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In order to gain traction in the mobile business, Hewlett-Packard Co. (HPQ - Analyst Report) recently announced the launch of two new Voice Tablets, more commonly known as Phablets. The new Android handset will be based on Google Inc.’s user-friendly Android 4.2 Jelly Bean platform.

The device will enhance user experience and provide high-quality visuals. The successful deployment of the Voice Tablets will not only curb its over dependence on the PC market but will also boost revenue growth for the company, going forward.

The newly-launched 6-inch diagonal HP Slate VoiceTab and the 7-inch diagonal HP Slate7VoiceTab feature a 2 MP front-end camera and a 5 MP rear-facing camera, supporting a resolution of 1280×720 and 1280 x 800 pixels, respectively. Both come with 16 GB in-built memory, which can be expanded up to 32 GB. Moreover, the devices are powered by NVIDIA’s (NVDA - Analyst Report) industry leading Tegra 3 quad-core processor and 3G dual SIM capabilities for enhanced network speed.

The new handsets Slate6 and Slate7 have been priced at $200 and $149.99, respectively and will be launched first in the Indian market. The handsets will hit Indian stores in February. We believe that the reasonable pricing of Slate 6 and Slate 7 will put the company in a better position versus its competitors including Samsung, whose phablet, Galaxy Grand 2, is priced at approximately $370.

According to research firm IDC, phablets are more popular than tablets in emerging markets. The research firm stated that the phablet cannibalization trend led them to lower their forecast for 2013 from 227.4 million units to 221.3 million units. It also lowered its 2017 tablet shipment forecast to 386.3 million units from the prior expectation of 407 million units.

Hence, we believe that the deployment of these products will boost H-P’s mobile solutions portfolio and act as a tailwind for the company’s near-term financial performance.  

However, increasing competition from companies like International Business Machines Corp. (IBM - Analyst Report) and Oracle Corp. coupled with continuing macroeconomic challenges and tepid IT spending will pose challenges going forward.

Currently, H-P has a Zacks Rank #3 (Hold).

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