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HP Spinning Off WebOS and Exiting Hardware Business
A number of readers submitted rumors about some announcements HP was set to make today. Now, the announcements have actually happened, and the news looks grim. For starters, they are exiting the tablet and phone market and repositioning webOS for use in appliances and vehicles. While confirming they are in talks to acquire Autonomy, they also announced they are considering exiting the PC hardware business entirely in order to focus on their software business.
I hope that HP will somehow weather the turbulence and emerge stronger than ever. This is the company that built Silicon Valley and for decades was the benchmark for tech innovation, and it's so painful to watch them floundering like this. And I'm especially saddened that WebOS never really had a chance to strut it's stuff. I'm a very happy iPad owner, but I have the greatest respect and admiration for what the Palm team accomplished with WebOS's interface, and I was hoping that it would take off and keep Apple on their toes.
I personally blame Carly Fiorina for the travails of a once-proud company.
So can I get a TouchPad for $100 now?
The TouchPad has only been on sale for over a month. It doesn't really have many apps. Did they really expect it to sell out? I really like to know what their expectations were. It seems pulling the plug after such a short time suggests they didn't think it was going take a while to make traction against Apple's iPad.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Sounds more like they're trying to stop competing with Dell and start competing with IBM, reversing a Fiorina era trend.
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hp hasn't been in the PC hardware business for quite some time. When they realized they could adopt the razor model with their printers they dropped their first core business like a hot potato and never looked back. They have never been a serious PC manufacturer despite all the PC's they managed to sell. I knew when they bought Palm WebOS was doomed just like when they bought Compaq.
"A person is smart. People are dumb, panicky dangerous animals and you know it." - K
Yeah bring back Carly Fiorina! Oh wait...
Seven puppies were harmed during the making of this post.
They have been blowing up the company since Carly Fiona, became the CEO. The problems HP has are a decade old. They have no respect for employees and treat them like machines or cattle and now are shocked that after 10 years of layoffs month after month that only incompetence remains.
I could cite examples but I wont waste space. I am just dumbfounded and glad I do not own shares of the company. HP has a history of killing the goose with the golden eggs and focusing on things that do not make money instead. Ink is the only thing that gives them money thanks to the DMCA and chips in the cartridges. Once the patents expire on them they are screwed. All the good produces are under Agile now like medical equipment that HP used to make. No doubt, they will sell WebOS at a loss and focus on the 0 profit margin desktops instead and let a few billion shareholder money go to waste.
HP was a different place 10 years ago where they made high quality components and were known for great innovation and management.
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for the same reason Carly fired almost all of R&D, sold the itanium engineers to Intel, and considered getting out the printer market, despite those sales being the majority of their revenue: greed, short-sightedness, selfishness, and the desire to be seen in the news.
You have to work really hard for that PC dollar. In desktop PCs Microsoft makes several times the profit dollars per unit than HP or Lenovo does. Lenovo's crowing about "huge" $100M profits on $5B sales right now- about 2 percent. That's a lot of work and risk for $100M profit to be a good thing. You could blow $100M just by, say, building an initial run of half a million tablets that don't sell.
Help stamp out iliturcy.
that's keeping a lot of people employed
I obviously wasn't intending to talk about anything like this, but hey, you brought it up. :P So this statement you made is one that I see a lot of people making and I think it shows a disconnect between the understanding of what a profit actually means and what jobs are. You probably don't want to hear about it, but it bothers me, so deal.
A profit is far more than just making moneyIt shows that you are creating wealth. One of the fundamental law of economics is that trade creates wealth. By trading, you should end up with more than you gave up. When you can't make a profit, it shows that resources are being improperly allocated. If HP decides they suck at PCs and close down, that doesn't mean those jobs and resources are lost. It means they have to be reallocated. If HP sold 1,000,000 PCs a year, that doesn't mean there are 1,000,000 PCs less going to be purchased. A business staying around that doesn't make a profit is preventing those resources from being used by a company that can make better use of them and create more wealth. This creation of wealth is one of the biggest assets to the advancement of humanity and to encourage the opposite prevents progress from happening. The problem that a lot of people have, of course, is that the wealth ends up in the hands of the top and the elite, but this frustration should not be used to advocate the prevention of wealth creation. This is the result of very different causes.
I couldn't care less about Fiorina's personality, and frankly it has no bearing on the success of the company. By all accounts Steve Jobs is a complete asshole to work for, the proverbial boss from hell, but investors will forgive anything if he delivers results. Fiorina did not deliver, and the acquisition of Compaq was in my opinion a dramatic strategic mistake. The culture of engineering innovation at HP seemed to go out the window on her watch, and the company became a low-margin mass producer.
I've compared her before with Steve Ballmer of Microsoft. Both come from marketing backgrounds; when both assumed leadership of their respective companies engineers took a distant back seat; and investors rewarded both with flat stock prices in recognition of their inability to innovate and grow the business.
Commoditization of the hardware and razor thing margins leads to a rather severe avoidance of risk. Risk-taking is what drives innovation. That's why PC OEMs haven't given us anything amazing and revolutionary for fifteen years. They can't afford the risk. That's also why they dare not turn from Windows to new software platforms. To do so would be to decline Microsoft's co-marketing dollars which are not just all of their profits but offset a lot of their negative profits as well. This would drive the price of all of their products up, not just the innovative ones, guarantee failure in the marketplace.
Now with the shift to mobile they get the risk whether they choose to avoid it or not. It had to happen eventually. The increased risks of a dynamic market combined with razor thin margins make for a guaranteed money loser. Deprived of the freedom to innovate and build brand premium they have no choice but to fold their hand.
HP has just run the numbers and figured out what IBM did in 2005: the only way to win is not to play this game. There are other games to play that offer at least the hope of a good win someday.
Unfortunately they've also just announced that they're ready to spin off a major product line with no buyer in view, no plan. This will almost certainly result in rapid sales decline until people see what the outcome will be. This is the Elop maneuver.
Help stamp out iliturcy.
Actually, that is a terrible idea. Consumers know Compaq.
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