Hewlett-Packard Co. was upgraded to outperform from sector perform by RBC Capital Markets after the firm hosted a round of investor meetings with the technology giant’s CEO, Meg Whitman.

RBC analyst Amit Daryanani told clients he is now more confident that HP has reset the bar low enough where it should meet expectations and likely exceed consensus estimates.

If HP executes in-line with RBC’s expectations, the analyst believes the stock’s multiple will expand to 8x forward 12-month earnings per share and longer-term to 10x.

“We walked away comfortable with Ms. Whitman’s strategy and believe her focus is making HP successful with the assets it has rather than implementing another transformation strategy,” Mr. Daryanani said in a research note.

The analyst also pointed out that while Ms. Whitman views fiscal 2012 as a year to rebuild HP’s cash position, the company will have a more shareholder friendly capital allocation with share buybacks and dividends in the future.

He reiterated his US$32 price target on the stock, which implies upside of roughly 20% from Monday’s close.

Deere & Co. (NYSE:DE) – $72.50 is expected to open higher after CLSA initiated coverage with a Buy rating and a target price of $90. The stock has a negative, but improving technical profile. Intermediate trend is down. The stock trades below its 200 day moving average. Short term momentum indicators are trending down. Resistance is indicated at $78.99. However, the stock bounced yesterday from near its 50 day moving average at $72.16 and strength relative to the S&P 500 Index has been positive since the beginning of October. Seasonal influences currently are positive. A break above resistance completes a reverse head and shoulders pattern. Preferred strategy is to accumulate the stock at current or lower prices.

Netflix (NASDAQ:NFLX) – $ fell $4.72 to $69.75 after announcing a $400 million debt and equity financing. The stock has a negative technical profile. Intermediate trend is down. The stock broke support at $74.25 yesterday. The stock trades well below its 50 and 200 day moving averages. Short term momentum indicators are trending down. Strength relative to the S&P 500 Index has been negative since mid-July. Better opportunities exist elsewhere.

Hewlett-Packard Co. (NYSE:HPQ) – $26.35 slipped 2.0% despite reporting higher than consensus fourth quarter earnings. However, the company also lowered its guidance for its fiscal first quarter. The stock has a neutral, but improving technical profile. Intermediate trend is neutral, the stock trades below its 200 day moving average and its short term momentum indicators recently rolled over from overbought levels. However, the stock recently bounced from near its 50 day moving average and its strength relative to the S&P 500 Index turned positive in mid-September. Seasonal influences currently are positive. Preferred strategy is to accumulate the stock closer to its 50 day moving average currently at $25.24.

Don Vialoux, chartered market technician, is the author of a free daily report on equity markets, sectors, commodities, equities and Exchange-Traded Funds. For more visit Don Vialoux’s website

These days, unless you’re Apple Inc. you’re going to have a hard time keeping your head above water in the technology world.

Mark Moskowitz, analyst with JPMorgan, warned that both top and bottom-line near-term estimates are expected to decline anywhere from 3% to 10%, with further, more serious cuts to come in the first half of 2012.

“We think the cuts will come in a series, potentially increasing in size in the first half of 2012. We do not think the stocks have adjusted for this latter point,” he said in a report. “Our research indicates that CIO budgets already have come under pressure, and we expect this dynamic to worsen.”

Not surprisingly, the only bright light left in the tech space comes from the glow of an iPhone screen, with Apple still forecasted to have upside potential in both revenue and EPS estimates.

Other safe harbour options are IBM Corp., storage and data management solutions company NetApp Inc., and infrastructure tech firm EMC Corp.

IBM’s high exposure to the Asia-Pacific and Latin America sectors provides a decent buffer, however the company derives significant revenue from government and financial services.

As for NetApp and EMC, the concern is that investors are not prepared for estimate cuts of more than 5% as storage remains a high priority in IT budgets. Mr. Moskowitz expects cuts in the 2% to 6% threshold, but warned risks will ramp up considerably if those numbers climb any higher.

At the other end, Mr. Moskowitz recommend investors either vacate or steer clear from Hewlett-Packard Co., Lexmark International Inc., Xerox Corp., Brocade Communications Systems Inc., Emulex Corp., QLogic Corp. and STEC Inc.

“Company-specific and secular dynamics facing these stocks stand to amplify end-demand risks related to broader macroeconomic challenges,” he said. “The downside risk to estimates could be 10%-plus in the near term, and the next round of cuts could be worse.”

Mr. Moskowitz has downgraded five stocks, warning that some companies may not rebound at all over the next 12 months due to macroeconomic and company-specific reasons.

Lexmark, Xerox, Brocade and QLogic have been cut to “Underweight” from “Neutral” while Seagate, a maker of computer hard drives, has been cut to “Neutral” from “Overweight.”

Is the only thing standing in the way of Research In Motion Ltd.’s plan to turn the BlackBerry PlayBook into a hit consumer device the price tag?

It seems we’re about to find out.

Retailers in the United States and Canada — including Staples, Best Buy , and Future Shop — have started slashing the price of RIM’s first touchscreen tablet and at least one of RIM’s major telecom partners, Rogers Communications Inc., is offering its employees hefty discounts on the PlayBook.

When RIM first launched the PlayBook back in April, a 16GB version of the device sold for $499. However, several retailers have started offering 16GB PlayBooks for as low as $249, while at the same time offering customers gift cards and rebates as added incentives for purchasing the seven-inch touchscreen tablet.

In a statement, RIM said that the official retail price of the BlackBerry PlayBook has not changed.

“However, as mentioned on the Q2 earnings call on Sept. 15th, we have a number of promotional plans in place for the fall with our retail partners that are intended to drive sell-through and increased adoption of the BlackBerry PlayBook,” the company said in a statement emailed to the Financial Post .

“We are already starting to see some of these promotions being implemented in the form of instant rebates and gift cards within the consumer channel, and expect these promotions to continue into the holiday season. The BlackBerry PlayBook has established itself as a high-performance tablet, and we are confident that these activities, along with the upcoming software upgrade, BlackBerry PlayBook OS 2.0, will help to generate an increase in demand and sell through of the BlackBerry PlayBook over the upcoming months.”

In Canada, Best Buy has reduced all three versions of the PlayBook by $100, dropping the 16 GB to $399, the 32 GB to $499 and the 64 GB to $599. Customers who purchase a PlayBook also get a $100 gift card when they purchase the device in store, effectively dropping the price of the device by $200.

Future Shop has implemented the same price drops , however, users can get the extra $100 gift card by purchasing the device in a brick and mortar location.

