HP buys Autonomy for £7bn, kills webOS devices and looks to spin off PC unit

Summary:All change as HP goes all-in on enterprise...

...sales of the TouchPad are not meeting our expectations... The velocity of change in the personal device marketplace continues to increase and the competitive landscape has grown increasingly more complex especially around the personal computing arena," Apotheker said yesterday.

HP had to take "the difficult but necessary decision" to close its webOS hardware operations within Q4 2011, he added.

HP only announced the acquisition of Palm just over a year ago, when it paid $1.2bn for the mobile device and OS maker.

Analysts suggested at the time that HP's eye was on the webOS mobile platform rather than Palm's hardware expertise, with a view to enabling it to create a webOS tablet to compete with Apple's iPad.

At the time, HP said buying Palm would improve its ability to "participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets".

The first of those devices were unveiled in February this year with the announcement of a HP-branded webOS tablet and two smartphones.

The tablet, the HP TouchPad, did not launch until July and despite a positive reception - with the TouchPad being touted as a serious rival to Apple's iPad - sales did not live up to HP's expectations. In a telling move earlier this month the company heavily discounted the slate in the US.

The webOS operating system, however, seems likely to live on: "We have been tracking closely the performance of webOS and analysing its operational performance and market opportunities. We were successful at launching software that was praised for its different shaded user experience. We know that many developers feel the operating systems is elegantly designed and it's a respected platform. Therefore, we are exploring options for how best to optimise the value of webOS software going forward," Apotheker said.

Analysts are sceptical as to how beneficial this week's moves will be to HP's long-term future.

"HP, through its plans to shutter webOS and seek alternatives for its PC business, is limiting its exposure to the consumer hardware market and, instead, going all-in on a strategy of increasing its revenue and margins with an enterprise-focused bundle of software, services, servers and storage," said Beau Skonieczny, research analyst in industry watchers TBRI's computing practice, in a research note.

"Removing all or part of its low-margin consumer PC business and the expense of fighting its way into the mobile and tablet markets with a fourth offering (after Apple, Google, and Microsoft) will improve HPs margins in the short term. The company will be challenged, however, to morph into a highly profitable purveyor of software, services, servers and storage - a goal it has pursued for some time," Skonieczny added.

Anthony Miller, managing partner at analysts TechMarketView, added in a research note: "The announcement that HP is to (a) buy Autonomy, (b) scrap its webOS tablets and smartphones (and in so doing write off the $1b+ it paid for Palm in April last year plus who knows how much more R&D to try to turn that sow's ear into a silk purse), and (c) potentially sell off its PC business, completely overshadowed its Q3 results.

"And just as well, as they were a lacklustre set of numbers, carrying with them yet another downgrade to FY [financial year] guidance... Buying Autonomy - as fabulous a business that it is - does not bring HP any closer to becoming a software company than buying Palm made it a mobile internet company, or than buying EDS turned it into a services company."

silicon.com's Natasha Lomas contributed to this article

Topics: Apps, Software Development

About

Jo Best has been covering IT for the best part of a decade for publications including silicon.com, Guardian Government Computing and ZDNet in both London and Sydney.

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