This week has got to be one of the biggest weeks for the tech industry.
First, Google announced on Monday that it will be buying Motorola Mobility for $12.5 billion in cash,Â and on Thursday, along comes Hewlett-Packard which announced that essentially, it will be moving out of the consumer space in a massive business move which claims webOS smartphones and tablets as casualties in the process.
In a press statement issued on Thursday, HP said that it confirms that it is in talks with British software firm Autonomy for a possible acquisition. Various reports say that the deal could be valued $10.24 billion. However, reading the press release, HP also made bold announcements which will see it restricting how it conducts business.
First, HP announced that “it plans to announce that its board of directors has authorized the exploration of strategic alternatives for its Personal Systems Group (PSG). HP will consider a broad range of options that may include, among others, a full or partial separation of PSG from HP through a spin-off or other transaction.”
This means that HP is moving away from the consumer space. But isn’t HP’s PC manufacturing business the biggest in the world? Apparently, that isn’t enough and some industry observers note that even though it is the world’s largest PC manufacturer, the business has low-margins, unlike Apple which always has a healthy profit margin with each product they churn out.
And HP is not moving packing its things from the consumer space in only its PC business, it also announced that it will be discontinuing the development of the webOS platform and will also stop producing webOS smartphones and tablets. The HP TouchPad is doomed. And so are webOS smartphones.
In the release, HP says that it “plans to announce that it will discontinue operations for webOS devices, specifically the TouchPad and webOS phones.” This means Palm is essentially dead, but not quite.
“HP will continue to explore options to optimize the value of webOS software going forward,” the company did say, bringing up the possibility that webOS may be allowed to be licensed by other companies. It’s just that HP will no longer be developing it. This means, however, that a piece of Palm – which HP bought last year for $1.2 billion – will still live on despite most of Palm’s legacy being shuttered in the process.
As Louie pointed out in an earlier post here: “Will the iPad ever get a decent rival?”Â I’m wondering the same. One competitor has bowed out of the race as HP has killed the TouchPad. It has decent rivals, particularly in the Samsung Galaxy Tab 10.1 which has been getting a lot of good reviews of late. But will it ever get a decent rival in the sense that it is also rivaled in popularity and market traction? Time will tell, eventually.
It should be said, however, that the TouchPad hasn’t really made a splash since its launch. In fact, just this month, HP announced two consecutive price cuts for the poor TouchPad, hoping it will drum up sales. Nonetheless, it hasn’t sold many and even retail chain operators like Best Buy have reportedly been asking HP to take the TouchPads back because they’re just wasting storage and display space.
With that said, Apple’s rivals are running out of time. The iPad and the iPhone are getting stronger, in my opinion. While they are dominating the smartphone and tablet space, people looking for alternatives to these products should have choices. And without choices, well, it certainly is a possibility that they will buy the iPhone and the iPad. The iPad makes loyal owners too.
A Baird Research & Insights survey which came out Wednesday said that out of 1,114 respondents, 48 percent said they will be buying tablets.Â And out of those who said they will buy a tablet, 94.5 percent said they are interested in the iPad. Of the iPad owners who participated in the survey, just three said that it is possible they will be buying another tablet aside from another iPad. It certainly looks from the survey like once you go Apple, you (most likely) never go back.
However, the Baird survey also revealed an interesting outcome. The HP TouchPad was the second tablet the respondents were interested in, even beating Samsung, Motorola, HTC and RIM. However, I guess now that HP has announced it will stop developing webOS and stop producing TouchPads, people looking at the TouchPad will become disinterested. Who wants a tablet that has an OS which will not be developed? Or a tablet which will have no future generations?
HP CEO Leo Apotheker’s move is quite a big one. It reminds me of what IBM did the past years. It sold its PC manufacturing business to Lenovo in 2005. Lenovo is doing quite well, reporting that it nearly doubled its profit for the April to June quarter. IBM seems to be doing quite well too. However, much is to be said about if people know what it is exactly that IBM is doing nowadays.
I guess HP will be the same in years to come. After it spins-off its PC business, people will know that HP is still alive, but they will be wondering what it does as a company. Palm will be dead and webOS will be somewhat alive. HP won’t be a phone manufacturer and they won’t be a tablet manufacturer either. If it sells its PC business, HP will certainly not be a PC manufacturer then. I guess like people, you reach a certain point in life when you become tired of the ultra-competitive, glamorous, flashy and exciting races and settle for a more secure and less dangerous place to be. I think HP will be content working in the backgrounds, not really being a consumer brand anymore, just as long as growth stays up and profits are big.
P.S.: Rest in peace, Palm and TouchPad.