HP handheld target may be overambitious

Hewlett-Packard (HP), a global leader in IT solutions, has ambitious plans for its handhelds in India.

Sumeet Gugnani, country manager-handhelds, HP said, "In India at present, the handheld market is pretty small. Only around 700 units are sold every month. Compare that to the rest of Asia like Thailand with 4,000 units and China with 38,000 units. We want to grow the market to at least the size of Thailand in a year."

He was speaking on the soft launch of three HP-Compaq iPaQ models in the country -- the RZ 1710, H 2210 and the RZ 3715.

HP, which gained wireless handheld marketshare through its acquisition of Compaq, plans to do this by getting aggressive on the marketing front. Gugnani blames their late strategy on the huge customs duty that prevailed and credits the lowering of it as one of the reasons HP will be pushing their handhelds.

"It is no mean reason that we are the number one in the APAC region according to IDC. We sell over 1,00,000 units in the area and are reputed with 53 per cent growth in the sector," says Gugnani proudly.

However, according to the IDC report on global marketshare in handhelds in 2003, HP had only 22 per cent of the market, while palmOne still dominated with 40 per cent. HP remains in the third place in China, the biggest Asian market for handhelds, where two local players hold the top spots.

More importantly, Indian market is not going to be very easy game since it has traditionally shown resistance to handhelds. While the world's number one, palmOne has been having trouble pushing its products in the market, there is stiff competition from cheaper smart phones and the beginnings of a laptop revolution.

When asked about how HP would tackle this, Gugnani said, "There is actually no issue of direct competition. This is a case of expanding the market and finding new consumers. We will address the commercial space largely, where there is a huge mobile sales force and companies are looking at providing them with laptops. We will now offer handhelds that do 90 per cent of what a laptop does at 50 per cent of the cost. That is a value deal that most commercial enterprises can't miss."

The lower-end RZ 1710 is priced around Rs 15,000 while the higher-end RZ 3715 Mobile Media Companion is priced around Rs 26,000. All three run on Microsoft's Pocket PC OS.

That being so, smart phones will pose a challenge as they offer a powerful additional weapon -- voice capability. In fact, in the first two quarters of the year, the handheld market shrunk by 12 per cent from last year and IDC attributes this largely to the growing popularity of smart phones.

In fact, HP itself has lost global marketshare in the first two quarters, while palmOne has been gaining, thanks to Sony exiting the handheld market.

And exits are not new to the handheld market. It may be recalled that Phillips entered the handheld market in 1998 but bowed out quietly within two years. And now there are rumours of Toshiba quitting, at least the US market.

As per independent estimates, HP would be targeting Rs 1.25 crore by the end of the year, which would be a very small blip in HP India's revenues which stood at Rs 3,899 crore last fiscal, according to Dataquest.

According to Gugnani, the company is already in the piloting process with some of these handhelds and around 100 devices are being used for the process. But achieving the target is another story altogether.