Not to be left out, this week, U.S. BlackBerry fans can also get their hands on a discounted 16 GB PlayBook. According to a post from Crackberry.com , Staples plans to begin offering the PlayBook for US$349 with a US$100 mail in rebate, bringing the price down to $249.

Rogers Communications is offering its employees a discount of $150 on each PlayBook model, which means Rogers employees can pick up a 16 GB PlayBook for $249. According to an internal Rogers email obtained by the Financial Post , those employees who purchased a PlayBook before Sept. 22 were also given a $100 Mastercard gift card.

While the news of a PlayBook price drop will likely come as no surprise to RIM observers, the Waterloo, Ont.-based technology giant’s decision to offer the tablet at a reduced price raises fresh questions about the BlackBerry-maker’s first foray into the tablet market and the long term viability of RIM’s answer to Apple Inc.’s iPad.

Sales of the BlackBerry PlayBook have certainly not lived up to RIM’s hopes for its first tablet.

Although the PlayBook sold a respectable 500,000 units in its first six weeks of sales — between its launch on April 19 and the end of RIM’s first fiscal quarter at the end of May — Apple sold 300,000 iPads on the first day its device was available in April, 2010, and sold more than one million iPads in less than a month.

RIM sold only 200,000 PlayBooks in the most recent quarter , falling well short of Wall Street analyst expectations — who were anticipating sales of about 560,000 units — which helped push shares of RIM into a nosedive that saw the BlackBerry-maker’s stock plummet more than 20%.

There is some evidence to suggest that cutting the price of the PlayBook may encourage BlackBerry users and other potential customers who were on the fence about which tablet to purchase to finally pick up RIM’s device.

Hewlett-Packard Co.’s TouchPad device was deemed a spectacular failure when it launched this summer , which led to now-former chief executive Leo Apotheker’s decision to discontinue the webOS tablet after just 48 days of sales in the U.S.

But when the world’s largest computer maker opted to slash the price of the TouchPad to just US$99 in an effort to sell off its remaining inventory — a decision which may have cost HP more than US$400-million and helped cause Mr. Apotheker’s untimely ouster last week — customers were lining up outside electronics stores to get their hands on the TouchPad.

It appears the PlayBook price cuts may already be having the desired result. Future Shop’s online store lists the 16 GB version of the PlayBook as “temporarily out of stock” and other retailers have reported selling out of the PlayBook.

But just as HP wound up feeling the pain of the TouchPad’s demise on its balance sheet, if RIM’s only recourse to bolster PlayBook sales is to offer steep discounts, the company could be facing a devastating financial reckoning the next time it reports quarterly financial results in December.

While the price drop is likely to give a much needed shot in the arm to PlayBook sales as electronics retailers gear up for Black Friday and the ensuing holiday shopping season, the fact remains that margins in the consumer electronics business are razor thin, and falling prices put a squeeze on potential profit.

In the most recent quarter, RIM’s gross margin fell to 38.7% with net income of US$329-million, down substantially from a gross margin of 43.9% and net income of US$695 in the prior quarter. What sort of impact this price cut has on RIM’s balance sheet remains to be seen.

Estimates vary, but several analyst firms believe it costs RIM anywhere between US$190 and $US270 in components to build a 16 GB PlayBook (RIM has not publicly disclosed how much it costs the company to build a PlayBook). Of course, that doesn’t include the R&D dollars associated with the device, or marketing, transport, distribution and other associated costs.

Andrew Rassweiler, senior director of teardown services at IHS-iSuppli, estimates each PlayBook costs RIM $270.95 to produce, which includes both manufacturing costs and direct materials.

The point is, in the eyes of analysts, margins on the PlayBook look much better when the device is selling for $499 than when it’s selling for $249 or $299 and is heavily subsidized.

In the long term, it may be more beneficial for RIM to get as many PlayBooks as possible into the market, regardless of the cost. We may even see a day when the PlayBook is offered as a free device when users purchase a new BlackBerry smartphone.

In the eyes of RIM’s executives, it may be the case that simply building the PlayBook brand — and by extension, bolstering the BlackBerry ecosystem — and growing the scale and reach of RIM devices is better for the long term health of the company, despite the short term financial hardships such a strategy may produce.

Putting more PlayBooks, even discounted ones, into the hands of consumers would help give the device scale and might help RIM draw more developers to the QNX platform. When it comes to encouraging developers to build for BlackBerry devices, RIM needs all the help it can get.

One thing is certain: RIM can ill afford to disappoint investors again with calls for the ouster of co-chief executives Jim Balsillie and Mike Lazaridis growing louder all the time and the company’s long-awaited turnaround still in the works.

EDIT (4 p.m. Tuesday, September 27): An earlier version of this story stated that customers who purchased a PlayBook from Future Shop would be given a $100 gift card which could be applied to the purchase price of that device. The story also stated that reports indicated that Wal-Mart Canada was offering a 16 GB version of the PlayBook for $249. That was inaccurate. We have made the change and apologize for the error.

No one person is responsible for the challenges facing Hewlett Packard Co. , RBC Capital Markets said Friday, and no one person can solve them.

Amit Daryanani, a financial analyst with the Toronto-based investment bank, took one dollar off his previously US$30 price target on the California computing giant’s stock in a note to clients on Friday morning, hours after the company replaced Leo Apotheker with Meg Whitman as its chief executive.

Mr. Apotheker had been in the top job for just 11 months following two years as co-chief executive of German software giant SAP AG. Ms. Whitman, who joined HP’s board in January, had previously served as CEO of online auction house eBay Inc. before launching an unsuccessful and expensive campaign to become Governor of California.

“While the new CEO appointment brings to HP a better communicator, we don’t think it alters the multitude of issues that HP is facing,” Mr. Daryanani said.

Providing a list of no less than seven issues of serious concern to RBC, topping the list is uncertainty over the future of the HP’s personal computing business. The world’s largest computer maker has been rumoured to be considering a sale of its US$41-billion PC business since March and the company confirmed those rumours last month, when HP brought an abrupt end to its TouchPad tablet offering following barely one month of initially lacklustre sales.

Over the past five weeks, the company has sent mixed messages over whether it plans to sell its computer-making division or spin it off as a separate company. HP is also facing a shareholder lawsuit filed last week over the haste employed in its decision to stymie several products based on the WebOS software it purchased for US$1.2-billion along with the rest of failed mobile device maker Palm Inc. last year.

“By continuing to delay a decision on the PC business, HP will negatively impact the inherent value of that asset,” said Mr. Daryanani.

