I believe it would be fair to say that investors do not approve, or, at the very least, do not especially like HP's new plan how the company plans to sail into the future. The company said that it be trying to sell its personal computer business, which is a major revenue source for HP. This was questioned not just outside of HP in the investor community, but especially by the services guys inside HP who never missed a chance to trash HP's interest in building consumer PCs.
Of course, there was also news that HP canceled its webOS hardware devices and is now leaving the future of the software in question, which essentially will cost HP at least about $2.5 billion to get rid of one of the greatest opportunities it had in a long time and is now left with the only choice to kill whatever is left of Palm, the company that pioneered mobile devices as we know them today. HP is served a broadside from the financial community today, with the most critical piece being Jeff Reeves' article that compares HP to the "worst of corporate America."
I would not be so dramatic, but he has a point and there is much in this claim why webOS failed inside HP. WebOS failed for the very same reasons why VoodooPC failed as part of HP as well, for example.
HP today: Invent?
A few months ago, we heard HP CEO Leo Apotheker saying that he would hope that HP could be as cool as Apple is today. However, realistically, what is HP today and what do we think it will be without webOS and the PC business? A printer manufacturer? An enterprise services company that uses fancy names for trivial technologies described in Powerpoint presentations that put the company's clients to sleep in a matter of minutes? Even in its enterprise business, HP seems to have lost its fire and we know that the company has been searching for direction for some time. A direction that has changed course several times since CEOs Carly Fiorina, Mark Hurd and now Leo Apotheker.
In servers, HP always had issues going after IBM and it was the profitability of IBM services that drove HP into this market as well. Yet HP never achieved the high profile and reputation of IBM in this market and could only grow its reach via substantial acquisitions, such as Autonomy now. It is not difficult to see that HP will be moving much more into the enterprise market and services than ever before. However, even in that space, HP may have problems at the very core as the company is turning into a giant that is the opposite of being nimble.
Its perennial rival IBM may be larger than HP, but it does much better job at being perceived as an innovation driver across all of its business segments -- for example, with chips that are built using neuron-like structures. HP has its famous labs as well, but, honestly, when was the last time you heard about a significant innovation that has come out of HP? You can take this innovation game even further and look at the patent space. HP filed 2 patent applications with the U.S. PTO this week, IBM filed 44 and Samsung filed 98. On an average week, Samsung is filing for 130 new patents every week, IBM for about 120 and HP for about 15. The activity coming out of HP does not reflect the size of the company. If the number of filed patents that protect any innovation in fact are a sign for the innovative power of a company, then I would claim that "invent" is not be the best word to describe HP anymore.
A Colossal Mistake: webOS
The acquisition of Palm and webOS was an interesting move. For pocket change ($1.2 billion), HP bought itself an ailing, but very capable platform that could have changed the face of HP. WebOS was the foundation of a platform that screamed "innovation" much more than anything else HP has in its product portfolio today. There was initial enthusiasm for webOS and an opportunity that connected nicely to HP's position as leading PC manufacturer -- its aspirations as a smartphone company as well as the emerging tablet market that so heavily depends on a functioning platform. HP had the resources to build webOS into something great. What HP did not have was time and passion.
HP gave the Touchpad 49 days to succeed or fail. 49 painful days that jailed a fantastic OS in barely adequate and over-emphasized hardware. 49 days that proved that consumers will not just buy a $500 tablet because we all suddenly think that they are the best thing since sliced bread. In Leo Apotheker's more pragmatic words: "Our WebOS devices have not gained enough traction in the marketplace with consumers and we see too long a ramp up in the market share. Due to market dynamics, significant competition and a rapidly changing environment and this week's news only reiterates the speed and nature of this change, continuing to execute our current device approach in this market space is no longer in the best interest of HP and HP's shareholders. Therefore, we have made the difficult but necessary decision to shut down the webOS hardware provisions within Q4 2011." What Apotheker failed to mention is that it was not "market dynamics, significant competition and a rapidly changing environment" that killed webOS hardware -- it was HP.
When HP acquired webOS with Palm, it was clear that this was a very fragile foundation for a new and highly marketed environment that required as much brainpower as risky and substantial monetary investments. The Touchpad was the first attempt. Like all Android tablets on the market today, the Touchpad lacked the reasoning, vision and passion that makes the iPad so successful. HP did not court webOS developers. Instead of a truly unique tablet, it produced an iPad copycat and sold it for the same price as the original. What reason would consumers have to buy the Touchpad over the iPad, if there are fewer apps, if there is a questionable future, if there is no platform integration, if there are no compelling phones, and if the iPad carries the innovation mindshare and all bragging rights? Releasing the Touchpad in its current form was driven by negligent market and consumer research at the very least.
HP had tremendous opportunities with webOS. It could have given the software away for free to invite developers. It could have create a huge platform spanning from PCs, appliances, smartphones to tablets. What is left is webOS with nowhere to go. There is talk that HP may try to license it to HTC or Samsung. I am not quite sure what HTC would do with webOS. HP calls this strategy now "optimizing the value of WebOS" after it virtually killed it with sub-par hardware.
