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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.
Judging by the amount of bloat-ware that's been coming with HP computers for the past several years, it would seem they've been practicing for this very moment.
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"According to one source who has seen internal HP reports, Best Buy has taken delivery of 270,000 TouchPads and has so far managed to sell only 25,000, or less than 10 percent of the units in its inventory."
http://allthingsd.com/20110816/ouchpad-best-buy-sitting-on-a-pile-of-unsold-hp-tablets/
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 HP is jettisoning all of the things that made it HP two years ago and just focusing on the stuff they got when they bought Palm? Does this sound like they are trying to blow up the company to anyone else?
I'm sorry to see it go, but I'm not at all surprised. I was a release-day Palm Pre buyer (Sprint), and I LOVED WebOS, but Palm really blew it. If there were more apps and the hardware was better (and upgraded more regularly) I would probably have gone with WebOS over Android or iOS, but in the end they left me hanging with no decent upgrade path (the Pre was an okay first-gen device, but really needed a major followup at the one-year mark) and they just didn't attract the app developers (I mean the major developers, the indie devs were fantastic!). End result, I'm now a happy Android user (HTC Evo), but I still miss the great parts of WebOS (Cards, Konami-code to root, etc).
Well, I'll just keep hoping that some of that good stuff makes it to Android eventually. Last I heard that's where most of the WebOS team ended up.....
As for WebOS in vehicles....great, just what I need. People have enough crap that they play with instead of paying attention to the road, now they're going to be swiping through multiple cards on their in-dash systems looking for things while careening down the highway? Wonderful....
Some bring out the best in others, some the worst. Some bring out far more.
So can I get a TouchPad for $100 now?
I try to think of HP as in the context of 'software business' but my mind stays blank. Am I missing something? I mean, quitting PC hardware for something I can't remember?
I wonder if patents had anything to do with it?
It sounds like its time to fire the CEO. They paid billions just a few months ago for WebOS from Palm and now have nothing to show for it. Either way that was a very expensive bad investment if you blow billions just to dump it a very short time later. If patents were that bad the CEO should have made sure their employees did a risk analysis and investigate this. I mean this is why you pay the employees right? Idiots
http://saveie6.com/
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.
Oh No! I won't be able to get horribly fragile laptops with absolute crap for support anymore. I have an HP laptop that I bought just over two years ago. It has been mailed back to them for service five times before the warranty expired. Three of those times, they entirely failed to fix the problem, cracked the screen, or didn't return the battery. Every time I have to call them up it is a painful experience talking to India. Contrast with my experience with apple: when I had a bad power supply on a two year old laptop, the guy at the apple store got a new one from a wrapped box and swapped it over the counter with absolutely no questions asked. There's a reason apple is running HP out of the harware market. They make better hardware, and they are actually pleasant to deal with when something does go wrong.
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.
HP has been one of the worst PC manufacturers in the last 10 years (if not more). I have had a very low view of their PCs since the time they started selling thsose small towers with everything cramped in (about 10 years ago).
Ubuntu is an African word meaning 'I can't configure Debian'
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.
No, that was Agilent, the test and measurement company.
We're talking about HP, the Printer/Business Services/Bottom-barrel PC company. Totally different.
Profit margins in the PC hardware business are razor-thin, and not likely to improve. So while their PC business does generate a large percentage of their revenue, it is a much smaller percentage of their profits.
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.
So, HP was an instrument company, started with an ingenious application of a light bulb no less. Then they became a computer company sort of by attrition, since they needed machines to control their instruments -- IIRC. Then servers came sort of naturally when they got to dabble with UNIX. Then the core instrument business got spun off as Agilent, pretty much tarring the name of Hewlett and Packard IMHO. Then the PC business gets spun off too. So what remains is servers? What the heck software is HP shipping that hasn't to do with their own hardware? It's becoming more and more of a joke to keep the same name. Their business got nothing to do with Hewlett nor Packard. They're turning in their graves. </rant>
A successful API design takes a mixture of software design and pedagogy.
Revenues != Profits. If the profits are terrible (i.e. they're just breaking even), then it might make sense to give up on that, or sell it to someone else who thinks they can do a better job with it, or is happy with low profits.
It's too bad, however, because even if a division isn't profitable, as long as it's breaking even (or slightly better), that's keeping a lot of people employed, and obviously it's keeping some customers happy too. But big companies want profit ueber alles, so just having good revenues and stability isn't enough for them, so they throw this away in search of something that has giant profits, which they may or may not find.
They were just awarded a huge NASA contract to provide HARDWARE and desktop support (the old Lockheed ODIN contract)... Seems odd. http://www.hp.com/hpinfo/newsroom/press/2011/110428a.html
Since they are replacing all the Dells at NASA with HP (at HP's request when they started the contract) - why would they now be looking to get out of hardware?
Compaq
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.
Who blames Carly because she was rude? From all accounts I've heard, the Compaq merger was a huge mistake, as was the spin-off of Agilent and the iPod cross-licensing with Apple. You think that the party thrown when she left was just because she was rude? Why did HP's market cap raise by $8 BILLION when she left? Surely market traders on Wall street wouldn't care whether she was gruff with her employees.
Some are saying that the Google buy of Motorola Mobility may have been a big factor in the decision to kill WebOS hardware. They can't afford to keep up with that level of investment against the iOS and Android ecosystems' dynamic synergy. Too hard for a third player to bootstrap here. I hope RIM is watching this. It's too late for Nokia to take this turn.
