HP halts webOS business, possible PC unit spin off, more

By on August 18, 2011, 6:07 PM

The web exploded earlier today following a Bloomberg report that claimed HP planned to dump its PC business and make a massive $10 billion acquisition. Those rumors have been confirmed by the company's earnings report this evening that claims that HP's board has approved the "exploration of strategic alternatives" for its Personal Systems Group, including the possibility of a full or partial separation through a spinoff or some other transaction.

The announcement immediately brings to memory when IBM decided to sell its consumer PC division to Lenovo a few years ago. At the time it seemed like a contradictory move, but looking at the present it'd seem the shift in strategy fully paid off for Big Blue. PC sales remain at large a low profit margin business, nevertheless HP is and has been for a few years the largest PC maker in the world.

In addition to talks of shedding its PC business, HP will reportedly cease all webOS operations, including its TouchPad tablets, existing Pre smartphones and upcoming webOS-based devices. Although it's no secret that HP's tablet sales have been weak, nobody is doing as well as Apple in that department. Few expected the company to entirely scrap its webOS projects considering they're a relatively fresh endeavor. HP acquired Palm for $1.2 billion on April 2010, and the TouchPad went on sale just three months ago.

"Our WebOS devices have not gained enough traction in the marketplace with consumers," said Leo Apotheker, HP president and chief executive officer. "Continuing to execute our current device approach in this space is no longer in the interest of HP or its shareholders."

The company is leaving the door open to the possibility of licensing webOS to third party manufacturers, a scenario that could suddenly find willing adopters after Google's acquisition of Motorola and the potential conflict of interest with outside parties supporting the Android platform. If anything, HP's previous plans of putting the mobile OS at work in all of its devices including PCs is certainly canned.


Today's announcement likely spells the end to original laptop designs like HP's Envy.

Along with those two big announcements, HP reported fiscal third-quarter earnings and confirmed they're in advanced talks to buy British software firm Autonomy Corp for $10.2 billion -- several times what they paid for Palm last year. Autonomy is dedicated to the development of enterprise search, content management and knowledge management applications. This is certainly a hint of the strategy the company is setting forth for the long term, less hardware that doesn't represent large margins and more enterprise products and services.

Needless to say, HP is not touching its highly profitable Imaging and Printing Group, where webOS may eventually find a home in one shape or another.

Until things settle down and a final decision is taken about HP's PC business, you can expect several interesting shake ups in the industry. Inevitably HP will lose consumer confidence on buying their hardware and that will result in strengthening positions for other manufacturers such as Acer, Dell, Asus, Lenovo, and undoubtedly Apple, who is widely viewed as the only manufacturer capable of driving healthy profit margin on high-end computer sales.

Update (8/19): HP's stock price went down 20% the day after the announcement as investors reacted to the unexpected news.

Update #2 (8/20): HP will offer a fire sale of all remaining TouchPad stock at $99 for the 16GB version and $149 for the 32GB version. Watch out for Amazon and HP's own listings for the closeout price to become effective.




User Comments: 27

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Guest said:

Crap!!!! Anybody knows how to install Android on a Touchpad?

MrAnderson said:

Kaboom! Wow... I did not think I would live in a time of business folding... okay so I was around and older enough to understand the IBM selling of their PC business... but IBM at the time was doing so many other things and I don't think they were close to the largest PC manufacturer. Wow the PC market is going into a shake up... soon all the Windows based PCs will be made by foreign companies. Strange... Apple will be the only one left. What will happen to the enthusiast market that is already an expensive hobby... will PCs start to really become consumer products with super slim form factors and no upgrades except for replacement... if the price to replace costs less than a few upgrades I will mind less... but I will miss the control when all my memory is soldered into the system boards in perhaps in 10 years time. I hope they open it up so I can at least write software myself... and I hope a bunch of other manufacturers give it a go... geez how much did they lose... not everyone can be Apple when releasing a product. So twitchy...

KG363 KG363 said:

They're #1 and they're still profitable, even if it's margins aren't great. I don't see why they'd drop it. I guess that's why I'm not a CEO.

gwailo247, TechSpot Chancellor, said:

I still don't get why they just couldn't hire some people to write some apps. Get the top 100 app makers for Android and iOS, pay them each a good bounty to either port their apps, or write new versions, and then go to town. I'm sure it would have cost them way less than the money they hemorrhaged to date.

Guest said:

I guess Leo wants to find more money to buy Software companies at inflated prices.

HP wants to be IBM, when they should strive to be unique mix of hardware, software and services.

I think Leo may be the death of HP.

RH00D RH00D said:

I kind of see this as "Instead of putting in sweat, blood and tears into out products... Let's just screw the whole thing." The main reason why I think Apple continually has success opposed to other tablet *manufacturers* is because I don't think many people can deny Steve Job's passion and dedication for his company. He isn't just trying to pump out a tablet for a quick buck. Yeah, obviously he wants to earn money for Apple, but I don't think Job's is in the business of releasing piss-poor products. It seems most executives are in it only for the money, while people like Steve Jobs are in it for the money AND his perfect vision of what a product should be. I'm not an Apple fanboy at all, just my $0.02 of what I'm observing.

