain that HP won't be buying struggling BlackBerry-maker Research In Motion (RIM). When asked about that possibility, Whitman said, "No, that is not a direction that we're going to head."