Meanwhile, the company is also facing systemic problems with its supplies business, shrinking margins for its service offerings, a general lack of confidence and a growing risk of executive attrition, the analyst said. On top of all that, Mr. Daryanani also noted the “perception” that HP’s ever-lengthening laundry list of problems to solve is “as much a function of the board as they are of the executive team.”

While perhaps not as strong an indictment as the one the New York Times made two days ago — calling HP’s directors “ the worst board in the history of business ” — the statement does acknowledge the more systemic nature of the grim outlook facing the company.

Ray Lane, current chairman of HP’s board who joined the company at the same time as Mr. Apotheker in September 2010, challenged the board’s critics during a conference call on Thursday evening, saying “this board did not select Leo.” While the statement was technically true (the current HP board was largely hand selected by Mr. Apotheker in January), Mr. Lane has since faced public rebukes for his perceived abandonment of someone he has known personally for decades.

Then there is HP’s planned US$10.3-billion acquisition of U.K.-based business software firm Autonomy Corp. The company remains committed to completing the transaction, Mr. Daryanani said, despite the fact that “investors would like to see it reverted.”

“Unless we see a clear path for how HP intends to fix all of these issues, we would rather remain on the sidelines.”

Stock markets managed to eek out modest gains Friday, a day after a crushing rout left indices in Canada and the U.S. down more than 3%.

A small climb for the Dow Jones Industrial Average allowed the beleaguered index, which has lost almost 2,000 points since late July, to move back above the 11,000 level.

Here is a look at what markets were doing at the open on Friday August 19:

The Dow Jonesgained 14 points, or 0.12%, to 11,004
The S&P 500gained 2.41 points, or 0.79%, to 1,142
The Nasdaqgained 9.77 points, or 0.42%, to 2,390
The S&P/TSXgained 13.6 points, or 0.13%, to 12,199

Mild gains in North America, however, contrasted with weak performances from global stocks. Gold also posted another strong gain Friday.

“Recession fears cut through global markets once again overnight driving gold to another new record high,” Colin Cieszynski, analyst with CMC Markets Canada, said in a note. “As with other recent panics, however, bears have been unable to sustain momentum and markets have started to rebound off their lows into the morning here in North America.”

European markets suffered steep losses , with Germany’s DAX index losing 171 points, or 3.06%, to 5,431. The STOXX 50, the leading blue-chip index for the 17-nation eurozone, lost 2.52% in afternoon trading.

Gold continued its meteoric rise with a strong 2% gain. The metal hit a record US$1,877 an ounce earlier Friday, before retreating slightly to trade at US$1,859 an ounce as of 9:15 a.m. ET.

Recession fears were heightened by lowered forecasts for Chinese and American economic growth Friday.

Deutsche Bank downgraded its forecast for China’s growth, saying that the current slowdowns in Europe and the United States have surpassed domestic credit tightening as the biggest risk to the Chinese economy. The bank now expects China to post growth at a 7% annualized rate in the upcoming quarters.

Cuts were also made to American growth forecasts by J.P. Morgan Friday. Economists downgraded their fourth-quarter growth predictions to 1%, from their previous forecast of 2.5% growth. Also lowered was 2012 first quarter forecasts. Economists at the bank said they now expect the United States economy to grow a meager 0.5% in that quarter.

On the corporate front, analysts at Jefferies said Research In Motion shares may have found a bottom . Analyst Peter Misek upgraded the stock to hold from underperform, and raised his price target to US$25 a share, from his previous target of US$22. Shares in RIM rose 3.45% on the Nasdaq to US$26.65.

Also in focus was Hewlett-Packard’s stock, which plunged 22% after the company announced earnings Thursday night. The company surprised many when it announced it was mulling a discontinuation of its personal computing arm, as well as killing its WebOS devices, including its TouchPad tablet.

In Asia, the Tokyo’s Nikkei index closed down 2.51%, while the Hong Kong-based Hang Seng was 3.08% lower.

After months of mis-execution, delayed products and shrinking market share, Research In Motion Ltd. shares may have finally found a bottom, according to Peter Misek, Jefferies Equity Research analyst.

RIM’s shares have fallen nearly 27% since June , when the Waterloo, Ont.-based company delivered a disappointing second-quarter result following a lowered outlook and the disappointing launch of the BlackBerry PlayBook tablet.

But Mr. Misek believes the freefall in company’s shares has finally hit a bottom, and upgraded the stock to a ‘hold’ from an ‘underperform’ Friday.

His rationale for the the more positive outlook is based, in part, on the increased value ascribed to its patents following a series of transactions, including the auctioning of 6,000 patents belonging to Nortel Networks Corp. — which eventually sold to a consortium of companies including Apple Inc., Microsoft Corp. and RIM — and Google Inc.’s US$12.5-billion deal to acquire Motorola Mobility Holdings Inc. earlier this week.

But Mr. Misek said his decision to upgrade the stock was also based on the company’s build plan stabilization, the removal of Hewlett Packard Co.’s webOS as a competitor , and an expected quicker release of its new QNX-based devices.

“While it may not be the superphone we hoped for, we believe it is slightly positive as it demonstrates to investors the ability to execute on time,” he said.

While he estimates RIM has spent more than $5-billion in acquiring and developing its patent portfolio, Mr. Misek said he believes the company could monetize its portfolio for roughly $2-billion since many are uniquely security-related and cross-licensed.

Taking the value of the patents, adding in its $3-billion in cash, $700-million restructuring charge, and its subscriptions, it ascribes a salvage value of about $25 a share to the company, he said.

Shares of RIM closed at $25.49 on the Toronto Stock Exchange Thursday.

“Our assumptions assume the hardware business will be run at breakeven and the subscription business will be run as a cash cow,” Mr. Misek said. “Given these very conservative assumptions in our scenario analysis, we believe this provides a good floor value for the stock.”

Today in technology: Canada’s largest software company looks ripe for a takeover after HP’s multi-billion dollar bid to buy Autonomy, an Ottawa landlord evicts dozens of startups to make room for Ericsson’s arrival and Apple Inc. is reportedly looking for a few good fan boys to help test a next-generation iPhone.

Open Text buyout speculation intensifies
Will Open Text Corp. be the next domino to fall as M&A fever sweeps over the technology world?

Now that Hewlett Packard Co. has decided to stop “ trying to force non-competitive products into the market ” by killing its WebOS devices and doubling down on software with a US$10.2-billion offer to buy Autonomy Corp. , analysts believe other technology titans will soon develop eyes for Canada’s largest software company.

Shares of the Waterloo, Ont.-based company, boasting a market cap of nearly $3-billion, spiked by more than 6% in late trading on Thursday. The company commands some 18% of the global enterprise content management (ECM) software market, compared to some 5% controlled by Autonomy.

