Rumour: Amazon might buy WebOS. But why?

The spectacular failure of Hewlett-Packard's TouchPad media tablet has left the WebOS operating system, originally written by Palm Inc, with no obvious future. It could return from the dead if Amazon bought it, and used it to replace the version of Android that runs in its new Kindle Fire.

The spectacular failure of Hewlett-Packard's TouchPad media tablet has left the WebOS operating system, originally written by Palm Inc, with no obvious future. It could return from the dead if Amazon bought it, and used it to replace the version of Android that runs in its new Kindle Fire. But why would it bother?

An unconfirmed report at the respected VentureBeat website, Amazon has Palm in its shopping cart -- will it click Buy? (exclusive), says: "A well-placed source tells us that HP is currently looking to rid itself of Palm as soon as possible, and that Amazon is the closest to finalizing the deal, among a handful of contenders."

There are some associated details that point to a connection. First, HP's Jon Rubinstein, who briefly headed Palm, was appointed to Amazon's board of directors late last year. Second, Rubinstein referred to Amazon in an interview with another website, This Is My Next. He said:

"So, we'd like a partner that would allow us to expand the WebOS ecosystem. . . There's a variety of different sets of a characteristics to qualify as a good partner. I would say Amazon would certainly make a great partner, because they have a lot of characteristics that would help them expand the WebOS ecosystem. As to whether there’s been discussions or not… that's obviously not something I'm going to comment about."

That might have been a good deal at the time, but times have changed. Amazon has now announced Kindle Fire and it runs a forked version of Google's Linux-based Android operating system, which is hidden under Amazon's own tablet user interface. It would certainly be possible to run the same TUI on top of WebOS, but is there a strong case for making such a move? WebOS is reckoned to be "good at multitasking", but Android isn't exactly bad at it.

Amazon has a vested interest in Android, having already built an Android App Store, and will benefit by attracting support for the Kindle Fire from the large pool of Google Android software developers. WebOS does not have the same level of support.

VentureBeat says: "Amazon would have free rein to redesign WebOS to its own liking, and it would be able to further differentiate its Kindle devices from the slew of Android tablets in the market." In other words, VentureBeat thinks Amazon should buy what amounts to a proprietary operating system rather than change one that's open source. (As Daniel Bentley has pointed out on Twitter, WebOS is also based on the Linux kernel.)*

But Amazon's TUI already provides differentiation from other Android tablets. For Amazon to put that same differentiation on top of a failed operating system instead of on top of a successful one makes no sense.

The PaidContent website has also speculated that "Perhaps more significantly, Amazon could also use the [WebOS] platform to power other products in the future, too -- such as smartphones and PCs, both areas where Amazon could naturally move".

But this doesn't make sense either. The fact that Amazon has been successful with e-readers/tablets doesn't mean it wants to get into the phone market and take on Apple, RIM, Nokia-Microsoft and manufacturers such as HTC, Samsung and Motorola (or Goomorola). Even if it did, it would make more sense to use its own version of Android, though it might need to spend a lot of money developing a smartphone user interface. The one in the Kindle Fire is completely unsuitable.

The idea that Amazon might use WebOS to do a non-Windows PC is even more bizarre. Not even HP -- which is by some distance the world's largest PC company -- thought it could manage that. HP's idea was to ship PCs with WebOS as an option in much the same way as HP, Asus, Sony and others include a version of the Linux-based Splashtop (which consumers ignore, if they even know it's there).

Reaching the next billion customers

It's certainly true that having WebOS on more devices would extend Amazon's virtual shopfront into more homes, which is (as I wrote yesterday) what the Kindle Fire will do. However, the quickest way to reach the next billion users is to provide free Kindle apps for current platforms such as Microsoft Windows, Android and Apple's iOS, not to sell a billion new phones and/or PCs running an operating system that has already failed at least twice in the marketplace.

Finally, Amazon doesn't have to buy WebOS to avoid potential threats from Microsoft. Amazon already has a comprehensive cross-licensing agreement with Microsoft, announced on February 22, 2010, "including coverage for Amazon’s popular e-reading device, Kindle".

So if Amazon does buy WebOS, it will be based on a calculation that balances the purchase price -- which should be a fraction of the $1.2 billion HP paid for Palm -- and extra software development costs against whatever fees it may be paying Microsoft. And all that's unknown.

@jackschofield

* I've updated this paragraph to include the tweet.