A tale of two failures: Microsoft's Kin and HP's TouchPad

HP’s bombshell announcement that it will “discontinue operations” for WebOS devices, most notably the TouchPad tablet, inspired immediate comparisons with Microsoft’s disastrous mobile phone, the Kin. Indeed, there are striking similarities:

• The Kin was on sale for 55 days, from May 6, 2010, when it was first available for purchase online, until Microsoft pulled the plug on June 30. The TouchPad went on sale on July 1, 2011, and lasted until August 18, giving it 49 days on the market. HP wins that Dubious Achievement award, narrowly.
• Microsoft paid approximately $500 million for Danger in 2008. HP paid $1.2 billion for Palm last year.
• Microsoft took a $240 million writeoff for shutting down Kin. Because of the current inflated market for patents, HP might be able to recover its purchase price by selling Palm’s potentially valuable patent portfolio.

But none of those numbers really matter in the final analysis. For both Microsoft and HP, there were much more significant intangible costs associated with these high-profile failures.

It’s embarrassing to fail so quickly and in such spectacular fashion. In the case of Kin, the failure was with a niche product aimed at a youth market. In HP’s case, the humiliation is much more profound. HP had literally bet the company on WebOS. In the press release announcing the Palm acquisition, HP bragged that “Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy.”

And HP had big dreams for WebOS. In March—less than six months ago—HP CEO Leo Apotheker talked about the “massive platform” opportunities for WebOS. According to Business Week, Apotheker had a grand vision: “Starting next year, every one of the PCs shipped by HP will include the ability to run WebOS in addition to Microsoft Corp.’s Windows.” Now, with HP's announcement that it plans to spin off its PC business, there’s a good chance the company won’t even be shipping PCs at the end of 2012.

But for Microsoft and HP alike, the worst writeoff of all is the opportunity cost associated with their respective failed ventures. Microsoft sunk two years of precious development resources into Kin while Windows Mobile was failing. During that same period, Apple's iPhone was thriving and Google's Android platform was gaining critical momentum.

Microsoft CEO Steve Ballmer admitted in a September 2010 interview that the Kin project “just defocused activity from Windows Phone.” Nearly a year later, Windows Phone is still struggling to gain traction in the marketplace.

In HP’s case, it’s too early to assess how much damage this wrong turn caused. But the fact that Apotheker and HP’s board feel compelled to exit the PC business—its onetime core—suggests that the ultimate cost will be very high indeed.

See also:

• HP’s Apotheker recounts TouchPad disaster in post mortem
• I’m not surprised HP killed the TouchPad, but it is a sad way for Palm to end
• If HP spins off webOS group, HTC should buy it
• HP's WebOS conundrum: Sell the IP or try licensing?