Mike Abramsky, managing director of global technology equity research for RBC Capital Markets, argues Open Text’s dominant position in the ECM space alone, being second only to International Business Machines Corp. (IBM), makes the company ripe for takeover.

“Amidst the slowing global economy, the ECM Sector remains resilient to date, due to its focus on regulatory compliance and cost savings, making it attractive to an acquirer,” Mr. Abramsky told clients on Tuesday evening.

“We expect consolidation of ECM players to continue, and to us OTEX remains an attractive acquisition candidate.”

The resiliency of Open Text to the global economic turmoil has already driven market watchers to push investors towards the company’s stock as a strong defensive move , but the acquisition of Autonomy at such a high multiple (more than ten times annual revenue) has significantly upped the ante, they argue.

When applied to Open Text, the metrics behind HP’s offer to buy Autonomy would represent a premium of nearly 100% above its Thursday closing price.

“We view IBM as the most likely buyer,” said Kris Thompson, analyst with National Bank Financial, said in a note to clients on Friday morning.

“A bidding war between SAP and Oracle is another real possibility.”

Even if no suitors emerge, Mr. Thompson said, maintenance revenue valuations alone still garner an Outperform rating for Open Text.

Ottawa startups left out on the street
This was a bad week for Brad Weber. The chief executive of Escalade IT Inc., along with the owners of as many as 50 small businesses based at 349 Terry Fox Dr. in the Ottawa suburb of Kanata, was given three weeks to vacate the premises in an email from his landlord sent Monday. Despite having signed a one-year lease in April and not missing any payments, the entrepreneur is left scrambling to find new office space as Ericsson prepares to occupy the entire building. Vito Pilieci at the Ottawa Citizen has the full story .

LTE iPhone reportedly enters testing phase
With expectations set for Apple Inc. to deliver a new iPhone next month, rumours are swirling about what new features the next generation smartphone might include. Recent Apple job postings discovered by Forbes on Thursday suggest the company is looking for field test engineers to test mobile devices based on long-term evolution (LTE, a.k.a. 4G) technology. That report follows one in January for another LTE-related position, lending some credence to this latest rumour.

TORONTO — Postmedia Network has become the first Canadian newspaper publisher to launch apps on HP’s TouchPad tablet computer.

Malcolm Kirk, executive vice-president, digital media, said he’s excited to see the company ahead of the curve in Canada.

“There’s an explosion in tablet use, and I think we’re seeing that people enjoy using tablets to consume news and information. As creators and curators of content, I think it’s intuitive that we would be where our audiences are and allow them to see our content in a whole new way.”

The new mobile platform — which is free for TouchPad users — will be updated throughout the day to give users what Kirk calls a “live news experience.”

Users will find local, national and international news, high-resolution photos and photo galleries, the ability to share stories via social media, customizable pages and the option to read offline for users on the go.

Readers can download the app from the HP webOS App Catalog on the TouchPad.

“Postmedia’s localized daily news content on the Touchpad is a valuable resource for users who want to keep up-to-date on the current happenings in Canada on a daily basis,” said Richard Kerris, Hewlett-Packard Co.’s vice-president of webOS worldwide developer relations.

Kirk said the easy-to-navigate platform is all about participation. “It’s about users engaging with the content and with each other and engaging in a debate around the content that they find on the application,” he said.

The Postmedia Network owns some of the country’s oldest and best known newspapers. Its papers include the National Post, Ottawa Citizen, Montreal Gazette, Windsor Star, Saskatoon StarPhoenix, Regina Leader-Post, Calgary Herald, Edmonton Journal, Vancouver Province, Vancouver Sun and Victoria Times Colonist .

The network also reaches Canadians through online, digital and mobile platforms — the newest of which is HP’s TouchPad.

As sluggish worldwide demand for personal computer continues, Canadian businesses are considering the role tablets — an emerging PC competitor — could play in their companies, according to two reports released by market research firm IDC Thursday.

Small growth in overall PC Shipments and U.S. decline

Global PC shipments increased 2.6% year over year in the second quarter of 2011, missing May projections for 2.9% growth, according to IDC’s Worldwide Quarterly PC Tracker , which measures shipments in more than 80 countries.

Japan and the rest of Asia saw strong growth of 12% and 3% respectively, but shipments in the United States actually declined 4.2%.

On top of contraction in the netbook market, Rajani Singh, a research analyst with IDC, said the U.S. slump is partly explained by softening demand as corporate buyers look to focus on new IT solutions like cloud and visualization and consumer interest shifts to media tablets.

Canadian businesses integrating ‘BYOD’ tablets

But it’s not just consumer interest that’s focused on tablets. A report from IDC Canada found businesses are increasingly confronting how to integrate the devices into their companies.

Business will represent just 8% of tablet shipments in Canada by the end of 2011, but that hasn’t stopped consumers from following a “bring your own device” (BYOD) practice with the gadgets. In fact 21% of businesses said that was the primary channel though which tablets were introduced to their company.

“We’re seeing more and more of the devices ending up in the workplace and being used for work purposes although they were actually purchased with a consumer’s own funds. That’s a trend we expect to see continue to grow,” said Krista Napier, senior analyst with IDC Canada. “It’s a lot of senior executives that are driving this.”

Ms. Napier said the BYOD trend is forcing companies to figure out how to deal with security issues and consider accommodating multiple devices and operating systems.

While tablets are convenient for travelling and tasks like presentations and document review, she said, they’re less useful for document creation and other business functions and simply aren’t designed to replace full PCs.

“To date, there’s been minimal cannibalization of other markets when it comes to media tablets,” she said, noting that in surveys of Canadian businesses that purchased tablets, most saw them as an incremental purchase, on top of — not instead of — another device.

Apple climbs to third spot among U.S. PC vendors

As for the PC shipments report, there’s still something in the numbers for Apple Inc. to smile about. It’s now the third largest vendor of PCs in the United States, ahead of Toshiba Corp. and Acer Group on shipments in the second quarter, according to IDC’s preliminary calculations.

With 10.7% of the market share, Apple is still behind HP and Dell Inc. (with 26.3% and 22.2% respectively). But Apple’s year-over-year growth of 14.7% far outstrips the top two, who both had negative growth in shipments during the quarter as compared to this time last year. Apart from the top five, other vendors made up 23.3% of the market share.

Worldwide, the top five vendors by market share in the second quarter of the year were HP, Dell, Lenovo, Acer Group and ASUS Inc., with other vendors accounting for 40.7% of the market.

If venerable technology stalwart Hewlett-Packard Co. just can’t hack it anymore against the new generation of tech companies, then perhaps the best solution is to split up HP’s many product lines into smaller, more competitive entities, private equity firms have been arguing .

