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Devices like smartphones and tablets take a while to develop. Apple’s iPad 2 may not seem like a huge upgrade, but it take a lot of work to cram more into a smaller space like the folks from Cupertino managed to do. We’ve seen companies like Samsung take a step back to reevaluate their decisions since the iPad 2 was announced, and if DigiTimes’ sources are to be believed, HP is considering making some changes with regards to the next generation TouchPad. Specifically, HP is considering moving research and development for the TouchPad away from the Palm Global Business Unit to HP’s notebooks division (both fall under Executive Vice President Todd Bradley’s Personal Systems Group).

We’re a little conflicted on this rumor. While we’re obviously most interested in the software experience of the TouchPad (awesome hardware is nothing without awesome software), we have to admit that the TouchPad doesn’t exactly blow us out of the water in comparison to the current generation of tablets, even when compared to the year-old iPad and current releases like the Android 3.0-powered Motorola Xoom. And that’s not even taking into consideration Palm’s recent history of ho-hum build quality.

HP’s notebooks division, however, has been hitting it out of the metaphorical park with their Envy line of laptops. Designed to compete head-on with Apple’s MacBook Pro computers, the Envy laptops are both technically and physically solid, while still managing to be beautifully crafted. The TouchPad? Aside from the more advanced Qualcomm processor, it’s not that far ahead (if at all) of the curve in just about any technical aspect and aesthetically it’s, well, it’s a shiny black slab, front and back.

That said, we have a hard time believing that anybody was caught off guard by the iPad 2. Apple did exactly what everybody expected them to do: released a thinner version of the iPad with cameras, a new dual-core A5 processor, and other modestly upgraded internals. What’s going to drive iPad sales is precisely what drove tens of millions of iPhone and iPod Touch sales over the past few years: apps. And we're not talking about the sheer number of apps, if anything that's a bad thing. We're talking about the quality of those apps. A good portion of the iPad 2 event was dedicated to demonstrating new apps from Apple, including the awesome-looking GarageBand and iMovie (both priced at a surprisingly low $4.99). It’s the software experience that makes the iPad platform and sets it apart from entries like the Xoom.

No doubt, hardware is important, but for a personal device like a tablet, the software experience is what sells it. Processors, displays, and cameras are means to an end - the modern customer is asking “what can I do with it?” You’ll notice that Apple didn’t even give a clock speed for the A5, because it doesn’t matter, just like it doesn’t matter that it has 512MB of RAM - all that matters to the customer the iPad 2 is fast and fluid and can do everything under the sun. HP would be wise to give more consideration to give more consideration to software for the TouchPad, and that is definitely not the notebook group’s area of expertise. Then again, an webOS-powered Envy tablet would probably one sweet piece of kit.