HP: webOS hardware dead, PC business could be spun off

Another tablet bites the dust as HP shutters webOS hardware and considers spinning off its entire PC business.

In a shock announcement yesterday HP announced that it is to cease production of webOS devices such as the TouchPad and that it may consider a sale of spin-off or its PC group.

What's gone wrong at HP?

First, some background. HP is the largest PC maker in the world with a quarterly revenue of $31.2 billion. Riding on its success as a PC OEM, HP grabbed webOS as part of its $1.2 billion Palm deal last year. HP promised that we'd see the webOS OS used on a myriad of devices, from phones to printers, tablets to PCs.

HP released the webOS-powered TouchPad tablet on July 1. At first it seemed that it had a chance against the iPad; after all, it was new, exciting and had the backing of the biggest OEM. But then things started to go wrong. First HP pre-announced a better, faster TouchPad, then started cutting prices, and then came the rumors that Best Buy was sitting on 200,000 unsold TouchPads and wanted HP to take them back.

And then, out of the blue, HP announced yesterday that there will be no more webOS hardware.

What will happen to webOS? At present, this is unclear. Insiders at HP claim that the company is still committed to developing webOS as a platform, but where this will go is unclear. Personally I don't see HP wanting to get into the licensing business (something it has no experience in). I think it is sell or shutter time for webOS.

So what went wrong? I think that bottom line, it's clear that HP thought that purchasing Palm was a gigantic mistake, and trying to push a webOS tablet on the public in the way that HP did was also a huge and costly mistake. It seems that Apple is still the only company that possesses the necessary secret sauce to sell tablets and make a profit. The fact that Apple has managed to outmaneuver the big PC OEMs when it comes to tablets should also be cause for concern.

Whatever will happen next, the Touchpad is dead.

OK, so HP's webOS aspirations have crashed and burned, but what's wrong with its OEM business?

Pretty much the same thing that's wrong with every other PC OEM. Profit margins are razor thin and people aren't spending as much as they used to, and even as the biggest OEM on the block, HP doesn't want to play any more. Announcing its intentions to exit from the business now shows that the company also has no faith in Windows 8 to make things better. To have a major OEM decide that it no longer wants to play in the PC market with Windows 8 just around the corner must be a major cause for concern over at Redmond.

Overall, while it's shocking how quickly HP pulled the plug on the TouchPad (after only 49 days on sale, a time period even shorter that that of Microsoft's Kin handsets, which were on sale for 55 days before having the plug pulled), what's far scarier here for the industry as a whole is that HP wants out of the PC business.

Feeling a little glum because HP pulled the plug on your TouchPad after only a few weeks of life? Here's a little something to help lighten the mood:

(NSFW - Caption language)


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