Guest said:

Well, get out why they can, I guess, before they dump any more cash into these losers.

it ain't exactly visionary though, is it? Makes them look like a bunch of pins. Who will trust them ?

If I'm an IT manager, why would I buy a bunch of HP crap if they are just gonna dump it?

Apotheker's days are limited. He'll be out by the end of the year.

buttus said:

Wow. This really is a frickin' JOKE. I mean, they spent a TON for Palm, launched the WebOS touchpads and phones just a few months ago and now they are disco'ing the whole thing.

It's funny. But, I think consumers didn't buy the product (Techspot just posted news yesterday about HP pleading with BestBuy NOT to return the overstock of their touchpads) simply because they didn't have confidence that HP would continue to support the hardware. I for one certainly doubted HP's long term support. To me it's similar to the Microsoft Zune. They hardware was good...but people lacked the confidence to make a long term investment.

I hope the CEO of HP gets slaughtered over this. Carly lost her job when they buggered the aquistion of Compaq. This is FAR worse IMO.

Archean Archean, TechSpot Paladin, said:

I wasn't expecting HP to spin off PSG, as despite some shortcomings generally their products / and support are reasonable enough. It is interesting to see that they are citing 'lower margins' as one of the reasons for this, which is incomprehensible since they have the largest share in the market. Besides HP is not IBM.

On webOS: they probably forgot that you may loose a battle or few at that, but the eventual goal is wining the war. +1 gwailo

Whoaman said:

The Writing On The Wall

Not sure if it's time is fully ripe yet but we are certainly moving back to the dummy terminal. Server-side is where the action will increasingly be. Apple knows it and is developing the right "ecosystem" with iCloud and a host of contemporary well-crafted devices that all speak the same elegant language.

Apple's only "perceived" weakness is price but the economics show that while Apple products may cost a bit more at the register, they are a far better investment.

Microsoft will need to get into the hardware business so they can have more control over the user experience or their shares will start to decline more and more.

IBM lost because they didn't control the core software (MS-DOS). Now, Microsoft will start losing because they don't control the hardware. Apple controls both and can ensure they run swimmingly together. Both Google (buying the Motorola division) and HP saw the writing on the wall but HP was coming too late to the game and Google will have a battle because of the lack of experience in hardware design, the lack of experience in GUI design and the lack of a full-fledged capable professional\ transitional platform like Mac\OS X.

Microsoft will buy Dell, Google Apps and Apple iCloud will chip away at Microsoft's server offerings. Eventually we will have three major competitors left at the table for center stage with Apple leading the way for a while.

mosu said:

@ Whoaman: We all see how much you like Apple, but it's still wishful thinking.The end of HP as a significant player began with Carly Fiorina, when mercantilism beat quality and technology.

Guest said:

i think you strongly fail in your understanding of apple's hardware. your apple fan boy comments are coming through your every pore

yRaz yRaz said:

Whoaman said:

Not sure if it's time is fully ripe yet but we are certainly moving back to the dummy terminal. Server-side is where the action will increasingly be. Apple knows it and is developing the right "ecosystem" with iCloud and a host of contemporary well-crafted devices that all speak the same elegant language.

Sounds Like windows 8

Archean Archean, TechSpot Paladin, said:

Not sure if it's time is fully ripe yet but we are certainly moving back to the dummy terminal.

That is because the companies selling such cloudy non-sense have figured out that it is a great way to make money and that too forever. Beside, there is a little problem with regard to 'unforeseen outages' which can always cause huge loses depending upon circumstances prevalent at a given time.

Guest said:

I really hope you're joking...

Whoaman said:

Delusion as it is, technology is all about convenience, comfort and entertainment . We want the smallest, the lightest, the sexiest , and the most "it just works". Turnkey and server-side are the natural side-effects of this inclination.

I will always build my own systems to some extent because I'm a scientist more than a consumer. I like to experiment and to understand. But I don't think I am in the majority here and the economics suggest this.

I hope MS with Windows 8 etc. can pull it all together like Apple's offering does. But it's somewhat of a paradigm shift for MS and obviously challenging. They have the resources to stay in this game for a while but do they have the vision to see it through? Ballmer is OK but he is not Bill Gates and most definitely not a Steve Jobs.

I dislike the idea of a three company future for this realm. I wish consumers were wiser and recognized their true power but we just ain't. We're lazy and becoming more "dummy terminal" ourselves with every passing moment it would seem. Corporations\Banks are trampling all over the laws designed to try to bring some level of equality to the masses. Disparity is massively on the increase hollowing out the vital middle class.

This will not end well.

Archean Archean, TechSpot Paladin, said:

And Steve Job is not going to stay there forever, and Apple do not have any one with the even half as good as he is. So if we take your logic once Steve Job (inevitably) departs Apple will start to slide right?

Corporations\Banks are trampling all over the laws designed to try to bring some level of equality to the masses. Disparity is massively on the increase hollowing out the vital middle class.

