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Why HP’s Hasty, Bumbling Decision To Dump Mobile Hardware May Doom WebOS

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It’s never pretty to watch a big tech company scramble for direction (that is, unless you compete against that company). HP (NYSE: HPQ) is currently trying to wind down a mobile business that it hardly launched while at the same time trying to convince the world that it has a truly valuable mobile business, and that schizophrenia makes it harder and harder to understand what lies in store for WebOS, its developers, and its potential partners.

HP CEO Leo Apotheker is not a mobile guy, that is for sure, but he forged a reputation as a solid leader through transition at SAP. Knowing that, how did HP manage to botch this transitional phase in its mobile strategy? It’s pretty obvious that HP’s mobile division had no idea that the company was about to get out of the tablet hardware business until the day it was announced, making new WebOS leader Stephen DeWitt look quite foolish in the process for stating just weeks earlier that HP was about to “go big” on mobile.

Let’s be brutally honest about WebOS: it’s just not cutting it as a modern mobile operating system despite its critical-darling status, and no one has advanced a credible plan for how make it work. First Palm, and then HP have tried to get wireless carriers and consumers to think of WebOS as an iOS competitor but the numbers speak for themselves: according to Nielsen’s latest figures more people are using smartphones running Windows Mobile, which Microsoft (NSDQ: MSFT) has virtually abandoned, than WebOS. The only way HP could stimulate demand for WebOS was to sell TouchPads at an unsustainable price that would cost it nearly $200 per unit sold.

So it’s not all that surprising that HP would take a long hard look at its mobile assets–especially an HP led by a career enterprise software guy–and decide to punt when faced with fourth and long. However, serious damage is being done to WebOS as HP stumbles its way through August.

Consider the following:

–Even though people weren’t responding to the TouchPad or Veer, HP’s decision imposed a ceiling on how many people WebOS developers can reach. And even after the fire sale, it’s nowhere near the amount of people they can reach by focusing on iOS, Android, or even BlackBerry. Why would anyone building out a mobile strategy invest in WebOS development right now? At least an intact hardware department offered the promise of future sales, and the limited production run promised earlier in the week seems to have more to do with clearing a component backlog than a response to TouchPad mania.

–HP had an opportunity to sharpen its pitch for WebOS as a licensing alternative to Android and its patent problems in the wake of Google’s decision to purchase Motorola (NYSE: MMI), but it instead went ahead with its WebOS hardware announcement just days after Google’s bombshell. It will now have to pursue licensing deals with companies who might wonder why they should consider building hardware around an operating system that one of the largest hardware vendors in the world no longer wants to touch.

–Is WebOS for sale, or are WebOS licenses for sale? Why would I discuss taking a license to an operating system that might be owned by a different corporation in six months? Why would I buy an unpopular operating system when I can license Android or Windows Phone 7 unless I’m only in it for the patents?

The biggest head-scratcher of the last two weeks is why HP rushed out this shift in its mobile strategy, catching partners and consumers by surprise just six weeks after the TouchPad launch. On the conference call announcing HP’s reorganization, Apotheker said the company thought so highly of WebOS that “we are exploring options for how best to optimize the value of WebOS software going forward,” but HP had been exploring those options before the TouchPad even launched.

There are only a small number of realistic suitors for WebOS or WebOS licenses. It’s hard to believe HP couldn’t have worked out a deal with one of them before taking this drastic step and plunging WebOS into a self-induced period of fear, uncertainty, and doubt. There has to be someone interested in HP’s mobile patents during a year in which the value of mobile patents has skyrocketed, so some sort of deal will likely happen.

But if WebOS is really to survive as a going concern in the mobile world, HP has not done it any favors over the last two weeks.

8 Responses to “Why HP’s Hasty, Bumbling Decision To Dump Mobile Hardware May Doom WebOS”

  1. There’s lots of rationale in the article but it’s all just dancing on the head of a pin. WebOS is dead as a dodo and that’s as sure a night follows day. You wouldn’t expect HP to agree yet but it will take more than PR to fix their mess

  2. WebOS is no longer an OS, it is an ex-OS.

    You don’t get to have a successful OS by default and then it is yours to screw up. You have to not screw up at all and then still, you almost always fail. Even if WebOS had decent sales, this would have killed it. To have terrible sales, become a punchline with the failed sale, become another punchline with the $99 fire sale, become yet another punchline with the second run made from leftover components … this is like a guy going up to the roof of a skyscraper, taking poison, putting a bag over his head, slitting his wrists, jumping off, and landing in an open construction site, impaled on #18 rebar. Yes, he is dead.

    I literally had to go “WebOS? what was that again?” when I saw this article.

  3. Bob Harvey

    It wasn’t just Apotheker who killed WebOs.   The Touchpad was partly responsible.  Launched at the same price as the iPad it was a very poor offering.  No SD slot, no usb storage mode, no overwhelming reason to buy.  Oh, you could touch it to a pre phone, only there weren’t any. 

    My old dad knew a thing or two about selling things.  He’d have told you that to take sales from the market leader you have to be one or both of:
    * Half the price
    * twice as good
    It wasn’t, and wasn’t.

    Two days after the launch HP were telling pundits about the problems of being No. 2.  it was delusional.  They probably weren’t no. 22.

    Then, instead of hard work and commitment and a struggle to build a brand we got shooting-from-the-hip sociopathic decision making (I suppose they are texans).

    The project was late, inadequate, overpriced and mismanaged by a corporation suffering from mass delusions.  I so wanted it to succeed, to go back  to palm who built the only PDA that actually worked.  I felt massively let down. 

    HP’s shareholders have let loonies run their company for years now.  I have no sympathy

  4. May doom webOS? HP pretty much have killed webOS now, who is going to develop apps for webOS?… HP is going to discontinue manufacturing webOS devices, so who is going to build them? with no apps, no devices, and no support I think we can say with great certainty that webOS is dead.

    It took HP 18 months to kill Palm.

  5. neutrino23

    This was a stunning story. It just goes to show that we the public assign too much credit to the guys at the top. They are just human and they have their own goals and aspirations. Clearly the new guy at HP doesn’t give a rat’s #$% about hardware. He may figure it is just a distraction that should be dumped as soon as possible. From his point of view he may be right. From the point of view of those involved in said hardware it looks like a disaster. I’ve seen this movie several times at several companies. It doesn’t have a nice ending for most people.

  6. John Dingler

    Hello Tom,
    We have to assume that Apotheker’s comment that he’s “…exploring options for how best to optimize the value of WebOS…” this time meant that ditching it to prevent further losses had the best value for HP “going forward.”

    • Terry Likens

      I totally agree (in part).. I say that because there is no way he could come in and literally throw away $1 billion US Dollars.. no way no way no way!  The stock holders would sue him and the board and hold them liable. 

      This play is into what I forecast-ed some time ago.  Yes HP is going to spin off the laptop and desktop portion of their business to include the tablets but to do that HP needed to get them out there in the market. Not sitting on store shelves because the pricing was wrong. So the idea of pulling all advertising and lowering the the price stating that this is a fire sell immediately throws hundreds of thousands of tablets out on the market more importantly it gets it to the market. 

      So now we add the tablet to the pc and laptop portion of the spin off BUT they keep WebOS for printers, phones and tablets and license that out. 

      That way they can exit that market, Keep options open for WebOS via licensing and can now focus on the main areas that HP is trying to grow. IT is not that complicated but we lose focus if we believe the marketing and news.

      IF this is not the plan then I have given HP a billion dollar strategy that meets all levels of satisifaction & I want a tablet and then some *wink*