Obvious Diversion

Michael Simon over at Spymac wrote a post titled iPod + HP = No big deal. I disagree for some fairly simple reasons.

The article’s disappointment seems to lie in the fact that the HP iPod offers no improvements at all to Apple’s already popular iPod. The only difference to the unit that I can discern is that along with the usual Apple and iPod logos engraved in the back, it will now have an HP logo. In other words, the shiny silver back of the HP iPod comes pre-scratched, albeit in a very concerted way.

HP has an incredible distribution channel unmatched by anyone else in the technology industry. They deliver products to shelves in parts of the world that are simply out of reach for Apple, 110,000 retail outlets by HP’s count. The HP deal isn’t about improving the product, but about getting the product on more shelves in more parts of the world. HP gets additional revenue by pushing an incredibly hot product through it’s distribution lines. Apple gives up a piece of the profit to increase overall sales and revenue. As an added bonus, HP has agreed to pre-install iTunes on it’s consumer machines and HP, last I checked, sells a lot of machines. Sounds like a good deal to me.

One humorous sidenote: Back in January, Carly Fiorina, the CEO of HP, got up on stage and announced the Apple partnership saying “Why did Apple come to HP? Because we’re an innovator; because we’re applying R&D, and focusing our innovation to make the iPod and iTunes fit into our whole digital entertainment experience; because we have the engineering prowess to make complex things simple” Carly isn’t fooling anyone. This particular decision is one that is good for business, not a feather in the cap of any engineer at HP. The video is still online if you want to see Carly announce the HP Apple partnership.