There is a reason for this, i.e. blindly following the beast of capitalism wherever it take us. Economic Freedom has turned into a disease just like the cultural freedom of 60s and 70s. Since the incarnation of Reaganomics, no one really bothered to see what actually is being done to economy, shifting manufacturing on the pretext of improving bottom lines and reducing costs resulted in loss of jobs all over the country. The tragedy is since that skunk head all the politicians have been following into his footsteps. These fools doesn't understand that technology eliminates jobs faster than it can create. Beside no one have noticed another trend, that most brightest minds do not study sciences now, they are heading to business schools, getting huge loans from banks for studies, then ending up working for same banks, helping them screw the ordinary folks even more, and when the banks go bust because of their fancy schemes with exotic names (e.g. CDS) they simply rush to the likes of Bush & Co + Obama O'Hoover & Co. asking for Govt. to lend them more 'almost free' money.

Anyway if you think only apple can make things 'which just work' then you are badly mistaken. Once Jobs is out IMO the company will slowly start to stagnate.

Relic Relic, TechSpot Chancellor, said:

That's a shocker, never expected to see HP actually looking into spinning off their PC division. The webOS halting not so much considering all the bad news of sales, but still disappointing considering it had a lot of potential.

Whoaman said:

Apple's only "perceived" weakness is price but the economics show that while Apple products may cost a bit more at the register, they are a far better investment.

To me it seems more like a status symbol than an investment for a lot of people and they don't mind shelling out extra to show it off. Which I really don't get since anyone can now pick it up at there local wally world.

Vicmiester said:

Relic said:

To me it seems more like a status symbol than an investment for a lot of people and they don't mind shelling out extra to show it off. Which I really don't get since anyone can now pick it up at there local wally world.

But, not everyone who shops at Walmart can actually afford to purchase Apple products and everyone knows that, including Walmart and Apple.

MrAnderson said:

Bring Compaq back =P that would be cool.

In university we used to affectionately call Compaqs comcracks because they had some boxes that were so proprietary that you could not upgrade unless you used their parts only.

Archean Archean, TechSpot Paladin, said:

But, not everyone who shops at Walmart can actually afford to purchase Apple products and everyone knows that, including Walmart and Apple.

Yes they do, but (probably) they hope that they'll be wanting these things so badly that they become 'generous' enough to use their credit cards, and then pay interest to bank for coming months and years.

gwailo247, TechSpot Chancellor, said:

Archean said:

On webOS: they probably forgot that you may loose a battle or few at that, but the eventual goal is wining the war. +1 gwailo

I actually got a little sad when I read the news. WebOS grew on me. I really think they could have had a good product on their hands had the pushed it properly. If they came up with enough good apps before launching the TouchPad, they would get enough free marketing from web site "OMG WebOS has apps!" articles to offset whatever cost they would have spent on buying off the app makers.

But then in reality, this tablet war is just going to be a tiny blip on the personal electronics battlefield. In a few years tablets are going to be given away like basic smartphones are today.

I guess the good news is that the TouchPads that are out there are going to drop in price quite a bit.

Whoaman said:

Archean said:

On webOS: they probably forgot that you may loose a battle or few at that, but the eventual goal is wining the war.

I would agree. Shareholders demand quick returns but there are investments that can only blossom with time. Many promising initiatives have had the lifelines prematurely cut due to this phenomenon.

Greed sucks.

Whoaman said:

Archean said:

Anyway if you think only apple can make things 'which just work' then you are badly mistaken. Once Jobs is out IMO the company will slowly start to stagnate.

Of course. Unless Apple can find the likes of a Steve Jobs to lead them (unlikely) Apple will begin a slow steady decline. Just as Microsoft has since Bill left the helm. ALL things that have a beginning also come to an end; Apple, corporations, governments, countries, cultures, languages, ideologies, religions, concepts, humans, animals, dad, mom, wife, son, daughter, you, me, pleasure, pain, earth, moon, sun, universe ... have we ever seen a single exception?

In this sector, it was Microsoft's time, it is now Apple's. Who's next? Will the causes and conditions still be in place in 50 years to support big corporations or will they go the way of the dinosaur? Is it me or is it getting a little warmer in here (...taps the tropopause)?

Uvindu said:

Ok, so my Laptop - No Support; My other laptop - no support; my Printer - no support - My PDA (iPaq110) - No Support. Just last week I told myself that my next desktop is going to be from HP... Sad

tipstir tipstir, TS Ambassador, said:

HP gamble had gone south this weekend. So many had gone on a mad dash to buy 16GB tablets for $99 after applying so many codes schemes to get for such a price. 32GB was dirt cheap too. WebOS and idea that came and went this weekend. Putting Android on this tablet would require drivers and support for WiFi, Touchscreen, Video Codecs an etc. Otherwise won't be happy HP tablet owner.

Archean Archean, TechSpot Paladin, said:

HP gamble had gone south this weekend.

It is HP's own making by the way, the hardware side of the things was good, they just couldn't optimize the OS enough to give a fulfilling experience to users. You can't sell many tablets with sluggish transitions / laggy performance etc.

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