Help stamp out iliturcy.
HP has already stolen market share from DELL because they have become so good at making PC's, the fact that they make little/no profit just means they are in a very competitive market. If HP stops making PC's then there will be fewer players in the market and so prices will rise and profits along with it, but that doesn't mean that anyone suddenly got better at making PC's only that the market is distorted by being closer to a monopoly. Remember that for classic economics to work you have to have a commodity product with many suppliers and zero barriers to entry.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
OK, I will bite. If a big company goes under, it surely does not mean that the market contracts. So far we agree. But it does mean that redundancy is reduced. Why is that bad? Well, first of all it means the system is not robust to events like Fukushima. Less players means more concentrated business chain means more vulnerability to disruption. Second, elimination of redundancy means less competition. Which implies higher prices, less quality, and less service. So what we get is not necessarily that resources were mis-allocated. It could just be that temporary sentiment shift places less value on robust supply and overall competition. Markets have often been quite short-sited and this could be a manifestation of that. Finally, one less big company means one less lobbyist. The surviving players can now make sure their voice is not balanced out by another player pulling in their own direction.
Also, I am not sure I buy that trade creates wealth. If I have two people on an otherwise empty island and they are starving to death for lack of food, whether or not they trade their shirts makes no difference to their wealth and might even detract from it if you factor in the calories they expend in trading. Wealth comes from two places and two places only: new natural resource discoveries and improvements in efficiency (i.e. scientific, technological and business process discoveries). Trade can stimulate these two and that is the only way it can help create wealth. Trade can also be detrimental. The most detrimental is trade that leads to bubbles, that is when strong correlation patterns show in the trade.
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.
I'm a little surprised more /.'ers aren't familiar with HP's software and services division. HP is considered to be one of the "Big 4" of enterprise infrastructure, service, and asset management, along with CA, BMC, and IBM. HP's acquisition of EDS strengthened their professional consulting position, and put them squarely in competition with IBM as their main software/services competitor.
Enterprise software is basically a license to print money. Companies and governments spend inordinate amounts of cash on the Big 4's closed-source software, enterprise license agreements, support contracts, and implementation services. If HP is anything like CA or IBM, they're making the vast majority of their money on enterprise software and services, and very little on PC's and devices. Spinning off or selling their PC / device manufacturing business made sense for IBM, and it makes sense for HP, especially in light of the consumer competition in that space. There simply isn't the same competition in the enterprise space, hence why the Big 4 can charge the inflated prices they do for their software and services.
>. HP just did a half ass job of building market traction.
I'd say it's more like, they jumped the gun and tried too hard to monetize it too quickly. When the G1 came out, Google was smart. They created a phone that was a tiny bit underwhelming, but was mostly a fully-functional hardware reference platform that worked perfectly on at least one major US network, and worked equally well overseas. They didn't expect to ever make a cent from the G1's sales, because they understood that the G1's entire purpose was to *exist* and not flop. Period, full stop, end of story. Even then, Google's own mistake was obvious in retrospect -- they didn't accommodate AT&T's frequencies, and they didn't have a CDMA version. If you look at Android's growth, you have a series of small blips during the G1 era, then suddenly an overnight explosion in Q4 2009 when the Hero hit Sprint and the Droid hit Verizon. The point is, Google didn't even *try* to make real money on Android until it was well into its second generation of hardware. HP, meanwhile, had its executives chomping at the bit thinking they could roll out a fairly expensive device with minimal developer support and little in the way of real thirdparty software, and magically have it take off into a profitable project. When their delusional fantasy got shattered, they had nowhere left to go.
HP would have been FAR better off to have "softly" introduced WebOS as a product available for free for installation on select pre-existing Android hardware, and worried about making actual money from licensing fees on the NEXT round of hardware sold with it in the box. And to have changed the stupid name. I know it's an inaccurate perception, but even now, every time I hear the name "WebOS", I cringe & think of a lame half-assed web-based API built on Javascript that just kind of sucks the way 99.9% of browser-based apps do... but worse, because the underlying hardware itself is slower than the browser I've run sucky slow Javascript-based web apps in for comparison. It's a shame HP ran it into the ground, because it would have been good to have another good Unix-based mobile OS around to keep Android on its toes (I'll freely admit my prejudice, and state that I hate Apple & have looked down upon them since the day in middle school when I found out that the Mac didn't even have an apparent programming language AVAILABLE, let alone BASIC in the box. For the kids here, I believe that to actually write real software for a first-gen Mac, you actually had to buy a Lisa)
Your island example is bad. Shirts are valueless (or of equivalent value) in this context, so trading them doesn't create wealth.
Now if one half of the island had bird nests full of eggs, and the other had water, two people on the respective halves of your island could trade and both would have more wealth because on the bird side, plentiful food is worth LESS than the scant water and on the water side abundant water is worth LESS than the scarce eggs. Then trading is good for both parties, they both have more of what they most value than before. The sum of value across the island is higher, and thus there is more wealth.
If you don't like a resource example, one person could know how to weave hats and build boat hulls and the other could know how to weave nets and sails. Trade creates more wealth. This is extremely basic economic theory.
You are wrong about where wealth comes from. At the end of the day every manufacturing plant turns steel/glass/wire and plastic into a bunch of products worth more than the inputs. That directly creates wealth and it doesn't have anything to do with natural resource discoveries or improvements in efficiency. This is true at the craftsman level as well- working a bunch of reeds into a useful basket directly creates wealth - the basket is worth more than the reeds.
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.