Amit Daryanani, analyst with RBC Capital Markets, thinks this is unlikely, especially after taking a look at the constituent components of the tech conglomerate and concluding that HP’s shares are trading well below what they are worth based on a sum-of-the-parts analysis.

“The exercise gives us further comfort in our ‘Outperform’ rating given HP is trading materially below the SOTP analysis that suggests US$52-US$55 a share,” he said in a note to clients. “To the extent HP can get back to meeting expectations, and investors get comfort that the management team has a grasp of problems, the stock should trade closer to our SOTP price.”

First up is HP’s server, storage and networking business, which is still tops in the world. Its value is about US$51-billion (US$26 a share).

Next is HP’s services business, which is second in market share and worth about US$25-billion (US$11).

HP’s valuable imaging and printing segment, which offers commercial and consumer printing hardware and supplies, has strong margins and cash generation and is worth US$18-billion (US$8) based on domestic and international printer companies.

While HP is still a leader in PC markets, it has struggled in the face of new tablet offerings from competitors, Mr. Daryanani said. This segment generated revenues of US$40-billion in 2010 but margins of only 5%. It is valued at US$10-billion (US$3).

Finally, HP’s smallest channel is its software business, worth US$9-billion (US$4).

All-in, the various product and business lines are worth about US$113-billion and a share price of US$52.

Of course, if HP ever does split up one wonders if we will get one company called Hewlett and another one named Packard.

Today in technology: Hewlett-Packard Co. pushes its WebOS software as a device-agnostic tablet PC platform similar to Google Inc.’s Android software, News Corp. takes a hit on its MySpace sale and Steve Ballmer brushes off suggestions that he should step down from his post as chief executive of Microsoft Corp.

The inner beauty of the HP TouchPad
On the eve of the TouchPad’s touchdown in the United States, it is not the world’s largest computer maker’s physical tablet which has the tech world talking.

Rather, it is in the WebOS software Hewlett-Packard has packed into the 9.7-inch device which has the tech world abuzz.

(FP Tech Desk Editor Matt Hartley spoke with Richard Kerris, head of worldwide WebOS developer relations, in Toronto this week about how he plans to bring developers on board with the computer giant’s new platform )

Walt Mossberg, resident gadget guru for the Wall Street Journal , got his hands on a TouchPad earlier this week and published his insights on Wednesday evening. Calling the platform “significantly distinct” from the iOS software powering the market leading iPad from Apple Inc. as well as Google Inc.’s increasingly pervasive Android software, WebOS was just about the only thing he seemed to like about the tablet.

“WebOS is an attractive platform,” Mr. Mossberg said in his video review.

“On balance overall I think [the TouchPad] falls short of matching the iPad,” he said in conclusion, citing various issues with the hardware, its “bulbous” appearance as well as the paltry number of apps currently available (only 300 optimized for a tablet display and slightly more than 6,000 for WebOS in total, though HP is working on that ).

“HP has plans to put [WebOS] on many more devices and turn it into a real platform,” Mr. Mossberg said.

But it’s not just HP devices that will be running WebOS. Speaking to reporters in Beijing on Wednesday, HP chief executive Leo Apotheker confirmed the company intended to license WebOS to other device manufacturers and Samsung Electronics Corp. — the world’s largest consumer electronics maker and among the leading producers of Android-based devices, is already rumoured to have expressed an interest.

HP acquired WebOS along with the rest of Palm Inc. as part of a US$1.2-billion buyout of the failed mobile device maker last year.

“What makes HP TouchPad a compelling alternative to competing products is webOS,” Jon Rubinstein, senior vice president of HP, said earlier this month when the TouchPad’s pricing and launch date were announced.

“This is only the beginning of what HP’s scale can do with webOS.”

With the TouchPad set to land on American store shelves tomorrow and in Canada on July 15, the tech world is eagerly awaiting what the next step will be for WebOS.

News Corp. lost at least US$1-billion on MySpace: report
No question Rupert Murdoch’s media empire lost a whole heap of cash on MySpace. Having paid US$580-million for the then-thriving social network in 2005, only to sell it for a meager US$35-million on Wednesday , the most basic math suggests the loss to News Corp. stands in excess of US$500-million.

But according to some more studious number crunching involving the expenses related to owning the long beleaguered company done by Anders Bylund over at Ars Technica , the more realistic figure is actually more than double that.

“All things considered, MySpace has cost Murdoch’s empire something like US$1.3 billion,” wrote Mr. Bylund.

“Even if my assumptions are way off, the final cost can’t be less than US$1 billion,” he claims.

Steve Ballmer is all Windows on the inside
Facing calls for him to step down from his position as chief executive of Microsoft Corp., Steve Ballmer responded to his critics on Wednesday. During an appearance at the Rotary Club of Seattle, he made it clear why he feels he deserves to keep the job he has held for more than 11 years.

“You tell me if I have the energy, conviction, passion … or drive,” he told an attendee who asked him about the calls.

“You cut me open and saw what was inside: Windows. Windows. Windows. Windows.”

On his recent visit to Toronto, Richard Kerris felt it was important to develop a taste for his own dog food.

For the first time, Mr. Kerris set off from his office in Sunnyvale, Calif., without a laptop, and, instead, carried with him only a tablet, which would serve as his sole computer for the duration of his business trip.

As the head of worldwide WebOS developer relations for Hewlett-Packard Co., Mr. Kerris is tasked with encouraging the developer community to start crafting software applications for the computer giant’s new mobile platform, which it acquired as part of its US$1.2-billion acquisition of failed mobile device maker Palm Inc. last year.

The tablet he carried with him was a TouchPad, HP’s touchscreen tablet and the Palo Alto, Calif.-based company’s boldest foray yet into the increasingly crowded market for tablet computers. It pits HP against rival devices — Google Inc.’s Android software, Research In Motion Ltd.’s PlayBook and Apple Inc.’s iPad.

For Mr. Kerris, the challenge he faces lies in convincing developers — both big and small — to create applications for WebOS, even though most of them are building apps for Android, Apple’s iOS and RIM’s platform.

It’s up to him to show them WebOS — the highly touted operating system Palm initially launched with the Palm Pre smartphone in 2009 — is worth the extra expense.

[np-related]

Earlier this year, HP announced plans to put WebOS on all its smartphones, tablets, laptop computers and PCs, even its printers. Mr. Kerris said it won’t be long before developers begin to see the opportunity that comes with a software platform that will be available on virtually every device produced by the world’s largest computer maker.

