HP Dumps WebOS, May Exit PC Business
Just this week we were praising Hewlett-Packard for having a vision for the post-PC era as it sought to make webOS the embedded platform for every kind of web connected gadget. Now CEO Leo Apotheker has done a U-turn in his thinking and aims to get out of the devices business, PC or post-PC. The company is to drop webOS products and is evaluating plans to spin off its PC business.
Focal Points:
- The shock move reflects the slow decline of the conventional PC business, which HP still leads, and echoes IBM's sale of its own PC operations to Lenovo in 2004. Like IBM then, HP will refocus on back end cloud servers and services, and seems to be giving up the battle to make an impact on the mobile world. Its smartphones and its new TouchPad tablet have been minor players, but having acquired Palm, Apotheker recently outlined a radical strategy to target webOS at emerging cloud devices, rather than seeking to compete head-on with Apple.
- The strategy was accompanied by a restructuring, which combined the PC and mobile activities and gave webOS a broader role across the company. However, the plan was divisive within HP and it now seems that Apotheker believes it could take too long to come to fruition, and faces too many challenges from the likes of Google.
- HP stunned the markets with a reduced sales outlook; the dumping of webOS, and the statement that it was evaluating strategic options for its PC business, which could include a "full or partial separation".
- This is an abrupt change of thinking from Apotheker, who in February said being in the consumer devices business gave HP "an immense competitive advantage". Now, instead, he said in an interview: "We need to sharpen our focus…. need to take significant action." According to The Wall Street Journal, he has decided "to be successful in the consumer device business we would have had to invest a lot of capital and I believe we can invest it in better places."
- The PC division is HP's largest, bringing in almost $9.6bn in revenue last quarter, just ahead of technical services on $9.1bn. The printer unit generated just over $6bn.
- It seems unlikely that a second white knight will appear for the former Palm and the market will scarcely shift with the loss of the Pre and the TouchPad. However, as HP spotted when it acquired Palm largely to get its hands on webOS, the operating system is a modern and innovative one, and may find a home elsewhere as firms scramble to create platforms for the nascent cloud/browser industry.
If webOS fades away, Google's Chrome OS and Intel's MeeGo will face less competition, but the technology would be worth preserving - perhaps by Samsung, as it looks around for software acquisitions, or even Microsoft. Reports that Amazon was to become a lead licensee for webOS abounded recently, and it may be the failure of those talks - or to get other licensing deals - that prompted the abrupt volte-face. However, it is not inconceivable that Amazon will look again at webOS as it builds its cloud platforms.
Editors Note: IT executives need to re-evaluate their PC roadmaps going forward. One might jump to the conclusion that “Apple” has won[1] the battle, but it is certain that the end user workstation/laptop market will NOT become 100% of any one vendor.
However, the cloud will do more to impact the end user devices from both the consumer and manufacturer perspectives. If HP determines that the ROI is better from a cloud service perspective, others may follow suit.