HP’s Shuttering of WebOS HW, Spinoff of PSG Has Repercussions

palm webos HP’s Shuttering of WebOS HW, Spinoff of PSG Has Repercussions

Today HP announced it’s killing its WebOS device business, one year after purchasing Palm for $1.2 billion, a little over a month after shipping its new TouchPad tablets and WebOS smartphones. It also just after proclaiming loudly that WebOS would be put on everything from tablets to PCs to printers in a bold “thumb in the eye” to Microsoft.

The company also announced it’s looking to spin off, strategically partner, or sell off its Personal Systems Group (PSG) that makes PCs. It is doing so when it is #1 in the global PC market. While PSG is big in terms of overall revenue, it’s very small in terms of profits compared to other HP divisions. It’s smaller than HP Financial Services now in terms of profits. And PSG revenue is down, especially among its consumer business. So the company is going “all in” on enterprise and not surprisingly, services, while it looks for a transition solution for PSG. Not surprising given CEO Leo Apotheker’s background.

HP Touchpad HP’s Shuttering of WebOS HW, Spinoff of PSG Has RepercussionsFirst, WebOS never had a chance and I think HP’s vision when it bought Palm was flawed. Palm and WebOS never made it big outside the US, and HP had a slim chance to give it some traction on other shores, and Apple and Google just moved too fast. If RIM was struggling with BlackBerry in every corner of the globe thanks to Apple and Android, WebOS wasn’t going to gain any ground, despite how wonderful the OS is.

Clearly retailers who bought into HP’s TouchPad vision are upset — go ask Best Buy!; as are consumers who recently bought the tablets and smartphones. But out of the gate HP’s WebOS offerings didn’t meet sales out expectations. It missed them by a mile. So the shutdown was painful and swift. It would cost HP twice as much in losses next quarter —$332 million this quarter —if it left its WebOS hardware business alone.

Apotheker stated that software development and resources for WebOS would remain at the company. But I would posit that there isn’t a mobile developer around that will touch WebOS after today. A great OS with no ecosystem or breadth of developers around it is not a sustainable platform. Unless HP can shrink WebOS into its printers as a cheaper solution to its existing printer code, there’s no place for it inside HP. And who will want to buy it on the cheap? Some have said RIM, but there is already an existing BlackBerry OS developer base around the world actively moving to QNX.

Back in December 2009 I predicted that the eight Mobile operating systems would consolidate down to five by the end of 2010. At the time it was iPhone, Android, BlackBerry, Windows Mobile, Palm, Symbian, Maemo, and Samsung’s Bada.

I said that Palm would get acquired. It did.

Nokia would get off Symbian. It is.

Windows Mobile would struggle badly for a year. It did.

RIM would not get sold but would see increased enterprise pressure from Android and iPhone and have to re-develop its OS efforts. It did and it is.

Samsung’s Bada would fail. Where is it today?

Now here we are, 17 months later and we’re down to iOS, Android, Windows Phone, and QNX. So that’s one less than I predicted. Symbian and WebOS are meeting their fate right now. The market just doesn’t need that many mobile OSes. I’d go even so far as to say that three is now the right number of mobile OSes given the maturity of the device market today.

And what about PSG? Since HP has stated that it’s separating, spinning off, or perhaps selling its PC business — AKA “strategic alternatives” in their earnings call— what IT organization is going to continue to buy its commercial lines this year? Retailers can’t be happy either about their relationship with HP now. I would venture to guess that market share will be affected.

If HP wants to reinvent itself a la IBM, it needs to find a suitor for its PC business, and fast. HP makes great PCs but there hasn’t been much innovation in PCs for quite some time now. Most of the PCs we test as part of our Vantis Files service come in with pretty mediocre Market Success Scores. And the PC business is a race to the bottom as far as margins and profits go. Smartphones and tablets may be all the rage, but their margins are razor thin too! So can HP spin off its PC division? As Michael Dell snarkily said today in a tweet- “If HP spins off their PC business….maybe they will call it Compaq?”

dell2 HP’s Shuttering of WebOS HW, Spinoff of PSG Has Repercussions


I think the PSG news was more of a surprise than the WebOS news, and as someone who used to work in product marketing and product planning for a company back in Houston, back in the hey day of PCs, this was was sobering news.

Will HP PSG end up like a Motorola Mobility? Spun off and then ultimately acquired? Or will it find a suitor fast like IBM found in Lenovo? I guess we will see. More things to contemplate.

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