H-P Sells webOS, Chooses Android - Analyst Blog

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Hewlett-Packard Co. ( HPQ ) finally put an end to its incessant efforts to breathe life into the webOS mobile operating system platform. The OS was inherited from Palm Inc., which it acquired in 2010 for $1.2 billion. Failing to do much to promote the platform, the tech giant has now decided to sell it to South Korean company LG Electronics Inc. for an undisclosed amount.

The multinational electronic company, which deals in mobile communications, home entertainment and appliances, air conditioning and energy solutions, plans to use the webOS technology to introduce a connected television (Smart TV) initially and eventually integrate it in its other home appliances.

Per the deal terms, H-P will offload the source code, documents and websites associated with webOS, as well as the experienced staff. Apart from this, H-P will transfer to LG other webOS products (including patent rights acquired from Palm and user interface technologies).

H-P left no stone unturned to make the webOS platform a success. In a Strategy Summit held in San Francisco in early 2011, H-P's then chief executive officer (CEO) Leo Apotheker announced the company's intention to develop the webOS platform into a leading connectivity platform. The tech chief also announced plans to launch the TouchPad tablet and new smartphones on webOS.

But the TouchPad tablet and smartphone failed to carve a niche in a market dominated by Apple Inc .'s ( AAPL ) iPad and iPhone, as well as Google Inc. 's ( GOOG ) Android-based devices. The devices did not reach internal milestones or achieve financial targets.

Actually, the webOS platform itself lagged far behind Apple's iOS and Google's Android operating system platforms. Hence, the CEO had no option than to reconsider the continuation of its webOS-based devices.

Hence, in a major restructuring plan announced in Aug 2011, H-P decided to abandon the underperforming webOS devices. However, the tech behemoth stated that it would continue to explore options to optimize the value of the webOS software going forward.

But in Dec 2011, H-P's present chief, Meg Whitman, previously eBay Inc. 's ( EBAY ) chief, announced plans to make its webOS mobile system available as open-source software that anyone can freely use and modify. Previously, the company recorded a pre-tax charge of $1.6 billion to account for the non-profitable business.

H-P appears optimistic about its new tablet (Slate 7), which will run on the Android OS. A higher-end version based on Microsoft Corp.'s ( MSFT ) Win 8 operating system is already available. The Android tablet will hit stores in April with a probable price tag of $169.

While H-P's late entry into the tablet market makes things a little difficult for the company, we can't help thinking that it is 'better late than never. We therefore take the announcement positively.

Currently, H-P has a Zacks Rank #2 (Buy).



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAPL , CEO , EBAY , GOOG , HPQ

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