Failure by design
HP has always had trouble integrating young companies and new ideas into an aging corporate structure that may not be so competitive anymore. Rahul Sood from VoodooPC left HP's PC business earlier this year and joined Microsoft. VoodooPC, at least temporarily, gave HP the perception of being an enormously innovative company that took a playful and risky approach to set trends and not follow them.
WebOS is a deeply emotional product that failed inside HP most likely because of the same reasons companies like VoodooPC failed. Unless HP recognizes the opportunities it is given, unless it returns to the roots of innovation and becomes much more nimble and passionate than it is today, HP is simply stuck in a time that is slowly fading away. Apple is the poster child of what passion for its legacy and products can do for a company. HP needs to embrace the same spirit that is driving companies such as Apple and Google, whether it deals with business or home users.
WebOS represented the passion that HP so desperately needs. The strong reaction of investors that sent HP's stock down 20% to a six-year low may only be one indicator of HP's shaky future. Hp cannot afford to miss many opportunities such as webOS.
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A good read. First thing that comes to mind when I think HP is cheap molded plastic.Reply
webOS failed because HP has retards at the helm.Reply
HP let their tablet fail just like Microsoft does so often with their products. They didn't support it. They also weren't able to give it any resources or time. I agree with clonazepam- I too equate HP with cheap molded plastic. And it's one thing if your products are solid but not very flashy or innovative (think Lenovo) but it's completely another if your products are trash that have zero reliability and are not consumer friendly. Oh and by the way, installing 20 different trial programs and useless applications is NOT consumer friendly, especially when you do stupid stuff like sell laptops running Vista with 1 GB of RAM to unsuspecting consumers along with all the bloatware.Reply
"A good read"??? Seriously. Wolfgang is a symbol of typical media F.U.D journalism in technology topics. After having relied on HP enterprise servers and storage for over a decade, your infant dribble is pathetic. No, HP doesn't need to dabble in pathetic consumer crap, but they are rock solid in the enterprise. The problem with so-called "journalists" that write these "hey, I woke up, got a Starbucks, and thought I'd write on the latest tech topic of the day" is they've never spent a day having to provide 101% uptime and it's easy on their consumer device to write whatever drivel spills out of their trap. Useless waste of thought as usual with no benefit to persons actually working IN the tech industry.Reply
Great article, balanced and well said. You forget one other thing, not many palm people stuck around following the buyout. And those who did were gone within months. My faith in HP died when Rahul Sood left. Up till that point it was his excitement that really had me interested in the future of HP branded webOS products, but once he was gone, I looked at what was left of "Palm" and it wasn't much.Reply
I know there would be the "easy opportunity" for some readers to trash the entire analysis and passion in this article for the suspicious reason that Apple is many times mentioned as the company to have in mind. Again that would be very short sighted. But personally, I can't deny I expected more from HP. I believed the year HP took to develop their tablet and the Palm acquisition would be enough to produce maybe the best iPad challenger or even something better, different. And this situation with HP comes to reveal more than three things but I want to point just to 3. Apple has done very well their job with the iPad, even if you can't take any advantage of it or you hate it because its Apple. It is nothing trivial to produce a massive popular computer gadget. Second, HP's own big problems to produce one. My third conclusion is another big denial for many: The desktop PC tower form factor as we came to know it is dying as the massive default computer world wide. HP also announced a spin off of their PC business. What could happen tomorrow with the PC that could regain the concept to a better situation I don't know. Maybe the gamers in general could buy the PC more time in market interest. The hardcore PC users will always be there. I know I will use the tower PC while I find it the best way and economically faceable for me to produce my job.Reply
Well, I ordered the 16gb version @ $99. Hopefully someone will come out with a way to load Android on it. I'll just use it to surf the web and check email when I am out and about.Reply
I definitely disagree about HP small business and consumer OEM PCs. While they aren't flashy or gaming machines they are actually pretty good quality and from my experience have very good reliability. Their tech support is also quite good as is their warranty if you need it.Reply
I think HP is done as a major force in the computing business if they completely abandon the PSG entirely. It screams FAILURE at the most elemental level.
I would agree that HP needs to streamline their PC lines and bring the overall hardware quality back to the levels they enjoyed around the late 90s and early 00s.
They should kill the entry level models and concentrate on mid and higher priced units.
I've always been a big fan of their products . More worrying is the fact that it seems like US companies are just giving up the PC business without even a fight at all.
Sorry but this is DEPRESSING TO ME!!!!!!!
HP PLEASE ....DON'T GIVE UP THE PC BUSINESS!
Funny commentary, so true; then I associate HP brand to good laptops and printer, and enterprise stuff, IBM did not throw out core business with Lenovo but HP is doing it.Reply
My insistence on Windows Mobile or even older Palm OS is purely for one app: TCPMP; threw that out on webOS I pretend Palm does not exist (same goes Windows Phone 7) That surely says what a "platform" is, wreck that and you effectively screw the entire package.
I wonder if HP is going the same way as 3DFXReply