“A developer looks at two things when they decide to support a platform,” Mr. Kerris said in an interview this week.

“One of those things is, what’s the investment they’re going to have to make? The second part is how big is the opportunity? In the past, the investment has always been low with WebOS — because if you know the Web, you know WebOS — but the opportunity was always missing, because there just wasn’t enough out there.”

Mr. Kerris said there will be about 300 TouchPad-specific applications available for the device when it launches next month, in addition to several thousand legacy WebOS applications that should also run on the device.

Plans for the HP TouchPad, which launches in Canada July 15, began on July 2, 2010, the day after HP closed its landmark acquisition of Palm.

Now, as the company prepares to celebrate the first anniversary of that deal, Mr. Kerris believes HP is ready to make a splash in the tablet market, despite spotting Apple, Google and RIM head starts.

“HP wasn’t the first out with laptops and desktops, but they’re certainly now the biggest,” he said.

“In the long run, for a market opportunity like this, it doesn’t matter if you’re coming in first or second or third at the start, it matters how you’re going to play over the long run.”

Of course, HP doesn’t expect to counter Apple’s App Store on a pure volume basis, since it will be difficult for the company to amass an application warehouse numbering in the hundreds of thousands.

Instead, the company plans to follow a strategy similar to RIM’s by focusing on a smaller number of high-quality applications that will be designed for both consumers and HP’s large enterprise user base.

“Even my geekiest friends might have 20 or 30 apps,” he said. “Quality apps are what really matter.”

On July 15, the TouchPad from Hewlett-Packard Co. will be the latest tablet to land on Canadian store shelves.

Announcing the official launch date on Thursday, the company said the TouchPad will be available at the HP Store in Vancouver, the website hpshopping.ca and select retailers across Canada. Pricing starts at $519.99 for the 16GB (gigabyte) WiFi-only version and a model with 32GB of storage will cost an additional $100.

(update 2:48 p.m. ET — HP said select Canadian retail locations expected to carry the TouchPad upon launch include Future Shop, Best Buy, The Source, Costco, Staples and London Drugs.)

Preorders will be accepted online starting June 19.

“What makes HP TouchPad a compelling alternative to competing products is webOS,” Jon Rubinstein, senior vice president of HP, said in a statement referring to mobile software platform the company developed as a result of its US$1.2-billion acquisition of failed mobile device maker Palm Inc. last year.

“The platform’s unmatched features and flexibility will continue to differentiate HP products from the rest of the market for both personal and professional use,” he said.

“This is only the beginning of what HP’s scale can do with webOS.”

Clearly, the world’s largest computer maker is putting great stock in the operating system powering the tablet it first unveiled just four months ago. WebOS will allow users to have multiple applications open at once and also to transfer files between other WebOS devices — such as the Palm Pre smartphone — simple by touching the two devices together.

It’s 9.7-inch screen places the TouchPad in a category more similar to the iPad from Apple Inc. or the Xoom from Motorola Mobility Inc. than to the Galaxy Tab from Samsung Electronics Corp. or the BlackBerry PlayBook from Research In Motion Ltd. The latter two both have 7-inch screens and all four are already available in Canada.

When originally unveiled in February, HP said it was planning to market versions of the TouchPad capable of connecting to the Internet via a cellular connection (3G) as well as WiFi-only versions, though the mid-July release appears to be for the WiFi models only. When the company plans to launch 3G-enabled TouchPads remains unknown.

For those Canadians who simply cannot wait a full five weeks to get their hands on a new TouchPad, the device will be available in major U.S. retailers such as Best Buy and Walmart as of July 1.

jberkow@nationalpost.com

Today in technology: The world’s top three smartphone platforms reach an apparent stalemate in their battle over the all-important U.S. market, the Hewlett-Packard Co. TouchPad tablet is rumoured to launch on June 12 and the makers of the Call of Duty video game franchise bank on gamers paying a monthly fee for ‘elite’ access.

Battle over U.S. smartphone market reaches stalemate
After dethroning Research In Motion Ltd.’s BlackBerry OS as the top smartphone platform in March, it appears the Android software by Google Inc. has ceased its advance toward total market domination.

In a report from market research firm Nielsen Co., due for release on Tuesday and obtained in advance by Phillip Elmer-Dewitt at Fortune Magazine , the little green robot held 36% of the U.S. market between February and April. Although still more than double the 15% share Google held as of June 2010, the latest Nielsen figures suggest Android’s rapid rate of market saturation has begun to slow or even begun to stagnate.

Apple Inc.’s iOS platform — which powers the company’s iPhone, iPad and iPod Touch devices — stayed within a margin or error of the 26% market share it has held in Neilsen surveys for more than a year. Not far behind the Cupertino gadget giant is RIM, with Canada’s smartphone maker holding fast to between 22% and 23% of American smartphone users, which represent 37% of all U.S. cellular phone users.

While it might appear as though the smartphone wars have entered a period of detente, anynumber of factors could easily cause them to heat up again.

HP TouchPad to drop next month?
Having unveiled its answer to the Apple iPad in February, Hewlett-Packard Co. might have June 12 in mind as the day it will unleash its TouchPad device onto the open market. In a document obtained by mobile tech website Precentral, the mid-June date is listed as when the device will become available at retail, which is in line with earlier reports suggesting a summer launch. In addition to running the WebOS platform HP developed as a result of its US$1.2-billion acquisition of failed mobile device maker Palm Inc. last year, the first HP tablet is expected to have a number of features capable of rivaling those of other products such as Apple’s iPad or RIM’s PlayBook that are already on the market.

Call of Duty: Would you pay to play?
As the cost of producing blockbuster video games continues to grow , publishers are looking for ways to relieve the pressure on their margins. Activision Blizzard Inc., the world’s largest video game producer, is hoping that in addition to paying upwards of US$60 for its record-breakingCall of Duty shooter, gamers will also be willing to pay a monthly fee for access to a downloadable expansion called Call of Duty Elite , which will feature content not available in the now comparably basic shiny disc-based version. It is unclear what the company is planning to charge, but considering many owners of Microsoft Corp.’s Xbox 360 console already pay about US$10 per month for access to the Xbox Live online gaming portal, a modest fee for ‘Elite’ access could easily find a few takers. After all, all gaming will eventually be cloud-based anyway.

jberkow@nationalpost.com

Hewlett-Packard Co. was downgraded to neutral from overweight at J.P.Morgan after its second quarter results beat expectations, but the company’s revised outlook for the third quarter and 2011 disappointed.

Investors were prepared for a worsening in HP’s PC business and potential supply chain issues in Japan, but the elongated overhaul process in its services division will weigh on investor sentiment “beyond the near term,” J.P.Morgan analyst Mark Moskowitz said in a research note.

