Winning critical praise but commercial indifference is only a cool strategy when you’re trying to run a rock band. When you’re trying to get a mobile operating system off the ground, you need sales, and the future of HP’s WebOS is once again up in the air after it failed once again to tempt the public with either the TouchPad or Pre.
It has been two and a half years since Palm’s Jon Rubinstein took the stage at a packed press conference in Las Vegas at CES to introduce the *Palm* Pre and WebOS, which stole the show that week only to fall flat when it was finally ready for store shelves. Even after HP stepped in to rescue the company with a $1.2 billion acquisition last summer, WebOS devices simply never enjoyed a moment in which people actually voted for the innovative operating system with the wallets.
With a new business-focused CEO putting his stamp on the company, HP (NYSE: HPQ) has effectively thrown in the towel on WebOS, announcing Thursday that it was going to stop selling devices based on the operating system. CEO Leo Apotheker swore on a conference call following that announcement that HP was not giving up on the software entirely, and other executives reiterated that message during an internal meeting as reported by This Is My Next.
But there are limited options for a mobile operating system in last place in its division. WebOS barely registers on the radar of software developers, who value iOS and Android above all else. And RIM (NSDQ: RIMM) still has volume, while Microsoft (NSDQ: MSFT) still has Nokia (NYSE: NOK). WebOS has nothing, especially now that plans to put the software on all HP PCs are certainly up in the air considering HP is also shopping its PC division.
There are two realistic scenarios if WebOS is going to survive into 2012:
A less well-to-do mobile hardware company could do worse than to let HP’s team work on future versions of the software while focusing on the hardware end of things. But HP has never done this sort of thing, and Apotheker and HP executives at its internal meeting suggesting that company really has no idea what it wants to do just yet. Licensing an operating system for a complex device like a smartphone is not something you throw together in a couple of weeks.
Acquisition: Perhaps a more likely scenario would be an outright sale of the WebOS group to a company like Samsung or HTC, both of which are probably thinking about their options following Google’s earth-shaking decision to purchase Motorola (NYSE: MMI). Both of those companies have mobile brands and strong relationships with wireless carriers, as well as the motivation to see through the development of the WebOS ecosystem. Also, a fellow PC maker looking for a mobile boost could see an opportunity to snap up both HP’s PC business as well as WebOS.
One aspect somehow not addressed by either HP executives or the financial analysts allowed to ask questions of management: the fate of Palm’s patent portfolio. As one of the pioneering mobile computing companies, Palm brought a strong patent portfolio along with WebOS and the Pre when it joined HP, and those patents could be very attractive to someone looking to improve their own position during the great mobile patent gold rush of 2011.
In other words, somebody could buy WebOS just for the patents only to shut it down. Both the Nortel patent auction and Google’s Motorola deal valued mobile patents at around $750,000 a patent, according to an analysis by Stuart Soffer at Stanford Law School.
HP Chief Financial Officer Cathie Lesjak said quite bluntly during the company’s conference call that HP didn’t see much point in investing in WebOS given how long it might take to win over the mobile community. But HP has clearly decided it doesn’t have the stomach for the consumer market, whereas another company could see WebOS as an opportunity to control both its hardware and software development without having to start from scratch.
Still, the broader question is really whether anyone can wring any value out of WebOS. The software has been out for a long time now, and even though it’s true that Palm lacked the financial resources to make it a hit while HP was perhaps too distracted, you’d think there would still be something to show from software that reviewers have liked time and time again.
Instead, WebOS is an afterthought in developer surveys and market-share statistics. With app fatigue becoming a real issue inside development houses, we might have seen the second casualty (Symbian being the first) of the mobile operating system consolidation that we all knew was coming: the world simply can’t support five different mobile OSes.
In the span of a week, the landscape of the mobile market had changed dramatically. Whoever winds up with the remnants of a once-proud mobile computing company will have quite a project on their hands.