HP Spinning Off WebOS and Exiting Hardware Business

A number of readers submitted rumors about some announcements HP was set to make today. Now, the announcements have actually happened, and the news looks grim. For starters, they are exiting the tablet and phone market and repositioning webOS for use in appliances and vehicles. While confirming they are in talks to acquire Autonomy, they also announced they are considering exiting the PC hardware business entirely in order to focus on their software business.

Figures

[Udo Schmitz]

"According to one source who has seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory."

http://allthingsd.com/20110816/ouchpad-best-buy-sitting-on-a-pile-of-unsold-hp-tablets/ [allthingsd.com]

HP becomes Palm?

[Sez Zero]

So HP is jettisoning all of the things that made it HP two years ago and just focusing on the stuff they got when they bought Palm? Does this sound like they are trying to blow up the company to anyone else?

Sad day for WebOS

[NiteShaed]

I'm sorry to see it go, but I'm not at all surprised. I was a release-day Palm Pre buyer (Sprint), and I LOVED WebOS, but Palm really blew it. If there were more apps and the hardware was better (and upgraded more regularly) I would probably have gone with WebOS over Android or iOS, but in the end they left me hanging with no decent upgrade path (the Pre was an okay first-gen device, but really needed a major followup at the one-year mark) and they just didn't attract the app developers (I mean the major developers, the indie devs were fantastic!). End result, I'm now a happy Android user (HTC Evo), but I still miss the great parts of WebOS (Cards, Konami-code to root, etc).

Well, I'll just keep hoping that some of that good stuff makes it to Android eventually. Last I heard that's where most of the WebOS team ended up.....

As for WebOS in vehicles....great, just what I need. People have enough crap that they play with instead of paying attention to the road, now they're going to be swiping through multiple cards on their in-dash systems looking for things while careening down the highway? Wonderful....

Re:Sad, sad, sad.

[jamrock]

That's an insightful observation, and of course the best example that HP could hope to emulate is IBM's brilliantly successful transformation from a hardware to a service solutions company under the superb leadership of Louis Gerstner.

But why on earth would they even consider getting into bed with RIM? RIM's problems stem directly from their bizarre Frankenstein's monster leadership (2 CEO's and 3 COO's? Seriously??), and management appears to be in serious denial about the nature of their competition. Plus it seems as if the board doesn't see anything wrong with how the company is being led, so don't expect the situation there to change anytime soon.

History of HP

[tibit]

So, HP was an instrument company, started with an ingenious application of a light bulb [linear.com] no less. Then they became a computer company sort of by attrition, since they needed machines to control their instruments -- IIRC. Then servers came sort of naturally when they got to dabble with UNIX. Then the core instrument business got spun off as Agilent, pretty much tarring the name of Hewlett and Packard IMHO. Then the PC business gets spun off too. So what remains is servers? What the heck software is HP shipping that hasn't to do with their own hardware? It's becoming more and more of a joke to keep the same name. Their business got nothing to do with Hewlett nor Packard. They're turning in their graves. </rant>

Re:"I blame Carly"

[wolfemi1]

Who blames Carly because she was rude? From all accounts I've heard, the Compaq merger was a huge mistake, as was the spin-off of Agilent and the iPod cross-licensing with Apple. You think that the party thrown when she left was just because she was rude? Why did HP's market cap raise by $8 BILLION when she left? Surely market traders on Wall street wouldn't care whether she was gruff with her employees.

Re:I have a great name for the spin-off

[MasterOfGoingFaster]

Actually, that is a great idea. Consumers know Compaq.

Re:Agilent

[Dogtanian]

This is the company that built Silicon Valley and for decades was the benchmark for tech innovation, and it's so painful to watch them floundering like this.

No, that was Agilent, the test and measurement company. We're talking about HP, the Printer/Business Services/Bottom-barrel PC company. Totally different.

Shows you the importance of a name on perception. Often major companies split or spin-off major parts of themselves to the extent that one could question whether the current user of the name is meaningfully the "same" company as the original.

It occurs to me that it may be useful to consider the lineage of the various business entities formed from mergers, takeovers, spinoffs and splits *without* attaching weight to their names. Then- considering lineage, size and business interests- askine oneself whether the current holder of the "big name" is any more clearly the "true" continuation of the original company than any of the others.

In the case of Agilent, it's still (apparently) far smaller than HP which remains the obvious parent, but it could also be argued that it represents the roots of HP.

Motorola is the obvious example that sprung to mind though. It's spun-off or split major parts of itself several times and at the start of this year split into Motorola Solutions and Motorola Mobile, the latter being the business that Google recently bought. But this is after already having spun/split-off its semiconductor divisions in 1999 and 2004, as well as its original radio business (on which it founded its reputation) having been sold off in the 1970s.

Is Motorola "Solutions" (*) still the same Motorola that created the old products people get nostalgic about? That's questionable.

(*) Absolutely meaningless sound-good business expression that's so banally all-pervasive that it doesn't even qualify as a "buzzword" any more.

Re:What?

[Compuser]

OK, I will bite. If a big company goes under, it surely does not mean that the market contracts. So far we agree. But it does mean that redundancy is reduced. Why is that bad? Well, first of all it means the system is not robust to events like Fukushima. Less players means more concentrated business chain means more vulnerability to disruption. Second, elimination of redundancy means less competition. Which implies higher prices, less quality, and less service. So what we get is not necessarily that resources were mis-allocated. It could just be that temporary sentiment shift places less value on robust supply and overall competition. Markets have often been quite short-sited and this could be a manifestation of that. Finally, one less big company means one less lobbyist. The surviving players can now make sure their voice is not balanced out by another player pulling in their own direction.

Also, I am not sure I buy that trade creates wealth. If I have two people on an otherwise empty island and they are starving to death for lack of food, whether or not they trade their shirts makes no difference to their wealth and might even detract from it if you factor in the calories they expend in trading. Wealth comes from two places and two places only: new natural resource discoveries and improvements in efficiency (i.e. scientific, technological and business process discoveries). Trade can stimulate these two and that is the only way it can help create wealth. Trade can also be detrimental. The most detrimental is trade that leads to bubbles, that is when strong correlation patterns show in the trade.