He lowered his estimates for HP on May 13, expecting that the latest reset to its numbers was near. However, the company’s struggles in services suggest Tuesday’s revisions may not be the last.

Mr. Moskowitz cut his price target on HP shares to US$42 from US$55, telling clients that despite its relative low valuation, investors are unlikely to embrace the stock until evidence of “firm footing strategically gained in both services and the rest of the model.”

The world’s largest computer maker might soon stop making computers, China’s DigiTimes reported on Thursday.

South Korea-based Samsung Electronics is the most likely buyer of Hewlett-Packard Co.’s personal computing arm, the report said. According to the Chinese-language Commercial Times newspaper, other potential suitors for the US$41-billion PC business include Chinese firms Lenovo and Foxconn Electronics, which is a major component supplier for Apple Inc.

DigiTimes sources said the deal was originally rumoured to have been planned back in the fourth quarter of 2010, but was called off for unknown reasons and is not believed to have been revived since. In a statement made to Reuters, HP said its PC unit is absolutely not for sale.

“Irresponsible reporting by Taiwan’s Commercial Times, suggesting that HP might sell its PC business, should be dismissed as market rumor and speculation,” the company said.

Had the report been confirmed, the move would be a smart one for Samsung. It currently has a strong set of offerings in the LCD display and mobile computing markets, yet is noticeably lacking in desktop and laptop PC products.

It could also be a logical next step for the evolution of HP. As Eric Savitz over at Forbes has noted , shedding its PC division would be following in the footsteps of IBM Corp., as both companies seek to redouble their efforts in the software and services sector.

Leo Apotheker, the former chief executive of business software firm SAP AG, officially became CEO of Palo Alto, California-based Hewlett Packard last November following the controversial departure of Mark Hurd (who is now co-president of software giant Oracle Corp.). In late January, Mr. Apotheker promised to overhaul HP’s personal computing division , which could have been an allusion to an outright sale.

However, the move would also be a complete reversal of HP’s current strategy. Just this week the company said its next line of PCs will feature support for WebOS , the mobile operating system developed by Palm Inc. which HP purchased for US$1.2-billion in 2009.

For the 2010 fiscal year, personal computer sales accounted for 32% of Hewlett-Packard’s total revenue of US$126-billion. An increase of 15% from the previous year, the growth is particularly impressive considering the overallstate of the personal computing industry.

jberkow@nationalpost.com, with a file from Reuters

The tablet wars are heating up – and for good reason.

Global revenue for the emerging mobile computing category is expected to rise from US$11-billion in 2010 to nearly US$70-billion in 2014, according to RBC Capital Markets analyst Mike Abramsky.

After Apple’s anticipated continued leadership, he sees Research In Motion, Samsung, Motorola, HTC and HP as strong contenders. He also thinks Microsoft may face challenges, as might many less-differentiated “Not Another Android Tablet” vendors, some of whom may exit the market.

In 2011, more than 50 tablet offers are expected to be introduced as the competition looks to catch up with Apple’s iPad.

While the launch of the iPad 2 may have disappointed some, improvements both inside and out should sustain or add to the company’s market leadership in tablets, according to JPMorgan analyst Mark Moskowitz.

He is particularly impressed by the fact that the arrival of a second-generation iPad comes as the competition is rolling out or prototyping their first-generation tablets. As a result, the analyst thinks his assumption of Apple’s market revenue share may be conservative at 68%.

“iPad 2 raises the bar higher for the wannabes,” Mr. Moskowitz told clients.

His colleague Rod Hall thinks RIM may see less impact from the new iPad than Motorola since the BlackBerry maker plans to competitively price its PlayBook tablet.

As for HP’s accusation that RIM imitated its TouchPad and webOS when creating the PlayBook, Mr. Hall believes HP is referring to the use of some gestures on the tablets. However, the analyst noted that use of gestures to control a mobile device was created and made popular by Apple’s iPhone.

“We do not see any negative immediate threats from HP that could hurt the PlayBook’s popularity,” he said in a research note.

Taking a look at five U.S. giants who have stumbled badly in recent weeks on earnings disappointments and whether they’re worth buying.

Cisco Systems Inc. – Golden opportunity

There may not be another U.S. large cap that has suffered from expectations as much as Cisco over the past nine months. The leading network equipment provider has disappointed the Street with three lacklustre quarters in a row and since November the stock has fallen more than 20%.

The latest concern is diminishing gross margins. Complacency and a lack of innovation in recent years has put the company in a defensive position, say analysts, forcing it to price aggressively to protect market share and increase R&D spending for new products.

Cisco admits that gross margins won’t improve anytime soon but they won’t further deteriorate either. For Barry Schwartz, vice president and portfolio manager at Baskin Financial Services that’s good news, particular when combined with Cisco’s strong balance sheet and brand new dividend it plans to launch later this year.

He likes Cisco as a way to play the prosperous smartphone and tablet market and sees upside in the stock from here. “We own and like Cisco,” he says. “With the Canadian dollar so strong, this is a once and a lifetime opportunity.”

Ford Motor Co. – Losing its luster

After climbing more than 1300% from its market bottom in November 2008, shares in the second-largest U.S. automaker have not surprisingly gone into correction mode and from late January through Friday’s close, the stock has fallen 20%.

During the rally, Ford benefited from an improving economy and more attractive product line-up but also from having survived the financial crisis and recession without needing government help, something it’s U.S. counterparts, Chrysler and General Motors Co. could not do.

But not receiving a bailout has a downside. Ford’s financial situation remains extremely challenged and despite cutting its debt obligation by almost half to US$19.1-billion at the end of 2010, the company’s investment grade rating has yet to be restored. Moody’s Investors Service changed its outlook on Ford to positive from stable on Jan. 28, saying in a statement that Ford’s progress in improving its balance sheet “could support a rating upgrade during the next 12 to 18 months.”

But until such time Ford can get its debt burden under complete control, the stock may be vulnerable to more losses. “When markets get nervous, risk money comes off the table, says Gordon Reid, a portfolio manager at Goodreid Management Inc. in Toronto. “And Ford still looks speculative on the scale of opportunities.”

Hewlett-Packard Co. – Wait for the revenue

What a difference a week makes for HP investors. On February 16, stock in the personal computer maker was up 16% on the year, making it one of the best performing U.S. large caps around. Since then, however, shares have fallen off a cliff, dropping more than 13% in just two days.

The culprit? A big top-line miss last quarter and a big cut to this year’s top-line guidance that raises even bigger questions about the company’s ability to transition from a cost-cutting story to a revenue-driven one, in an environment that is becoming more competitive by the day.

