HP scraps plans for webOS after writing off $3.3 billion

After 2 years HP has decided to cease all webOS products, which are smartphones and tablets. HP had bought Palm in 2010 at a price of $1.2 billion. The price they paid was the equivalent of 9% of their total cash reserves at the time. But the amount of money they are writing off on their books now is $3.3 billion in total.

In total we estimate webOS was an expensive bet costing HP almost $5 billion. Was it worth it?

Definitely not but what happened and what could’ve been done? HP’s motivation was probably to buy a ticket to enter the new and growing mobility space, when tablets are dominating and PCs seem to become a thing of the past. Apple had contributed to growing the smartphone market into a $240 billion market with a profit pool of $26 billion and the tablet market to $34 billion. So considering the maturity of the PC market HP had to get its teeth into it.

Canon PowerShot A590 IS Sample - Hewlett-Packard Logo (Macro)


What went wrong was the lack of understanding and flexibility of HP, similar to what Palm had already been doing wrong. The product itself was acceptable and appealing. It was at one time the only operating system good enough to challenge iOS. But that didn’t guarantee the future of webOS because the gap between webOS and iOS was still considerable.

Android was in a similar situation but they had the flexibility to adapt rapidly and counter the challenges iOS brought up. Android quickly added the features required to be on par and issued revised updates of the OS almost every 3 months just to play catch up.

This is happening to many other firms out there even now, including Symbian, Blackberry OS, LiMO etc. Realizing the actual situation you are in seems to be an almost impossible exercise that most firms don’t seem to get. After realizing the situation, the next task would be to make a decision and do it fast. It’s been 2 years since iOS came out and a lot of these firms aren’t doing something about their situation. Sadly the webOS story can be and will be repeated in the near future.

The future of webOS? It may relive in printers, cars, TVs but it’s most likely to slowly disappear like Savaje or LIPS. It’s a sad thing but as we said, history has a habit of repeating itself.


Nov 23, 2011