In particular, the growing market for iPad and like computer tablets is a long term trend that has already begun cannibalizing consumer PC sales. While many analysts believe the sell-off offers a compelling entry point, others worry it represents a value trap and shares have further to fall.

Chris Whitmore, an analyst at Deutsche Bank, takes the middle ground and suggests investors assume a holding pattern for the time being. “We believe multiple years of underinvestment raises concerns of competitiveness but this is largely factored into HP’s valuation,” he said in a note to clients.

Merck & Co. – Time to jump in

The worst performer on the Dow Jones Industrial Average so far this year, the pharmaceutical giant is down 11% year -to-date. A big part of the decline was due to its latest earnings guidance for 2011 that fell well below consensus and the decision to withdraw its 2013 EPS target due to European Union austerity, U.S. healthcare reform and uncertainty regarding vorapaxar, its experimental blood clot drug recently deemed inappropriate for patients who have suffered a stroke.

Adding to these headwinds are significant drug patent losses across the pharmaceutical industry that are expected to erode revenues to record levels in 2011 and 2012. Michael Tong, an analyst at Wells Fargo said negative sentiment swirling around the stock is undeniable.

Still, share repurchases and a dividend yield at 4.6% should limit near term downside risk and just like the majority of analysts covering Merck, he believe shares, now trading attractively at 9x forward earnings, will outperform in the months ahead.

“Merck is well positioned among US large pharma as the patent cliff nears,” he said in a note to clients. “We believe the company’s diverse pipeline could drive near and longer term growth.”

Wal-Mart Stores Inc. – Don’t count it out yet

The big bad discount retailer from down south has lost its bite with investors in recent weeks, shedding 10% in share value since January 27. Earlier this week, the company reported better-than-expected earnings, but disappointing sales and weaker guidance than anticipated for this year.

The company faces a number of challenges including a weak U.S. housing market and increased competition from the likes of Target and Costco. At the same time, its core customer still begrudges merchandising errors that forced the company to add back thousands of products it had culled as part of a renovation of its stores.

Given these challenges, half a dozen or so analysts who cover the stock advise a wait and see approach, but many more, including Murray Leith, head or equity research at Odlum Brown, believe Wal-Mart to be a very profitable company still capable of generating above average growth.

He thinks the company’s international division will continue to be a high-growth bright spot and there is a good chance that the core Wal-Mart USA business will reestablish some luster as the U.S. economic recovery accelerates and employment picks up. “The action in the stock is enough to make one sick and think about selling,” Mr. Leith said. “But Wal-Mart is hardly a company in decline.”

Latest offerings leading edge of next generation in evolution of computing

Las Vegas — Everywhere you look at the International Consumer Electronics Show, the biggest names in the technology industry are talking tablets.

If there were any lingering doubts about the future of flat, tablet-style mobile computers, it’s now clear that the world’s top electronics manufacturers are all on board with the tablet revolution. Indeed, tablets have gone mainstream.

While some people in the technology world were quick to declare 2010 “the year of the tablet,” in reality, it would be much more accurate to say it was the year of the iPad.

But after dominating the market in 2010, Apple Inc. is now facing a growing list of competitors that threaten to eat into the iPad’s early lead.

In addition to Research In Motion Ltd.’s forthcoming BlackBerry PlayBook — which has been getting positive reviews — this week Motorola Mobility Corp. unveiled the Xoom tablet, Dell Inc. took the wraps off the Android-powered Streak and Toshiba Corp. unveiled a tablet of its own.

The touchscreen device craze is only one piece of a much larger technology evolution that is beginning to change the way we think about computing and what a computer should be. Apple’s iPad kicked off the tablet wars last January, immediately capturing the attention of consumers and dominating tablet sales throughout the year while the computer giant’s rivals failed to keep pace.

Last year at CES, rumours that Apple was preparing to launch a touchscreen tablet computer cast a long shadow over the show, despite the Cupertino, Calif., company’s absence.

While other major manufacturers announced plans to produce tablets and outlined their strategy to counter the iPad’s growing stranglehold on the market, few actually made their way to store shelves.

Microsoft Corp. and Hewlett-Packard Co. demonstrated a Slate tablet at last year’s CES that never made it into the market, RIM didn’t announce the PlayBook until September, while Sony Corp. has yet to unveil a tablet of its own.

Of course, with rumours already circulating that Apple is preparing to take the wraps off an updated version of the iPad in the coming months, the tablet market could be set for another huge shakeup.

According to market research firm Gartner Inc., about 19.5 million tablets were sold in 2010. That number is expected to jump to 54.8 million in 2011 and to soar past 208 million by 2014.

Considering Apple sold 7.4 million iPads through September, and some analysts believe the company sold as many as six million more during the holiday season, which pegs Apple’s share at roughly two-thirds of the burgeoning tablet market.

Consumer electronics giant Samsung Electronics was one of the few big technology companies to bring a viable iPad competitor to market in 2010, with its seven-inch, Android-powered Galaxy Tab. Samsung reportedly shipped more than a million Galaxy Tabs in just two months.

Thanks to the surging popularity of smartphones and tablets, major consumer manufacturers are beginning to rethink the computing experience, blurring the lines between tablets, laptops and mobile phones.

One company actively experimenting with new designs and form factors for PCs is Chinese computer maker Lenovo Group Ltd.

This week in Las Vegas, Lenovo unveiled the U1, a hybrid computer that features both a touchscreen tablet running Google Inc.’s Android operating system and a laptop dock running on Microsoft’s Windows 7. The U1 is just one of a number of different form factors the Chinese company is experimenting with as consumers begin to look for new styles of PCs.

“We’re really at an inflection point of innovation here,” Rory Read, Lenovo’s president and chief operating officer, said in an interview.

“We think the initial tablets are OK, and it’s an interesting phenomenon, but I think this is just scratching the surface of what will be a very powerful innovation trend. That trend is really going to be around the convergence of data information application across devices.”

Other companies are also changing the way they approach the design process for computing devices.

On Wednesday, Motorola announced a new smartphone, the Atrix, which can connect to an accessory known as a “Laptop Dock,” which allows the phone to power a full laptop experience.

The key for manufacturers will be to create devices that allows users to easily synch and move data across their various devices, Mr. Read said.

“Today, tablets are just showing up as a third or fourth screen,” Mr. Read said. “Smartphone, laptop, tablet; I don’t see any cannibalization so much as augmentation. What’s going to happen over the next three to five years is technology and information is going to move seamlessly across those devices.”

Financial Post
mhartley@nationalpost.com
@thehartley